ISSUE IN BRIEF:
Replacement Power
The Business Council
strongly supports the statutory extension of replacement power from the
Niagara hydropower facility, as proposed in S.1136(Maziarz) / A.2715(Tokasz).
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
on their New York operations or at
worst,
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.
The cost of energy
downstate may be less important to companies located there because of
New York City's one-of-a-kind role in financial services, business services,
corporate headquarters and other factors. Additionally, manufacturing
is generally more energy-intensive than many of these other businesses.
Hence, the greater need for this low-cost power in the upstate region.
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.
