One of Alaska’s most notorious companies is back in the state, but with a new public face.

And it’s now hoping to build the $180 million Cascade Creek Hydroelectric Project, nearly as big as Juneau’s Snettisham Power Project, on the mainland across from Petersburg.

Alaska Hydro Corp., a publicly traded company officially based in Vancouver and listed on the Toronto Stock Exchange, has spent millions on the project already. It hopes to build a project big enough to make it financially feasible to connect to Canada and the West Coast power grid, and then spur new hydro development throughout Southeast.

“Once you are connected to the grid, you will never turn on another diesel plant again,” said Thom Fischer, president of Alaska Hydro.

The 70-megawatt Cascade Creek Project, he said, will produce power with water that flows from Swan Lake down Cascade Creek into Thomas Bay, and give a boost to Southeast development.

What’s causing controversy about the Cascade Creek Project is not only what the project’s developer is planning to do, but also who the developer is.

In 2002, Bellingham, Wash., construction company Whitewater Engineering was working on another hydroelectric project, for Cordova, when it sent equipment operator Gary Stone to work in an known avalanche chute. An avalanche killed him, and Stone left behind a wife and two children.

The Occupational Health and Safety Administration called the company’s actions “criminally negligent.” State prosecutors agreed, and both Whitewater and owner Thom Fischer were indicted on charges of criminally negligent homicide.

Fisher disputed the charges, blaming Stone and government regulations for the death. He eventually agreed to plead guilty to the charges on behalf of Whitewater in exchange for the charge against him personally being dismissed.

The statewide notoriety came in the very final days of the administration of former Gov. Frank Murkowski, who pardoned Whitewater and agreed with Fischer that Stone’s death had been a “tragic accident.”

Whitewater had earlier testified before the Legislature on behalf of Murkowski’s pro-development agenda, and said government safety and environmental regulations on the Cordova project were hampering development.

Among the elements of the case that spurred public outrage was that Fischer assured Murkowski that he’d paid his OSHA fine and benefits to Stone’s family.

What he didn’t tell him was that Whitewater had never paid the $150,000 fine it had received as part of its guilty plea. That fine, which had grown with interest to $250,000 by the time of the pardon, was wiped away by Murkowski’s action.

Outraged legislators passed legislation reining in governors’ clemency powers, with Rep. Beth Kerttula, D-Juneau, the House Democratic leader, joining with Rep. Ralph Samuels, R-Anchorage, its Republican leader, to co-sponsor the legislation.

The bill passed unanimously in both houses of the Legislature, and was quickly signed into law by new Gov. Sarah Palin.

Fischer today calls the pardon “yesterday’s news” and said his company never should have been prosecuted for an accident.

“People who really understand what happened believe he did the right thing, that Murkowski did the right thing,” Fischer said.

Fischer had hired Juneau attorney and former state Rep. Bruce Weyhrauch to pursue the pardon.

After Murkowski granted it, Weyhrauch told the Empire he was “astonished” and donated his legal fee to a charity that serves crime victims.

Whitewater has long been involved with the Cascade Creek Project, which was first developed by an affiliated company, Cascade Creek LLC. That joined the Vancouver-based Alaska Hydro last year in a reverse merger with Fischer as chief executive officer of the merged company.

That project has been controversial locally, with part of the ire stemming from Whitewater and Fischer’s history, said Joe Nelson, superintendent of Petersburg Municipal Light & Power.

“There’s folks here who have long memories and very strong feelings about it,” he said.

And some concern is coming from Alaska Hydro’s business plan, Nelson said.

Fischer said the goal of the Cascade Creek Project is to connect into the electrical intertie between Petersburg, Wrangell and Ketchikan at Petersburg. Nelson said the city doesn’t need the power, doesn’t have a means of connection, and the intertie isn’t able to ship that much power.

Fischer said he initially plans to sell half the power locally, and eventually all of it locally.

“I don’t know who they are going to sell it to,” Nelson responded.

At a meeting in Petersburg recently, Alaska Hydro suggested it might sell power to cruise ships in Ketchikan.

While the power will eventually be sold locally, Fischer said, the Cascade Creek project could also spur construction of the long-sought intertie with the West Coast power grid in Canada.

That’s something the region needs, he said, and Cascade Creek could provide enough power to make construction of an intertie viable.

The problem for the mostly isolated communities in Alaska is that if they build large, efficient hydro projects, they initially have surplus power and have no way to sell it and no way to recoup construction costs until demand grows. Eventually, they wind up with a shortage and the same dilemma all over again.

“That’s the problem with every single power project you build in the state,” Fischer said.

He said Cascade Creek will provide so much surplus power it will finally make it economic to build the intertie to Canada.

“Our project is big enough to push it over the edge,” Fischer said.

And while Petersburg has been skeptical, Alaska Hydro won support from the Wrangell, which invested $250,000 in the company.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.