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Low-cost power contracts extended ; Major WNY employers get assurance on rates

Major Western New York employers like Praxair, Ford Motor Co. and General Mills will get to keep their low-cost hydropower for another 10 years, under special contract extensions approved by Gov. David A. Paterson on Tuesday.

The contract extensions will ensure the continued supply of low-cost power to more than 100 leading companies in Western New York, protecting nearly 30,000 jobs and a combined annual payroll of over $2 billion, according to a release from the governor's office.

The new contracts also require the companies to create and maintain more jobs for the duration of the contract, and to make annual capital investments over the life of the agreements.

"The contractual arrangements that the New York Power Authority has reached for this power for years to come is in keeping with my administration's emphasis on using all the tools at our disposal to encourage and support the success of our state's businesses," Paterson said.

State law requires NYPA to provide hydropower from the Niagara Power Project to Western New York companies, either as "replacement power" or as "expansion power." Those programs, accounting for about one-third of the power output from the Lewiston plant, are reserved for businesses within 30 miles of the facility or in Chautauqua County. The rates are more than 50 percent less than current wholesale market prices in the state.

The contract extensions are mostly for seven years, from 2013 to 2020, after the current contracts expire. Besides Praxair, Ford and General Mills, other recipients of power from NYPA's Niagara Power Project are in the automotive, chemicals, metals, printing and food-processing industries, and include 3M Corp., DuPont and Nestle Purina.

Under the agreements, the businesses must meet a "base employment level" agreed upon in advance, and must make capital investments at their Western New York facilities that will total about $150 million over the duration of the contracts. Previously, capital investments were only required when the initial power allocation was awarded.

The companies must also conduct energy-efficiency audits and verify that they have implemented any recommended improvements.

"The long-term contract extensions I have approved today will serve as a cornerstone for Western New York manufacturers to manage production costs and operate competitively," Paterson said. "Niagara hydropower -- some of the lowest-cost power in the country -- is a tremendous asset for protecting and creating jobs and bringing about the expansion of crucial New York industries."

NYPA President and CEO Richard M. Kessel said the "long-term certainty of this power" will enable the energy-intensive companies to make "significant capital investments" in operations and compete effectively nationwide and overseas.

He said there is also a "multiplier effect" because the benefits of the low-cost power would extend to local suppliers and vendors with which the companies do business.

"The considerable economic activity that the hydropower customers generate in Western New York underscores the importance of the contract extensions," said D. Patrick Curley, a NYPA trustee from Orchard Park, noting that the companies employ 70 percent of the manufacturing jobs in the region. "In short, they have a sweeping impact."

e-mail: jepstein@buffnews.com

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