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NRG urged to continue payments; Schumer says company should not turn its back on Chautauqua County if it closes power plant1

Sen. Charles E. Schumer is pushing NRG Energy to continue making $16.6 million in payments over the next two years to Dunkirk and other Chautauqua County governments, even if it moves ahead with its plan to mothball its coal-fired power plant in Dunkirk.

"Dunkirk residents and taxpayers have been upstanding community partners to NRG for years, and it would be absolutely unacceptable for NRG to turn its back on the students, residents and local officials in the community that it calls home," said Schumer, D-N.Y.

Schumer held a news conference Monday in Dunkirk to call attention to the major budget gaps that Chautauqua County governments would face if NRG stopped paying millions each year through a payment-in-lieu-of-taxes agreement. The company is expected to pay $8.6 million this year and $8.4 million in 2013 under the agreement, as well as $8.2 million in 2014.

The payments are divided among the Dunkirk City School District, which gets 49 percent; the City of Dunkirk, which gets 32 percent; and Chautauqua County, which gets 18 percent. NRG's payment is the biggest source of revenue for the City of Dunkirk, accounting for 23 percent of its revenue stream.

Dunkirk officials warned that residents and businesses would face service cuts and higher taxes if NRG were to stop making its payments under the PILOT agreement.

"Every aspect of city government and every resident and taxpayer that utilizes city services is affected in some manner as a result of these PILOT payments," said Dunkirk Mayor A.J. Dolce.

Gary Cerne, the Dunkirk school superintendent, said the prospect of either raising taxes or making "dramatic" cuts in staffing without the NRG funding "will leave behind a community and educational system that does not adequately serve the needs of its residents, young and old alike."

"It is difficult, if not painful, to conceive of the impact on our educational system should this revenue be lost," Cerne said.

NRG, which owns the 530-megawatt coal-fired power plant in Dunkirk, in mid-March filed a notice with the State Public Service Commission to mothball the plant by Sept. 10 unless it is determined that doing so will affect the reliability of the state's power grid.

NRG said the coal-fired plant has been losing money because it is too expensive to operate at a time when coal prices have been rising and the cost of natural gas has dropped to near 10-year lows.

More than half of New York's electricity generating capacity comes from power plants that have the capacity to burn natural gas, according to the New York State Independent System Operator, which manages the state's power grid.

NRG executives have said the Dunkirk plant's best hope is a PSC ruling that says mothballing the facility would put the reliability of the state's power supplies at risk. If that's the case, the PSC could mandate that NRG and National Grid work out a deal to buy the plant's electricity -- possibly from as little as one of its four units -- to keep the facility operating and ready to ramp up production when it's needed.

But even if the Dunkirk plant continued to operate on a scaled-back basis, that still could have an impact on the PILOT payments, which are linked to the plant's output.