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$1.1B Niagara Power Project upgrade is NYPA's biggest investment ever

ALBANY – The New York Power Authority will invest $1.1 billion in a massive modernization effort at the Niagara Power Project, the state’s largest producer of electricity.

The 15-year commitment is the largest single investment in the agency's history, according to Gil C. Quiniones, the power authority's president and CEO.

The authority owns the Lewiston facility, which was the western world’s largest hydropower plant when it opened in 1961. It's still the second most productive hydroelectric plant in the nation and is a crucial source of power for New York and seven other states.

But the equipment in the plant is showing its age. Some of it has never been replaced.

"Starting this program right now ... puts us in a good situation where we're not at risk for any imminent failures that could be catastrophic going forward," said Joseph Kessler, the authority's executive vice president and chief operating officer for utility operations.

"If we delay it any longer, we feel we're putting ourselves at risk," Kessler told the authority's Board of Trustees, which approved the work Tuesday.

Gov. Andrew M. Cuomo, in a statement announcing the investment Wednesday, said the project will help the state meet its ambitious plans to transition a carbon-free energy system throughout New York by 2040.

Kory Schuler, president of the Niagara USA Chamber of Commerce and a former Power Authority employee, said the project would update the facility with the "best and newest technologies to prevent any kind of power failure or the loss of production"

"It only takes one faulty switch, one relay, that can really affect the flow of power," said Schuler.

The project, intended to reduce the chance of a catastrophic failure, will be done as the hydropower plant continues to run full blast. It will include:

  • Replacing many of the system controls originally installed when the plant opened in 1961
  • ​Refurbishing the steel tubes that carry water to the generators

"Part of the complication of this is, nothing is being shut down to be modernized. This is changing the fan belt while driving 60 mph down the Thruway," John R. Koelmel, the board chairman, said during Tuesday's meeting. "That's part of the complication and part of the cost impact."

Cuomo called the investment – primarily focusing on the facility’s Robert Moses power plant – "extraordinary."

“The Niagara Power Project is New York’s largest source of clean electricity and this modernization project will allow it to continue operating for another 50 years," Cuomo said in a statement.

The Power Authority will fund the project on its own, using cash reserves and tax-exempt bonds.

"We believe this is highly financeable in the market," Lee Garza, senior vice president for financial operations and the authority's acting chief financial officer, told the authority Board of Trustees.

The authority has been mulling a life extension and modernization project for Niagara for some time, but now it's been dubbed Next Generation Niagara.

The first phase of work will begin later this year, and a Buffalo company, the State Group Inc., will be one of the big winners.

The State Group was awarded a $69 million, 14-year contract for work on the power plant's "penstocks."

The penstocks are the 13 long steel tubes behind the huge concrete wall visible to passing motorists along Interstate 190. They carry the water to the generators that actually produce the electricity.

The Niagara Power Project pictured in 2006. (Derek Gee/News file photo)

The contract covers construction of a temporary platform that will give workers access to the penstocks, as well as refurbishing the first three of the tubes. Contracts for refurbishing the other 10 penstocks will be awarded in future years.

"There's a significant amount of safety involved with that, and technical competence, and we're very comfortable with State Group," Kessler said.

Fabricating the temporary platform will be the first step in the project, starting before the end of the year.

Burns & McDonnell Consultants of Kansas City, Mo., won a $134 million, 14-year contract to supply equipment for the new integrated digital controls. In some cases, the original switches from the plant's 1961 opening are still in use.

"It wasn't necessarily 'low bid wins,' " Koelmel said at the trustees' meeting. "It was to ensure we had the right and high quality bidders here."

Neither Burns & McDonnell nor State Group were the lowest bidders on their respective contracts.

Also, a new backup control room is to be built, and the 630-ton crane that enables mechanical work at the plant will be refurbished.

"This is a great time to show what modernizing a facility can do, and the benefits, and the cost savings that it can have, not only to the project but to those who use the project for their power," Schuler said.

"We wanted to make sure the returns on such a significant investment were appropriate. In fact, they were more than appropriate," Koelmel said at the board meeting.

"A billion dollars is a lot of money. But to replicate that asset, it would be multiple factors of a billion," said Sarah Salati, a Power Authority executive vice president.

Lt. Gov. Kathy Hochul said the project will support jobs into the future while addressing climate change problems. While the administration said the facilities help support thousands of jobs, the future upgrades will lead to about 60 unionized construction jobs over the life of the project.

The administration said the project will be completed in four separate phases.

The federal government in 2007 awarded the Niagara facilities a license to operate for another 50 years, and the new equipment is intended to last that long.

"It's something we're proud of as well as excited about," Koelmel said.

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