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Power deal revives proposal for steel plant Would bring 200 jobs, $200 million to area

A scuttled deal for a new steel manufacturing facility in Western New York is back on again, promising to bring $200 million in private investment and 200 permanent factory jobs.

Steel Development Co., which last spring backed off plans to build a facility in the Orleans County Town of Shelby following a dispute with the state over the availability of low-cost power, will proceed with the plant in either its originally proposed location or some other spot in Western New York, a senior aide to Gov. David A. Paterson told The Buffalo News on Monday.

A precise location for the new plant is uncertain, a state source said, though it must be within 30 miles of the Niagara Power Project for the company to receive a low-cost power allotment.

The Mississippi-based company selected New York over sites in Mississippi, North Carolina and Texas, state officials said.

Steel Development canceled its factory plans in April when the New York Power Authority declined the company's request for an allocation of 34 megawatts of low-cost hydropower.

The Paterson administration; the Power Authority; Empire State Development Corp., which is the state's lead job-creation agency; National Grid; and Steel Development have been in talks since the spring to rework the various offers to lure the company to Western New York.

The Power Authority board is expected to approve the low-cost power deal for Steel Development at a board meeting today in Albany, said a senior Paterson administration official, who spoke on condition of anonymity.

Steel Development officials were not available for comment.

The new deal calls for the Power Authority to provide access to 18.7 megawatts of hydropower for a facility that needs 35 megawatts. The balance will be purchased by Steel Development on the open market. State officials said the authority's power will save the company about $5.4 million a year based on current market prices.

The company will also be getting tax credits through Empire State Development. Officials could not put a precise price tag on that incentive, though they said it would total less than the Power Authority package each year.

Steel Development first came knocking on the Power Authority's door for low-cost power several years ago. When it was rebuffed, it turned to Mississippi for its first production plant. That plant, under construction now in Amory, Miss., with a start-up date in 2010, is located on about 80 acres.

The proposed Western New York plant would be its second, state-of-the-art facility, which the company boasts is more environmentally friendly and efficient than traditional steel-fabrication factories.

Steel Development recycles steel by melting it down and reforming the new product into rebar for use in road and building construction.

State officials said the new Western New York plant, known as a mini-mill, is expected to open in 2011.

They said it is uncertain if the same site in the Town of Shelby will be selected for the new project, adding that the firm is still looking at locations in the region.

The company is tapping into a hydropower program that mandates its users be located within 30 miles of the Niagara Power Project in order to help keep jobs in Western New York.

The facility is expected to create up to 1,000 temporary construction jobs and 200 permanent factory jobs that will pay $50,000 a year on average. Steel Development is investing $200 million in the facility.

Paterson, who will be in the Buffalo area today and back again Wednesday for the annual fall meeting of the state Democratic Party, declined to comment until after the Power Authority board vote.

But Paterson, who is running for governor in 2010 despite overtures from the White House that he drop out, will likely tout the latest economic development news to try to prop up his sliding poll numbers in Western New York.

The Power Authority was slammed by critics in the spring after the Steel Development plan fell through.

But officials say the authority is often asked by companies to provide more hydropower than is available either for current needs or to help lure other businesses by using low-cost power as a carrot.

At the time, Power Authority officials said giving the company all the low-cost energy it wanted would have resulted in not "much left over for any other businesses applying for hydropower."

Hydropower and job creation have long been a thorny issue in Western New York, where some politicians routinely say the region should be permitted to keep far more low-cost power than it does as a way to attract businesses.

Three years ago, a German chemical company, Wacker Chemie AG, walked away from plans to build a new facility in Niagara Falls when it could not get an adequate supply of power from the Power Authority.

e-mail: tprecious@buffnews.com

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