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Smart study on dumb use of discounted power

In 2001 the New York Power Authority paid consultants to tell them what they didn't want to hear -- that the entrenched Replacement and Expansion Power program providing cheap hydropower to some 100 industries in Western New York wasn't working very well. Among other things, the report the team of mostly UB professors produced determined that 85 percent of the hydropower could be put to more effective use.

Then, in the waning days of George Pataki's days as governor, a blue ribbon panel charged with studying the state's nine discounted power programs, including the aforementioned Replacement and Expansion Power, said an overhaul was in order from Long Island all the way to Niagara Falls.

In 2007, The Buffalo News published an investigation I wrote that can be summed up with this line lifted from the main story: "The region is home to cheap power, high rates and huge corporate subsidies to a select few."

And the beat goes on.

Today, the Citizens Budget Commission releases a well-researched study of the state's nine discount power programs.

Its conclusion: Throw the circuit break on them and start over.

The programs, set up by legislation and managed by the Power Authority, all leave a lot to be desired, the study said. They don't align with the state's energy and economic development objectives and are tough to quantify and qualify because NYPA shields cost information from the public.

That's the bad news.

The worse news: The hydropower programs - Replacement and Expansion Power in our backyard and Preservation Power in Massena, which amounts to a huge handout to Alcoa -- are the least-efficient programs of all.

Consider these numbers from the Budget Commission's study, lifted from my story today:

Discounts for other discount programs offered by the state range from $247 to $630 per job per year. For the hydro programs, the cost ranges from $5,836 to $7,883 annually per job.

A look at the major recipients of low-cost hydropower customers in Erie and Niagara counties further drove home the point.

Statewide, the authority allocated on average 4.4 kilowatts of power for every job created or preserved. But the allocation for Olin Corp. in Niagara Falls works out to 497 kilowatts per job. The allocation is 244 per kilowatt per job for BOC Gases in Buffalo and 202 for Occidental Chemical in Niagara Falls.

Ah yes, good old Olin and Occidental. As I reported in my 2007 investigation:

Olin gets a $24 million annual subsidy -- an estimated $150,359 per job. Occidental gets a $28.7 million subsidy -- calculated at $111,144 per job.

Occidental's employment has dropped over the past three decades to about 200 today, but the pay is pretty good, in the $40,000 to $60,000 range.

Candace Jaunzemis, Occidental's plant manager, noted the facility's current payroll, including benefits, is about $20 million a year.

The value of its discounted power is some $29 million.

Therein lies the problem.

You'd think the state lawmakers whose legislation allows for this would be shamed into action. But it hasn't happened.

Not when George Maziarz - who is now incessantly yapping about NYPA's shortcomings, real and imagined - was a power on the Senate Energy Committee back when the Republicans were in change.

And not ever when Robin Schimminger sat, and continues to sit, as chairman of the Assembly's Committee on Economic Development, Job Creation, Commerce and Industry.

Most of the legislation governing the nine power programs is coming up on expiration, as are most of the authority's contracts with replacement and Expansion Power customers. Thus, an opportunity presents itself.

Rest assured, the Olins and Occidentals of the world are lobbying behind the scenes for a continuation of the status quo. There is no organized voice for change, but a few brave folks like Niagara Falls Mayor Paul Dyster are saying something has to give. So maybe there's hope.

After all, Gov. Paterson's folks reacted to the upcoming expiration of the legislation authorizing Empire Zones by proposing that the program be chucked.

I know this is short notice, but five Senate and Assembly committee chairmen. including the heads of both Energy Committees, are holding a hearing at 3 p.m. today at the offices of the Buffalo-Niagara Partnership, 665 Main Street, to take public comment on the future of the state's power programs.

On Wednesday, they'll do it all again at Niagara Falls City Hall at 10 a.m. The meeting notice for this hearing says the testimony is by invitation only, so you might want to get on the stick if you want to be heard.


Economic Development | New York Power Authority | State government
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