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Somerset power plant owner proposes conversion to data center

Somerset power plant owner proposes conversion to data center

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Somerset power plant

The Somerset Operating Co. power plant, shrouded in fog. (John Hickey/Buffalo News)

The owner of the mostly idle coal-burning power plant in Somerset has proposed a $650 million plan to convert it and another upstate coal-burning plant into data centers.

Local officials and union leaders are expected to support the Empire State Data Hub project during a news conference scheduled for Friday.

The Somerset project, priced at $550 million, depends on state assistance: $65 million in cash incentives from Empire State Development and other Albany agencies and 125 megawatts of low-cost electricity from the New York Power Authority, according to a release from Somerset Supervisor Daniel M. Engert.

Turning the Somerset power plant into a data center would create an estimated 160 full-time jobs, while the massive retrofit would employ about 500 union construction workers. At the Tompkins County site, the figures would be 25 to 30 permanent jobs and 100 construction jobs.

In an interview Thursday, Engert said Beowulf Energy, the plant's owner, has talked to NYPA, Empire State Development and Gov. Andrew M. Cuomo's office about the project.

Michael Enright, Beowulf's managing director, did not respond to a phone message Thursday.

A NYPA spokesman said the authority doesn't comment on its application process.

"ESD is engaged in discussions on these potential projects and stands ready to assist as possible," an Empire State Development spokeswoman said.

Engert said the state should support the retrofit of the plant, since Cuomo, in his view, bears responsibility for the plant's lack of economic viability.

"He announced his intention to have (the Department of Environmental Conservation) write regulations to make it impossible for a coal plant to operate in New York State, to basically kill coal," Engert said. "We're hoping the governor would step up and support this."

"The state stands ready to help workers and communities transition to a clean energy future through the Governor's Clean Climate Careers initiative created to address the needs of the local communities affected by any closures, as well as a host of clean energy programs to support transitioning these plants away from coal and its negative impacts on public health," Cuomo spokesman Jordan Levine said. "To that end, we look forward to working with Supervisor Engert and the Town of Somerset now that these regulations have been adopted."

Reusing the power plant also would help prop up the local tax base.

Tax breaks from the Niagara County Industrial Development Agency have steadily reduced the plant's tax bill. The Somerset Operating Co. plant on the shore of Lake Ontario still remains the largest property taxpayer in the town and the second largest in Niagara County. Its annual tax bill, which was more than $20 million 15 years ago, is now $3 million.

"We've been struggling for several years with declining revenues from the plant," Engert said.

Two months ago, The Buffalo News disclosed the plant had missed deadlines to make its payments in lieu of taxes, and at the time Engert said the company had told him of plans to construct a data center on vacant land. But now, the plan calls for converting the power plant.

In April, the company informed the NCIDA that it would seek to borrow $14.5 million on top of a current debt load of $33.5 million. But it didn't say why.

Plant manager Brian Gregson said Thursday that the plant's workforce, originally about 100 people, is down to about 60 because of attrition.

"The plant was down 340 days out of 365 last year," Engert said.

"It's a good way to retrofit an aging structure that doesn't really have any other purpose," said Kory Schuler, president of the Niagara USA Chamber, which supports the project.

He also said a large project at the 1,800-acre site on Lake Road would be "an anti-Apex project," bringing more benefits to the town than the Lighthouse Wind project from Apex Clean Energy. Somerset has been fighting the wind power project since 2015.

Earlier this year, Apex closed its Barker office and announced it would not apply for state approval for its project this year. Engert pronounced the wind project dead, but the company denied that.

The Somerset power plant was built more than 30 years ago by New York State Electric & Gas Corp. Beowulf acquired the Somerset plant and the Cayuga plant in Tompkins County in 2015 in the wake of the 2012 bankruptcy by its later owners, AES Eastern Energy, which left the plants in the hands of their creditors.

"They've been proactive," Engert said of Beowulf. "They want to continue and even increase their investment."

As for customers for the proposed data center, Engert said he is aware of "a very, very large client waiting for the project to get blessed," but he said he is not at liberty to identify the client.

The Buffalo News: Good Morning, Buffalo

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