A surplus? From a wheel generating 300 to 500 watts? That's basically two or three light bulbs. Did you mean kilowatts, perhaps?
He never expected it to generate a surplus unless he somehow didn't use any power at all for a month, like if the family took a long vacation somewhere.
I rather doubt it was in the kilowatt range. I have some concept of watts/volts/amps from my own solar installation in a camping trailer I've built. Pretty certain of the numbers I said, but I'm working off a 25 year old memory.
In this day and age given EPA and Army Corps strictures, could you even get away with altering the banks of a flowing stream to put in a water wheel?
"That's basically two or three light bulbs. Did you mean kilowatts, perhaps?"
If it were generating 300 watts an hour, and managed to run 24 hours non stop, that would generate around 7.2 KhHr a day of power, or just shy of 2,700 KwHr a year.
If it were generating 300 KwHr an hour?
No chance of that happening.
Eastern Washington, tiny stream that goes through hundreds of private property parcels in a rural setting. Lots of similar tiny streams all over. No bend to the stream on his property segment where the wheel is installed. It's installed, so obviously he got away with it back in the 90's.
In prime spring/fall temperatures when no heating and no cooling is needed, it probably did result in a net 0 to the property's electric consumption if all that was running was lights, fridge, and some intermittent TV and such. But he has a large 2-car separate workshop, aside from the 3-car garage. He's a tinkerer and owns an auto body shop (not on property). Plenty of power consumption going on to make sure that probably never happened.