Thursday, April 29, 2010
Low-cost electricity that benefits WNY may shift to statewide program for businesses
By David Robinson
A chunk of cheap electricity that now helps hold down the monthly power bills of Western New Yorkers and other upstate residents could be snatched away and used as the cornerstone of a plan to expand a program that provides inexpensive electricity to businesses statewide.
Supporters say the proposed shift would make better use of a valuable resource that currently saves upstate residents just a few dollars a month, when it could be turned into a powerful tool to create jobs.
But critics say the proposal is another power grab by downstate interests that will prevent businesses from Buffalo Niagara to Albany from reaping all of the benefits from one of upstate's most valuable economic resources.
"To me, it's really just a theft of a regional asset," said Assemblyman William L. Parment, D-North Harmony.
At issue is the future of the state's Power for Jobs program that provides low-cost electricity to 440 businesses and nonprofit groups across the state.
While four competing proposals — one from Gov. David A. Paterson and three from state legislators — are being discussed, the existing program is set to expire May 15.
Each of the proposals would expand the availability of low-cost power to businesses by taking the 455 megawatts of low-cost hydropower that now is used to reduce upstate utility bills by an average of $2 to $4 a month and shifting that electricity to businesses.
That move would more than double the amount of reduced-cost power available to businesses under a program that currently supports 440 companies that provide nearly 240,000 jobs statewide. A total of 72 companies with nearly 14,400 employees in Erie and Niagara counties receive more than 36 megawatts of low-cost power through the program, which typically costs 5 percent to 20 percent less than market rates.
Supporters of the shift contend that using the power to encourage business growth will provide a much greater economic boost to the state by creating or retaining jobs, rather than providing upstate consumers with a small savings on their electric bills.
Critics, however, say the reallocation will shift electricity that currently benefits only upstate consumers and put it into an economic-development program that operates statewide.
One of the bills, from State Sen. George D. Maziarz, R-Newfane, would allow companies statewide to participate in the expanded program, but upstate recipients would reap far greater cost savings than firms downstate.
"I think upstate has to be given preference," said Maziarz, the chairman of the Senate's Energy Committee.
Parment, for instance, said he would support a plan that moved the residential electricity into the economic-development program if it limited its use to businesses located within the areas served by National Grid, New York State Electric & Gas and Rochester Gas & Electric — the only utilities that now benefit from the low-cost "rural and domestic" power.
But Andrew J. Rudnick, president of the Buffalo Niagara Partnership, said he doubts such an approach would win approval in the State Legislature.
That puts upstate business interests in a sticky position. On the one hand, they can go along with an enlarged statewide Power for Jobs program that will benefit more businesses upstate and also includes new guidelines that would help prevent past abuses, which in the past has seen cheap electricity flow to downstate nonprofits, including a Boys & Girls Club in the Bronx.
Or they can fight an uphill battle politically to keep the power exclusively upstate, and risk a stalemate that could jeopardize the entire Power for Jobs program, said Rudnick, whose group has long advocated converting the residential power into an economic-development tool.
Paterson administration officials defended taking what is now a benefit for upstate residential customers and spreading it around to industrial and commercial users across the state. They said upstate manufacturers will be heavy beneficiaries of the additional power allotment.
"It's a statewide asset. Why should only one area be able to take advantage of that asset?" said Thomas Congdon, Paterson's deputy secretary for energy.
Each of the proposals would try to offset the impact of the shift in varying ways. The Paterson proposal would offset the costs entirely for one year by providing a $70 million subsidy funded by the Power Authority that then would phase out in equal increments over the following five years. The Paterson proposal also would provide a $5 monthly credit to low-income customers and create a $10 million program to fund energy-efficiency improvements by consumers, a 38 percent increase from current funding levels.
Paterson vowed Wednesday that he will not settle for anything less than a long-term extension of the program after five years of stopgap, one-year extensions that the governor and business leaders have said makes long-term planning difficult.
Richard M. Kessel, the Power Authority's president and chief executive officer, said the Paterson plan would remove a legislative roadblock that has prevented new companies from enrolling in the program in recent years. He also noted that the Power Authority must walk a fine line as it reviews the qualifications of existing recipients at a time when jobs are scarce and the economy is sputtering.
Meanwhile, Sen. Charles E. Schumer, D-N.Y, wrote a letter to Kessel, urging him to craft a longer-term energy agreement with Steuben Foods of Elma.
The food company is planning a major expansion, but the Power Authority only offered Steuben a seven-year contract for low-cost hydropower — even though the agency also offers 10- and 15-year contracts. A longer contract would help the company with its expansion plans, Schumer said.
Tom Precious of The News Albany Bureau and News Washington Bureau Chief Jerry Zremski contributed to this report.