It's official. Lehighton will not be constructing a new hydroelectric plant.

The borough had been approved for a $5.5 million state grant two years ago for the project and had already received the paperwork to physically receive that grant.

Monday night borough council agreed to return that contract to the state.

The borough had been working on the financing of the plant with Summit Water Nexus, a spin-off from Gravity Renewables Group of Colorado.

The plant would have been constructed on Pohopoco Creek at the basin of Beltzville Lake.

The 2.6 megawatt low-impact plant had an estimated project cost of $15.7 million.

The project was anticipated to create 9,470 megawatt hours of energy annually for the next 75 to 100 years, according to the Pa. Department of Community and Economic Development, which had approved the grant. The project theoretically would have allowed the borough to reduce consumption of electricity from the power grid at peak usage times.

Lehighton has an exclusive operating license in place from the Federal Energy Regulatory Commission to proceed with the project.

The Pa. Department of Environment Protection had determined the project is viable and offered its support for the grant.

The project has been in the active stage for the past 10 years, although developing hydroelectric power from Beltzville has been eyed by the borough since the 1970s.

In 2003, Lehighton initiated and funded the early design and licensing process for the Beltzville project.

In 2007, the Pa. Energy Development Authority granted Lehighton $750,000 toward the development of the project.

Under the agreement with Summit Water Nexus, the borough would have constructed the plant and then sell it upon completion to Summit.

Problems developed within the past two years during negotiations between the borough and Summit Water Nexus because the borough wanted assurances of receiving a specified amount of revenue from the plant. Summit Water Nexus didn't provide such assurance.

In addition, Council President Grant Hunsicker expressed skepticism at a previous meeting, stating that to benefit the borough, the project would require purchasing land on which power lines would be installed. Such a property purchase would be very expensive, he said, and the financing firm showed no guaranteed assets to back the project.

Had it been approved, the hydroelectric plant would have been built on 3.17 acres of federal land under the jurisdiction of the U.S. Army Corps of Engineers.