The Business Council strongly supports the statutory extension of replacement power from the Niagara Power Project.

JUSTIFICATION

Replacement Power is vital to the economy of Western New York. If this power is not maintained for the businesses located in the region and they are forced to cut back or worse, relocate out of state, the impact on the local economy would be devastating. Manufacturing companies that receive low-cost hydropower directly provide approximately 40,000 jobs in the Buffalo-Niagara region. According to The Business Council report The Key to the Upstate Economy? Manufacturing - Still (September 2002), upstate manufacturing jobs were one of every six private-sector jobs as of June 2002. The Governor's Office of Economic Affairs estimates that each manufacturing job creates 2.67 other jobs in supplier firms, in companies that sell goods or services to workers and their families, and in government.

BACKGROUND

The Niagara Redevelopment Act (1957) encompasses the Congressional authorization and direction to FERC to issue a license to NYPA to construct and operate hydro facilities that were subsequently developed at Niagara. The Act specifically set aside 445 MW of power for industries or their successors previously served by the Schoellkopf Plant (the Niagara Mohawk plant that was washed into the Niagara Gorge in a rockslide in 1956). This federal direction was "for a period ending not later than the final maturity date of the bonds initially issued to finance the project" so as to restore low power costs to such industries and for the same general purposes for which power from the Schoellkopf Plant was utilized. The Act was approved in 1957 and the plant began operation in 1961.

There is no further federal direction regarding the use of this "replacement power" following final amortization of the original construction bonds on January 1, 2006. Once these bonds are paid off, the replacement power allocation would be subject to state statutory provisions which, unamended, would appear to make continued service to industrial customers a secondary purpose, with priority given to domestic and rural customers. In the 1930's when the Public Authorities law was enacted, hydropower was envisioned as a means to encourage residential and farm use of electricity. Obviously, much has changed since then.

SUMMARY

The power from the Niagara Project has had a significant impact on the Western New York economy, in both the retention of existing jobs and the creation of new investment and jobs. The region has become critically dependent on this allocation, and its loss would have major adverse effects on businesses and industry located there.

For all the aforementioned reasons, The Business Council strongly recommends the enactment of this bill.

This legislation will be included as one of the scoring measurements of The Business Council’s “Vote for Jobs Index 2005.” This is The Business Council’s annual assessment of legislator’s action on key issues of concern to the state’s business community.