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NIAGARA MOHAWK AND STATE REACH TENTATIVE PACT TO RESTRUCTURE UTILITY

A tentative agreement was reached by state government and Niagara Mohawk Power Corp. negotiators Thursday to restructure the utility in a way that eventually will introduce competition into the upstate electricity market.

How historic the deal is, however, remains uncertain, since the sides -- staffers at the state Public Service Commission, Niagara Mohawk and an undisclosed "number of other parties" -- were keeping secret all details of their self-described "agreement in principle."

Niagara Mohawk Chairman William E. Davis said the agreement "will help revitalize the upstate economy and help restore Niagara Mohawk's financial health." But he said the parties haven't signed any written pact yet "and several issues remain open for continued negotiations." He did not say what those are.

The characterization of the deal as being an "agreement in principle" reminded many observers of the "conceptual" deals reached over the years on the state budget. Often, such "deals" then took weeks or months to be finalized. But the utility said it was pushing the deal on an expedited schedule.

Details, however, could remain secret until Oct. 10, when the PSC is tentatively scheduled to receive the pact.

The secrecy prompted an angry rebuke from several interested groups, who said the negotiators were trying to shield a deal that won't be good for residential ratepayers, small businesses or the environment.

They said if the pact was particularly good for Niagara Mohawk residential customers -- who didn't fare as well under a recent Niagara Mohawk rate proposal -- the sides would have rushed to announce the deal's details instead of handing out late in the day a six-paragraph statement offering only generalities.

"It makes me angrier than had they said absolutely nothing. This indicates that the upcoming agreement will do precious little to benefit consumers but only meet the same old PSC objectives of bailing out NiMo and giving big rate breaks to industrial customers," said Robert Ceisler, executive director of the Citizens Utility Board, a consumer group.

Ceisler had been sitting in on the negotiations until several weeks ago when he leaked out details that the utility was pushing a plan for a 25 percent rate cut for big industrial users but only a 2 percent reduction for residential users. Later, he said residential users would actually end up with a hike in their energy bill over five years. Ceisler believes the tentative deal reached Thursday probably didn't change much from the one on the table when he was removed from the talks.

But even negotiators for the big industrial companies weren't rushing to embrace the deal. "We did not agree to it," said Barbara Brenner, an Albany lawyer who is representing some of the state's biggest industry firms, including Bethlehem Steel, Nabisco, GM and Praxair in Western New York.

"Maybe in the end it will work out, but we don't know," she said. Ms. Brenner declined to comment why her group opposes the tentative deal, but other sources said a number of groups at the table are concerned about the costs involved in a proposed bailout of Niagara Mohawk's expensive nuclear plants.

The utility sought to downplay the criticism. "I just want to assure you we worked very diligently to get the best possible deal for all of our customers and our goal is to reduce prices for all customer classes," said Kerry Burns, a spokeswoman at Niagara Mohawk's Syracuse headquarters.

The utility has 1.5 million customers across a 24,000-square-mile area in upstate New York. It's utility rates, critics have long maintained, are some of the highest in the nation.

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