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National Fuel Gas Corp. will ask the state for permission to use half the $1.9 million it was paid by the city in the Hurd overtaxation case for charitable purposes.

The plan is the result of a deal struck between the utility and Citizens Alliance and calls for the money to be spent on several energy programs benefiting low-income residents of the Buffalo area. The remaining half of the money would go to National Fuel stockholders.

The split is National Fuel's attempt to do something for the community with the money it received as part of the settlement of the Hurd case, said company spokesman Gerald Miller. The courts have ordered the city to repay property owners, of which National Fuel was one of the largest, who were overtaxed in the 1970s.

"We feel we won the case, but at the same time we'd like to flow some of the money back to the community," Miller said.

The idea originated with Citizens Alliance, a National Fuel watchdog. Kenneth Sherman, the organization's director, believes the arrangement, if approved by the Public Service Commission, would be good for both the company and community.

National Fuel, he said, would receive both favorable publicity and money for its shareholders. The community, meanwhile, would get several worthwhile programs funded.

"This will meet the energy needs of low-income people," Sherman said.

The money would go toward programs that help the low-income residents pay their heating bills and make energy improvements to their homes as well as a revolving loan program to help construct energy efficient housing.

Sherman cautioned that PSC approval is not automatic and that the commission could change the split. He said the commission usually likes to see funds such as the Hurd refund be returned to consumers. But he expressed confidence that the PSC will approve some variation of the National Fuel proposal, although it probably will take at least four months to reach a decision.

He added that his organization will petition the commission in support of National Fuel's request.

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