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Spiraling energy costs are prompting Buffalo officials to take a serious look at a power-producing alternative that advocates claim could cut heating bills by at least 30 percent for government and institutional consumers.

Proponents of the Buffalo Co-generation Project contend the system eventually could be expanded into some residential communities.

Co-generation uses generators to produce electricity and thermal energy, or heat. While building and operating such a plant is cost-prohibitive for a single user, several thousand regions worldwide use such facilities to produce power for large blocks of customers.

In fact, co-generating plants are being used to power a large part of Manhattan, according to Morris A. Pierce, an energy researcher at the University of Rochester.

"This is a chance for Buffalo to take charge of its energy future," Morris told city officials during a recent presentation. "Your region faces some of the highest energy costs in the country, and those costs will continue to rise unless some radical steps are taken."

The Common Council directed city officials Tuesday to prepare a request for proposals from companies involved in co-generation.

Early talks with outside experts have given city officials reason to be optimistic that some long-term strategies can be used to substantially cut energy costs, said Delaware Council Member Marc A. Coppola, chairman of the Energy Committee. His panel has met with representatives from Buffalo Thermal, a company that is actively courting the city.

Mayor Anthony M. Masiello agreed that co-generation could help make the city more competitive with other regions in energy costs.

"Co-generation could be our gold of the future," Masiello said. "It really has unlimited potential when you look up the road several years."

Advocates estimate that a district energy system could reduce heating costs by 30 percent to 50 percent. In St. Paul, Minn., for example, bills have not risen in more than three years.

But even the most ardent backers concede that the project faces many challenges. A 33-page plan currently under review calls for the city to become the anchor customer. A not-for-profit corporation would be established to own the system's assets. The project would be operated by a commercial entity.

The city would help land other large-scale energy users as initial customers, then one or more co-generating plants would be built.

Pierce said the project could be financed with tax-exempt bonds issued through the Erie County Industrial Development Agency.

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