Water Department Superintendent Chris Satterlee said the turbine will generate more power than needed, and the surplus can be sold back to National Grid to create revenue for the department.
He said he was unsure how much revenue that would generate, but officials should have a good idea after the turbine has been operational for six months.
The turbine cost about $70,000, which the department invested without using state or federal grant money.
"At the time, it was tough to get grants because [government agencies] weren't really recognizing hydro," Satterlee said.
Generating more than $20,000 a year in electrical power, the device is expected to pay for itself in about three years.
"We were looking for ways to use water to our advantage," Satterlee said. "We've read about wind power turbines and solar panels. Why not use our water? So we did some investigating and educated ourselves, brought it back to the board [of water commissioners], and they gave us their blessing."
The turbine, installed in the Rice Watershed at the Rice Reservoir, will generate hydroelectric power from the flow of water into the reservoir.
The department must wait until it is granted a conduit exemption license by the Federal Regulating Commission before the turbine starts working. Satterlee said crews still have to do some electrical work outside, so the department likely will wait until April to bring the turbine online.
"We cleared all the hurdles," Satterlee said. "But even if we get the license right now, we're not going to put it online until spring."
Satterlee said the department is looking at installing a second turbine that can generate more power for other operations.
The department also has been replacing the remaining original valves in the filtration plant, built in 1939. Only three are left, as 19 have been replaced over the past few years.
The Water Department has a $2.4 million budget and has not raised water rates for the second year in a row.
Every expenditure greater than $150 must be approved by the Water Board of Commissioners, whose volunteers members are elected to four-year terms.