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Somerset power plant will be a seasonal operation, president says

WHEATFIELD – The soon-to-be-sold Somerset Operating Co. power plant is operating at only 30 percent of capacity and likely will run only in the summer and winter for the foreseeable future, the company’s president said Wednesday.

Jack White went before the board of the Niagara County Industrial Development Agency to apply for a revision of the coal-fired plant’s tax break. The board agreed to consider the request, but not without opposition.

The board voted 5-2 to take the application, and scheduled a public hearing on it for 4 p.m. Jan. 12 in Somerset Town Hall. A vote is expected Jan. 20 on a two-year extension of the power plant’s payment-in-lieu-of-taxes, or PILOT, agreement, but at a reduced payment level.

For the next two years, the plant would pay a total of $4.62 million to Niagara County, the Town of Somerset and the Barker Central School District. That’s $500,000 less than it paid this year. A decade ago, the plant was paying more than $20 million in taxes, but a series of lawsuits and PILOT agreements have driven the bill down.

Despite the reductions, the plant is still the largest property taxpayer in Niagara County, and the three taxing entities have endorsed the request for a lower bill to keep some revenue coming and protect the 99 jobs at the plant.

National Grid executive Stephen F. Brady was one of the two board members to vote against considering the deal.

“I’m concerned about the future of the project, as I think everybody on the board is, but at this time there seems to be a void of information about what the turnaround strategy is,” Brady said.

White said, “The long-term future depends on your view of what’s happening in the state.”

He said the coal-burning Huntley and Dunkirk power plants seem headed for shutdown, and the Ginna and Fitzpatrick nuclear plants also are in trouble.

Rising coal prices combined with higher greenhouse gas emissions have made it difficult for coal-fired power plants to compete in recent years, especially with plunging natural gas prices driving down the cost of electricity produced by gas-fired plants.

IDA Chairman Henry M. Sloma said that in a meeting with the current owners several years ago, their strategy seemed to be to take advantage of the Somerset plant’s relatively clean emissions record and to wait for its competitors to go under – “to be the last plant standing,” as Somerset Town Supervisor Daniel M. Engert told The Buffalo News last week.

Renewable energy is on the upswing, White admitted, “but you’ll need central generating stations. The wind doesn’t blow all the time; the sun doesn’t shine all the time. Everybody understands that.”

The IDA board’s other opponent of the request, Kevin McCabe, said he’s “uncomfortable” with continuing a PILOT.

“This has been going on so long,” he said. “There’s got to be a limit.”

“I don’t think it’ll ever be without a PILOT,” White told the board. “I don’t think the local jurisdictions can accurately assess a power plant.”

He said the value of the plant is trending downward and that will be reflected in the sale price, which he would not disclose. The revised PILOT would be transferred to the buyer, but White said a revision on the tax break is not a condition of the sale by the current owners, Upstate New York Power Producers.