The plant, which began supplying electricity to the village in 1894, will be upgraded to increase its output — an efficiency that could pay back the construction costs within two years.

The village trustees approved a contract with Barton and Loguidice to design a plan to upgrade the plant’s controls system. B&L estimates that the plant could generate almost twice as much power as it is currently producing. The hydroelectric generators produce around 120 kilowatt hours, but new controls should raise output to 200kWh.

The $28,000 cost of the engineering firm’s work will be covered by a grant from the New York State Energy Research and Development Authority. NYSERDA, primarily funded by an added tax to the state’s utility customers, promotes energy efficiency and the use of renewable energy sources as well as lowering utility costs to ratepayers.

B&L estimates the total cost of construction at the hydro plant at around $114,000. With a net metering credit of $55,000, that cost could be paid back in a little over two years.

“If we can change the controls, we can increase production,” said village Manager John Sweeney.

NYSERDA’s grant applies because the updates would facilitate a remote net metering arrangement for the village. Remote net metering allows utility customers to recoup the cost of electricity when they contribute electricity from renewable sources to the electrical grid.

The village owns the building where the hydroelectric plant resides, but National Grid owns the electricity.

“We have a purchase power agreement,” said Sweeney. “In theory, the power turns around and comes back into our building.”

Net metering means that for every kilowatt hour the hydroelectric plant produces, the village will be allowed to offset the cost of the electricity it uses.

The hydroelectric plant was originally built in 1894, when Orlando Blood, Wallace Murray and Orville Morse bought the mill on the edge of Lake Flower and installed two new water wheels and two generators. In 1907 Paul Smith’s Electric Light and Power bought the company and in 1927 built the three-story building above the dam that still stands there today. During World War II the old generators were scrapped for munitions material, and in the 1960s Niagara Mohawk bought the hydroelectric plant from Paul Smith’s. In 2000, National Grid purchased Niagara Mohawk.

Sweeney said the grant will indirectly help the village check off another item on its Clean Energy Communities list. Officials hope to install an electric car charging station, which would be powered by the hydroelectric plant, behind 3 Main St.

“The overall goal is to save the taxpayers money,” said Sweeney. “The Public Service Commission is anticipating a 10 percent increase in electrical costs next year. If we can reduce demand by upgrading our facilities, that’s good.”

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