Tonawanda News

August 26, 2012

POWERS THAT BE

Somerset Power Co. -- formerly AES -- up and running

BY BILL WOLCOTT, bill.wolcott@tonawanda-news.com
The Tonawanda News

Tonawanda News — SOMERSET — The Somerset Power Co. was going full blast for environmental testing last week while a half-dozen men outined coal-burning plant issues to state assemblywoman Jane Corwin.

Corwin, whose new 44th District will include five towns in Niagara County, was interested and receptive. The former AES coal-burning power plant, which will be in her territory on Jan. 1, 2013, is the biggest taxpayer in Niagara County.

Jerry Goodenough and Jack White, who manage the Cayuga and Somerset plants, explained the history of bankrupt AES and the challenges facing the new “Somerset Operating Co. LLC of the Upstate New York Power Producers.” Somerset Town Supervisor Dan Engert, Legislator John Syracuse, and Hartland Town Supervisor Ross Annabel talked of the town and county’s predicament. Former Legislator Gerald Farnham and Paul Bologna, who are on Corwin’s staff, sat at the table.

The group is opposed to “RGGI,” saying the Regional Greenhouse Gas Initiative, which is endorsed by environmentalists, penalizes coal and gas-fueled power producers in favor of solar and wind energy. Since RGGI was adopted, AES has been down hill, according to the plant managers.

The group endorsed the state’s “Energy Super Highway” efforts, which Gov. Coumo is pushing, to get electricity from upstate sources to downstate customers — principally New York City. The energy highway would update the infrastructure with a billion-dollar effort. 

However, the state is also considering a project to pipe power downstate from Ontario down the Hudson River or bringing electricity in from New Jersey. The Garden State opted out of RGGI, giving New Jersey an advantage.

Engert said that RGGI, shifted the burden onto the taxpayer. The town has had to renegotiate its Payment in Lieu of Taxes (PILOT) three times with the AES, LLC. With AES payments down, school, county and town taxes go up.

There is an effort for full repeals of RGGI and Corwin said withdrawal from the compact is possible. Environmentalists are fighting to save it.

“It hurts New York State business,” said Goodenough who is Chief Operating Officer for the new endeavor. “It has had a reverse affect.”

Goodenough has met with the state officials and came away with the feeling that the energy policy is trumped by environmental issues.

The group talked about “fracking,” a controversial way to get natural gas from deep underground sources. Pennsylvania profited but has environmental problems. New York State proponents say they will do fracking the right way, without polluting the water.

Syracuse wants Corwin to take part in the fight in Albany. “We need an advocate for Niagara County,” he said. “We’re not producing in New York State, so we’re going to Canada and New Jersey. Put an end to this nonsense.”

According to Engert, New York State has the fourth highest electrical rates in the country. He wants coal as part of a diverse energy portfolio. The supervisor said their investors believe in the Somerset plant.

Corwin understands that the outdated grid stands in the way for getting upstate power to downstate producers.

“Get behind the Energy Highway,” Goodenough said. “Coal can be used cheaply.”

According to the new company, which is owned by bondholders, the long-term success of the Somerset and Cayuga facilities depends on their place in the Energy Super Highway.

“We need diversity,” Corwin said. “We don’t want coal to be forgotten.”

Corwin, who was elected to the assembly in 2009, was impressed with the cleanliness of the plant and wants to keep it up and running.

Corwin has investigated fracking. “Pennsylvania didn’t do it right. New York state is different,” she said.

White, who lives in Barker, has looked into fracking water. “Fracking can be done safely,” he said.

Bondholders of the new company have committed an additional $70 million investment to operate the Somerset plant.

According to the Upstate Power Producers fact sheet, the Somerset plan is an important source of energy diversification and an important buffer to price shocks from volatile natural gas prices. The plant is clean and the largest coal plan in the state.

RGGI The Regional Greenhouse Gas Initiative (RGGI) is a regulatory program to reduce greenhouse gas emissions. RGGI is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. Together, these states have capped and will reduce CO2 emissions from the power sector 10 percent by 2018. The first CO2 Allowance Auction was held in 2008. New York State's participation is through Gov. Pataki's Memorandum of Understanding and Gov. Paterson's Executive Order. New Jersey pulled out of compact. FACT SHEET Somerset has 120 employees with a 2011 payroll of $15 million. The union employees voted to accept and new contract in July. PILOT money pays 80 percent of the town tax base; 70 percent of the school tax base and 5 percent of the county tax base