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Higgins wants to keep power profits here

Brian Higgins is filled with populist rage these days over the record profits posted last year by the New York Power Authority.

The authority cleared $298 million, plus another $119 million it gave to state government as a, um, "voluntary contribution" to help close Albany's budget gap. Most of NYPA's profits were generated at the Niagara Power Project, which cleared $205 million.

Put another way, seven of every 10 dollars of authority profits were generated in Lewiston. Not that NYPA believes in profit sharing.

There are several reasons for the surge in profits last year, and one of them has triggered Higgins' ire. Nearly 20 percent of the low-cost power generated in Lewiston and earmarked for industry here in Western New York goes unused. In some cases, the power hasn't been allocated to a customer; in other instances, the juice has been awarded to a company that has yet to start using it.

In either case, the authority sells the unused power on the open market. So, instead of getting 1.6 cents per kilowatt hour from a local company, the Power Authority sells it for 5, 6, 7 cents per kilowatt hour on the open market. And pockets the money.

As I reported last year, this has been going on for several years, and while numerous politicians and business leaders have complained about it, no one has done anything about it. The Do Nothings include the members of our local delegation to the State Legislature. Higgins has stepped in to fill the void.

He is drafting federal legislation that would require the Power Authority to turn over the proceeds of the sale of any unused power to a locally controlled economic development corporation. If such a beast had existed last year, the authority would have written a check for about $45 million. That's not chump change.

The money would be used to finance infrastructure work and capital improvements to public facilities in Erie and Niagara counties. Roads, bridges, brownfield remediation, etc.

Higgins intends to use the bill to "bringing this issue to a head." The point isn't so much to pass the bill, although he's intent on doing so, but to use it as the starting point for negotiations with the Power Authority to keep more of the profits in WNY. The Congressman used a similar approach in 2005 when he led the charge to wrestle additional money from the authority for local projects as part of the deal that saw the authority obtain a new federal license to operate the Niagara Power Project.

Power Authority officials at the time were dragged into the deal kicking and screaming. There's been a change at the top, however, and Richard Kessel, the new authority boss, sounded downright conciliatory Tuesday when briefed about Higgins' plan.

While not sold on the particulars, Kessel said he agreed that the authority could and should be doing more for Western New York. He's been saying that since taking over last falland Higgins' challenge creates a sense of urgency on Kessel to act.

While he doesn't rule out sliding some cash our way, Kessel's priority is to get the unused power allocated. He's also got his staff checking to determine if more than the current 695 megawatts of power earmarked for local industry can be squeezed out of the Niagara Power Project. The plant was refurbished and expanded a couple of years ago and you'd think there is more juice to be found.

My story today is likely to give ammunition to certain pols who have been screaming of lateover the authority's unwillingness to award huge power allocations to a couple of projects in Orleans County. I plan on writing a story in the near future on this, once I've done some additional reporting, but the numbers I've crunched so far indicate that neither deal represented a smart use of discounted hydropower. The subsidy per job would have been sky-high compared to almost every other power allocation the authority has made the past couple of years.

As my Power Failure investigation showed a few years ago, too many companies are already enjoying sweetheart deals. Since then, NYPA appears to be making allocations that get a better bang for the buck.

It's good to hear that Kessel recognizes his authority needs to do a better job finding takers for its unused inventory of low-cost hydropower. At the same time, NYPA needs to make prudent decisions that make the most of a very valuable economic development tool.

As for Higgins, the success of his tactic of using the bill as a starting point to negotiate better terms for WNY will depend partly on whether this community's Do Nothings close ranks with him to Do Something.

We'll soon find out.


New York Power Authority
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