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EXCESS POWER CALLED AN UNUSED RESOURCE

The low-cost electricity program started 50 years ago to support Western New York industry leaves a large amount of electricity unused every day.

Nearly 15 percent of the low-cost power meant to create and sustain industrial jobs in the region, allocated from the Niagara Power Project, instead becomes a small credit for Niagara Mohawk's residential customers across New York State.

The 63 megawatts -- enough to power approximately 88,200 homes -- works out to a monthly average discount of $2.11 for Niagara Mohawk's 1.5 million household accounts, a company spokesman said.

This unused power stems from Western New York's declining industrial sector, but lawmakers and business leaders in the region say it also ignores the region's changing economy. After preserving the low-cost power program with legislation, they said, the region must figure out how to use it to help a wider variety of businesses.

"We need to take advantage of that asset," said Andrew J. Rudnick, president of the Buffalo Niagara Partnership.

A bill to make permanent all 445 megawatts in the so-called "replacement power" program passed the State Senate last month. The bill needs to be passed in the Assembly and signed by the governor -- the sooner the better, elected officials and business leaders agree.

"The legislation is an absolutely necessary first step," Rudnick said. "But it isn't a sufficient step, I think, for strategic economic development needs for our region in the 21st century."

The discussion over how to better harness the 63 megawatts left unused is just beginning.

Assembly Majority Leader Paul Tokasz, D-Cheektowaga, said that the replacement power bill has to be passed first, protecting the 24,000 jobs across Western New York relying on the cut-rate electricity.

"I think we can deal with the unallocated megawatts in a way that makes sense, but I don't think we have to do it now," Tokasz said. "I don't think there's a danger of any of this slipping away."

Bill failed last year

State Sen. George Maziarz, R-Newfane, a co-sponsor of the measure, agreed. "The minute the governor signs it, we then start discussions on the 'loose juice.' "

Local legislators thought the bill was headed for passage last fall, only to run afoul of an upstate senator, James Wright of Watertown, who held up the measure while asking for similar lower-cost power from the Massena hydroelectric project in his district.

Those objections have been resolved, Maziarz said. The bill is in the Assembly's hands now. "They passed it last year, so there shouldn't be any problem over there," he said.

The unused power in the program doesn't go to waste now, said Niagara Mohawk spokesman Steve Brady. It's converted into a credit for the company's residential customers across New York State. In 2004, the credits were worth $38 million, Brady said.

Rudnick and others would like to see that value steered toward economic development in Western New York communities.

But as a matter of public policy, taking dollars away from residents isn't simple, Tokasz said. The question is, "can you do a better public good with it by using it as an economic development tool, or a power-for-jobs tool?"

Proposals to use power

There are two main suggestions to change the way the stranded power gets used, Rudnick said.

First, the criteria for eligible companies could be broadened, he said. If the current bill is passed, the electricity will be available under the "expansion power" law, which has less restrictive rules than replacement power. But that definition of eligible firms would still exclude some businesses, including retail establishments such as the Bass Pro outlet planned for the dormant Memorial Auditorium.

A more significant change would be selling the extra power on the open market and using the cash for a regional economic development fund, Rudnick said.

Development fund

Take some for a major tourist destination in Niagara Falls, for example, like the proposed Niagara Experience Center. "It wouldn't be something that would need a lot of hydropower," Rudnick said, "but if it got funding to pay off loans or build a piece of infrastructure, that could have a strategic economic impact on the region, just from the revenue."

Tokasz said he'd look at the suggestion of turning the unallocated low-cost power into a development fund. But he warned that it will be questioned by communities currently denied low-cost power because it is restricted to 30 miles from the Niagara Power Project.

"What about facilities that are in the Rochester area, or communities south of Buffalo beyond the 30-mile radius?" he said. "They may say, 'Listen, I have high energy costs. Why can't I qualify?' "

Any suggestion of changing the present bill has been strongly resisted by industry representatives and Western New York's Albany delegation, who say the bill must become law before adding new complications.

Every day the bill isn't passed makes it harder for companies considering investments in Niagara and Erie counties, said Assemblywoman Francine DelMonte, D-Lewiston. They "need to hear that this commitment is secure," said DelMonte. "That has to be our top priority."

Bill's passage is vital

If legislators insist on dealing with the leftover power before they pass the bill, that could jeopardize the bill altogether, said James Rouse of Praxair, a company that has been allocated 46 megawatts for its Niagara Falls plant, which produces hydrogen and other products.

The Western New York economy is like a person in dire straits, Rouse said. "Keep the patient alive and healthy," he said, "and then you can work on vitamins and minerals and all sorts of other things to improve the patient's health."

The Power Authority will do whatever the Legislature directs, said spokesman Jack Murphy.

"We don't make the call on issues like this," Murphy said. "That's up to the Legislature."

e-mail: agalarneau@buffnews.com

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