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Power coalition charges up Niagara group must now decide which way to go with the electric flow

They negotiated for it. They got it. Now they have to decide how to use it.

The seven members of the Niagara Power Coalition have a year and a half to plan how to distribute more than 25 megawatts of low-cost power they will receive as part of the New York Power Authority relicensing agreement.

Coalition members will receive the power, along with at least $8 million a year, each year for 50 years to compensate for the impact of the Niagara Power Project in Lewiston.

The money will be used to improve the economic and natural environment in western Niagara County. But the municipal electricity will be important, too.

"Power is king, but I'm not sure themembers realized that when they accepted this power, they became a utility," said Robert Murray of the Harris Beach law firm, which works for the coalition. "They won't be generating the electricity, but they must distribute it -- and it's use it or lose it."

Members of the Niagara Power Coalition include Niagara County, the City of Niagara Falls, the towns of Lewiston and Niagara and the Niagara Falls, Niagara-Wheatfield and Lewiston-Porter school districts.

>Benefit starts now

The new federal license to operate the Power Project for another half-century will not be issued until 2007, but the coalition will start seeing the benefit of the relicensing settlement this week, when each entity will receive a portion of an $8 million signing bonus.

The City of Niagara Falls and Lewiston will get $1.36 million; Niagara County and Town of Niagara, $1.04 million; Niagara Falls and Lewiston-Porter schools, $1.12 million; and Niagara-Wheatfield, $960,000.

In 2007, the distribution on the main agreement, called a $1 billion settlement, will begin. It includes $3 million in Greenway/Recreation funding per year to be divided among members; $5 million in annual host community funding, an amount expected to increase because it will be tied to the cost of electricity, which is likely to climb; and 25 megawatts of electricity. Lewiston will get an extra 3 megawatts recently added to the town's original 3.5 megawatt settlement.

>Distribution explained

David W. Koplas, director of operations for Fluent Energy, in Buffalo, recently met with the Niagara Power Coalition to explain how the distribution will work.

Electricity originating at a switchyard in the New York Power Authority must be transferred to the Niagara Power Coalition.

"It is the NPC's responsibility to arrange for the transmission from this origination point to each member facility," Koplas said.

He said the power must be managed on an hourly basis, and surplus power will be distributed on an agreed-upon schedule. A third party -- National Grid -- will continue to provide scheduling and billing.

Koplas told coalition members that the most efficient way to organize this utility would be to form a single municipal distribution agency, or MDA.

Murray and fellow Harris Beach lawyer R.J. Stappell learned that Niagara County formed an MDA in 1983 but never used this authority. Plans are to revive this agency.

Lewiston coalition members have balked at being included under an umbrella Niagara County agency. They have been discussing breaking off to form their own independent municipal distribution agency, which would include the Lewiston-Porter School District.

Stappell said a single authority would seem to be the most cost-efficient but agreed that the municipalities of Niagara Falls, Lewiston and the Town of Niagara should also form "shelf municipal distribution agencies," which can be used if any member wants to pull out of the single MDA.

School districts are not allowed to form a utility. A referendum is required to form a municipal distribution agency.

"A single MDA would maximize efficiency, but there is some mistrust that the county would become the dominant player," Stappell said. "We have to respect these concerns. We can't bind a future legislative body."

>Can't sell for profit

"The seven members need to decide if they want to help their own jurisdiction or the county as a whole," Stappell said.

"This is a historic opportunity for this community. This [type of settlement] has never occurred before. We need to have a clear understanding of how to use this power, and the how-to's must be discussed."
One megawatt is enough electricity to power about 1,000 homes.

The Niagara Power Coalition is not allowed to sell its power for profit. This rule was set up by the Power Authority to ensure that the coalition does not compete against the authority in an open market. The coalition members must use it, sell it at cost or lose it. However, the municipal distribution agency, as a utility, can buy additional power at wholesale costs, which is lower than market value.

Most coalition members plan to use the low-cost power for municipal buildings, helping bolster their taxpayer-supported budgets, and to provide to businesses to help spur economic development.

For example, Niagara Falls School Superintendent Carmen A. Granto said that the district plans to use its share to power schools and that electricity headed to Niagara Falls will be used to improve the city's economy.

>Lewiston's green goal

Lewiston is the exception. Town Board members there fought for a large settlement because the Power Project sits on 2,400 acres of nontaxable land all within the town. The town also provides fire and police protection to the Power Project.

The Town of Lewiston is relatively rural, with 18,000 residents. Its leaders fought for an additional 3 megawatts to bring their total to 6.5 megawatts. They plan to use much of their share of low-cost power to help lower electricity costs for residents.

"Most people prefer not to live in a heavily industrialized area," Supervisor Fred Newlin said. "They live in Lewiston because it is a nice place to raise a family. An example of good development would be to increase agri-business like vineyards and greenhouses. These are examples of nice clean business. We want to keep Lewiston green."

Newlin said residential electricity bills in the town could be reduced by a third.

Towns smaller than Lewiston have formed their own municipal distribution agencies, he said.

"A lot of the decision will be based on cost," he said.

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