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Crumbling and dirty, the Huntley Station was sold at a bargain-basement price just a year ago.

Yet now there's talk of the Town of Tonawanda electrical power plant getting a $50 million face lift and possibly a $250 million expansion.

What a difference a day makes -- especially when the day brings a $4 million tax break.

With the electrical power industry changing rapidly as deregulation took hold in recent years, the aging coal-fired plant on the Niagara River was, some feared, on its way to becoming a thing of the past -- another failed business in a community that has seen too many close their doors in recent decades.

But with a new owner intent on being a big player in the power generation business, and now a revamped taxing structure, the talk has turned to the future.

It's a future that already includes a $50 million infusion to make the power generating station more efficient and also install anti-pollution devices at a plant critics say is one of the dirtiest in New York State.

Beyond that, local government officials are working to persuade Huntley's owners to invest some $250 million more in the plant, further expanding its production and cementing the company's commitment to the Buffalo area.

"We have to convince them we should be one of the facilities that gets one of these turbines," said County Executive Joel A. Giambra. "That will secure the future of the plant. That is the next sweepstakes."

Immediately after Huntley's property taxes were slashed this week by 25 percent, the plant owner, NRG Energy, put Huntley on a short list of sites being considered for the expansion, said Nancy Jones, NRG's commercial asset manager at the plant.

The expansion would involve installing a new gas turbine at the plant, which is currently exclusively coal-fired. The plant now can generate up to 760 megawatts with its six units -- enough to meet all the electricity needs in a city the size of Buffalo, or handle about 5 percent of the state's demand for electricity on a typical day.

An expansion would add about 25 jobs at the facility and create an estimated 125 construction jobs, Jones said. With an existing work force of 123 people, the plant is not labor-intensive.

But if Huntley is selected, it would significantly increase production at the facility, officials said. It also would diversify Huntley's fuel base, making it less dependent on the economic and environmental viability of coal. Though that doesn't necessary translate into lower energy costs locally, it does increase the overall generating capacity in the state, helping to keep electric prices down.

What's more, a $250 million expansion could mean additional tax revenue to local governments -- possibly offsetting some of the revenue lost with the recent deal, though major tax breaks would certainly be negotiated.

But the key benefit to having the turbines come to Huntley, said Ronald Coan, executive director of the Erie County Industrial Development Agency, is that it would ensure the plant's future on River Road in Tonawanda.

"This facility is so large a component of the tax base that it has to be dealt with," Coan said. "We have bought the plant survival for 10 years to 20 years with its tax cut and ($50 million investment). If they put the gas turbine in there, this is going to be so your children's children are able to enjoy it. It will give permanency to the facility."

NRG has purchased 13 gas and steam turbines, which could end up in any of its 191 plants worldwide, Jones said.

Within a month or so, she said, NRG will be announcing all of the other facilities that have made the short list. NRG will do further engineering, marketing and environmental studies before deciding which plants will get the new turbines. But it would be a couple of years after that decision before the new turbines are installed.

The Huntley purchase by NRG -- and the possible expansion -- fits squarely with the company's approach to the power generation business.

As states deregulate their electric markets and regulators force utilities to sell their power plants to spur competition, companies like NRG are snapping them up like a hungry alligator, refurbishing and expanding them.

The Huntley plant, which has some units that date back to the 1940s, had been owned by Niagara Mohawk, which was forced by state regulators to sell off its power plants in the late 1990s and focus instead on its power transmission business.

The plant was assessed by the Town of Tonawanda at $230.8 million. NRG bought the Huntley Station and a sister plant in Dunkirk for $355 million last year.

Given the sale price, which was below the plants' book value of $370 million, government officials said, they felt compelled to settle the ongoing tax dispute over the Huntley property. NRG officials had contended that the plants paid five to 10 times more taxes than other comparable coal plants throughout the country.

Under the deal announced Tuesday, the assessment was dropped to $173 million, and the annual property tax bill slashed over five years from $15 million to $11 million.

As part of the agreement, Niagara Mohawk and NRG dropped a lawsuit asking for a 40 percent assessment reduction and $62 million in refunds.

And now, NRG is showing a willingness to upgrade the plant as part of its larger goal.

"We can start looking to the future," Jones said.

The Minneapolis-based company, which has grown to be the world's fifth-biggest independent power producer in just 11 years, ultimately wants to be one of the three top players in its target markets, mainly United States, Great Britain, Central Europe and Australia. It's now No. 3 in the United States and No. 1 in Australia.

In all, the company owns all or part of 191 power generation projects throughout the world and controls more than 16,000 megawatts of generating capacity at those plants, which is enough electricity to provide all the power for nearly 16 million U.S. homes.

By the end of this year, NRG is expected to have 17,500 megawatts of generating capacity under its control, said Neil Stein, an analyst at Credit Suisse First Boston Corp.

NRG's power play has its roots in the ongoing push throughout the country to bring competition to electric markets where utilities had long enjoyed near-monopoly control. Under deregulation, utilities have been pushed to sell their generating plants to create a competitive market for producing electricity in hopes of driving down power costs and improving efficiency.

NRG was formed in 1989 when top executives at Northern States Power Co., a Midwestern utility, decided to get ready for deregulation by forming NRG, which then could expand into new markets and provide the size and scope that company officials believed would be needed to thrive in a competitive market. Northern States still owns 82 percent of NRG after selling a minority stake to investors through an initial public offering in May.

The strategy is paying off. NRG has continued its buying binge. Within the last month, it has acquired a co-generation plant in Dover, Del., and a generating station in Louisiana that it plans to nearly triple in capacity by next summer.

"We really are trailblazers in acquiring utility assets," Jones said.

And with electricity prices remaining high through a combination of surging demand for power and a shortage of electrical generation capacity, NRG's profits have been soaring, too. Steven I. Fleishman, a Merrill Lynch & Co. analyst, predicts that NRG's earnings will grow at a 25 percent annual rate during the next five years.

While it can be costly to keep coal-powered plants in compliance with ever-tightening pollution standards, NRG officials said the Huntley station can generate electricity relatively inexpensively.

"In the universe of power producers, Huntley is a low-cost producer," Jones said.

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