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Buffalo is withholding nearly $4 million owed to Niagara Mohawk Power Corp. for street lighting in an attempt to force the power company to settle long-standing billing disputes, officials revealed Friday.

Since last spring, when the withholding began, $3.8 million in unpaid electric charges from two billings that go out monthly have been collecting dust in a City Hall office. This does not include late charges of 1.5 percent, according to the city's August billing statement.

"They (public works officials) tell me not to pay them, so I just keep stacking up the bills," James Zern, supervisor of street lighting said, displaying a pile of company invoices.

"We're looking for whatever leverage we have . . . One way we have is to not pay the bills . . . ," Public Works Commissioner Joseph N. Giambra said, calling the tactic, "one of the only means of protest we have."

Steve Brady, spokesman for Niagara Mohawk, said Friday, "The operations guys are aware that the bills have not been paid for some time, but we're not going to comment on anybody's intentions."

Giambra said power company officials finally began inquiring about the unpaid bills about five weeks ago.

"I've had a couple of calls asking why . . . I told them it was our thought that it would bring them to the table a lot quicker," Giambra said.

The action was started in March after Buffalo officials negotiated unsuccessfully for seven months with NiMo representatives regarding overbilling claims. The city claims it was overbilled $875,000 over a 20-year period for electricity at two facilities.

The strategy appears to be working, officials say, because power company officials have recently agreed to mediation in hopes of resolving a variety of outstanding issues with Buffalo.

According to Giambra, officials hope to begin talks with the company in early November along with a mediator from the state Public Service Commission.

The withholding strategy grew out of a Common Council meeting in February during which lawmakers complained the city was "treating the company with kid gloves."

Following that meeting, Giambra said he informed Mayor Masiello that his office would ignore the lighting bills until the city's issues were addressed.

"We are withholding the payments . . . The mayor is aware of it," Giambra said Friday.

According to Masiello spokesman Peter K. Cutler, the mayor did not wish to comment.

Going into mediation sessions, the city also is expected to pursue three other major issues in addition to its $850,000 claim:

* Phantom lights -- A city rate consultant charges that Buffalo is owed more than $1 million for hundreds of lights for which the company erroneously billed the city in the 1970s and 1980s. Buffalo paid for about 1,300 street lights that did not exist -- an error that persisted for 15 years and continued even after city officials protested.

* More overbillings -- Company officials recently offered to cut $900,000 from Buffalo's $8 million annual street lighting bill, leaving city officials to wonder if they're still being overcharged, Giambra says.

* Municipalization -- Buffalo has a "compelling case" for saving an estimated $1.7 million a year by taking over its street light system, a utility consultant claims.

Using Niagara Mohawk's figures, consultant Daniel Duthie claims Buffalo can cut costs by municipalizing -- even after buying all 33,000 lights and paying large "exit fees" demanded by the utility.

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