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While Western New York faces an impending crisis in how low-cost hydropower is allocated, there's also a longer-range power debate in progress. In 2007, the New York Power Authority's 50-year license to operate the Niagara Power Project in Lewiston expires. The relicensing application process already is under way.
Many see relicensing as an opportunity to end an aggravating mandate that 10 percent of Niagara's cheap hydropower be sold to neighboring states because federal dollars were used to build the project. But pushing to keep some or all of that power during future decades also could trigger calls for even more power-sharing.
"We're the host community," said Assemblyman Brian Higgins, D- Buffalo, a crusader for localized Niagara hydropower benefits. "Our economic situation here is extraordinarily depressed, and more than any other region of the state, we still have 20 percent of our work force in manufacturing. This issue is very, very critical. This community is being severely shortchanged when it comes to the benefits of the Niagara Power Project."
Relicensing is a complex process, with work under way now by the only current contender -- the power authority -- to build a community consensus that will make the decision easier for the Federal Energy Regulatory Commission as it considers whether to grant a new 30-, 40- or 50-year license.
By law, FERC has to consider both power and non-power issues. That translates into a series of workshops and hearings on environmental, recreational and other issues -- and on what benefits the power project should offer the "host communities" that sacrificed land and tax revenues when the federal project was built in the 1950s.
Communities now are working on "wish lists" for those negotiations. A similar process just concluded for the authority's power project on the St. Lawrence River involved substantial payments in lieu of taxes, the return of unused lands, compensation for power-project economic, environmental and other impacts and money for a museum and other projects. Similar requests will be made here.
The problem is that those host-community benefits cost money, which eventually is raised through the price charged for Niagara electricity. While communities like Lewiston deserve compensation for their continued loss of property tax revenue, there is also a regional need to keep power costs down. That balance will be addressed in the relicensing agreement.
Local advocates also want to recapture the 10 percent of Niagara power that now goes out-of-state -- an effort that would require rewriting federal law -- and they want a better accounting from the power authority itself.
Higgins has asked the state comptroller's office for an audit of the power project and its allocations, hoping that a current $300 million upgrade at the facility will generate far more new electricity than the authority says it will. Whatever new power is produced by the upgrade should stay in Western New York, Higgins said.
Much of Niagara's power already is being sent out of Western New York, Higgins added, citing a 1996 audit that found the authority shifting Niagara electricity to money-losing power plants in other parts of the state.
But that question is not a matter that will be taken up in relicensing. Allocation is a function of federal law. And that law specifies that a tenth of Niagara's power be sold at very low cost to seven "neighboring states," power that Higgins wants to recapture for Western New York. Requiring New York to share 10 percent of Niagara Falls hydropower with other states is like demanding that Florida share its sunshine, he said.
But others aren't so eager to pursue the changes in federal law that would be needed to recapture more of that lost juice.
Consider this: The Niagara Power Project already has 70 megawatts of industrial hydropower that is going unclaimed. It's the silver lining in a very dark cloud, a pool of returned electricity left behind by departing industries. Recent breakthrough agreements between the power authority, Niagara Mohawk and local development agencies now make it easier to use that power as a marketing tool, but there have been no takers so far.
Kelly Brannen, managing director of Niacet Corp. in Niagara Falls, contends the unclaimed 70-megawatt pool of power is a "blip in time" that will evaporate once the economy improves. Historically, companies have been waiting in line for the cheap power, he said.
Brannen may well be right. And if and when the economy improves and that 70 megawatts is allocated, Western New York may wish it had some of the cheap hydropower that goes to neighboring states.
But the problem now is timing. How strongly can Western New York make the case to keep more of the power that goes out of state when it already has more cheap power than it can sell? In addition, there is risk in going after that power. Western New York and the state have fewer congressional seats than they had in 1957 when the license was first granted. That means if this question is put on the table, other states have more muscle in the fight to gain an even larger share of Niagara hydropower.
"There's always a danger when you try to do a reopener," said Assembly Majority Leader Paul Tokasz, D-Cheektowaga, "because then everyone gets to put their hand in the cookie jar."
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