Congressman Brian Higgins (NY-27) announced he will introduce federal legislation aimed at keeping more of the profits from the Niagara Power Project here in Western New York. 

 “When constructed the Niagara Power Project was intended to provide a direct benefit to the host community however we continue to see the money derived exclusively from our natural resource being sucked right out of our region,” said Congressman Higgins.  “The legislation I am proposing would require that Replacement and Expansion Power profits generated by this community be reinvested into this community.”

 Last year the New York Power Authority (NYPA) had a surplus of $309 million, 76% of which was derived from the Niagara Power Project.  NYPA’s own study found that only 14% of the economic benefit from the Niagara Power Project remains in WNY. 

 Congressman Higgins office calculated that NYPA makes approximately $63 million from the sale of unused Replacement and Expansion Power intended to stay in the host community.  The Legislation sponsored by Higgins would direct the money derived from the sale of unused Replacement and Expansion Power to waterfront, park and cultural related projects in the region. 

 “We need to claim what is uniquely ours,” added Higgins.  “Without the Niagara River, located in our backyard, which feeds the Power Project, NYPA would have a losing operation.  Niagara Power Project proceeds should stay here, rather than feeding their coffers for more state budget bailouts, downstate projects and wasteful spending. “

Attachment:  Congressman Higgins Proposal

A Proposal from Congressman Higgins:
KEEPING MORE HYDROPOWER BENEFITS IN WNY

NYPA and the State of New York are Robbing WNY:
• In 2008, NYPA had a surplus of $309 million.  $236 million of this, or 76%, came from the Niagara Power Project.[1]  Most of NYPA’s other operations typically lose money or break even.
• Given this, it can be stated fairly that all discretionary spending by the Authority (including hundreds of millions for energy conservation efforts at downstate government agencies and hundreds of millions for voluntary contributions to the General Fund) comes principally from the Niagara Power Project.
• NYPA’s own studies found that only 14% of the economic benefit from the Niagara Power Project remains in Western New York.[2]
 
The Remedy:
• Industry tells us that because of a number of factors, the amount of hydropower they actually use is generally substantially less – typically 2/3 – of the amount they are allocated.  This is because they will not always be running at full capacity 24-7-365, and also because of first-through-the-meter arrangements with the utilities which cause industrial customers to draw a certain amount of higher-price power before they draw their hydropower allocation.
• NYPA sells this allocated but unused power through the ISO at a dollar amount dictated by the ISO’s reverse auction.  This is a principal source of the Authority’s extraordinary revenue. 
• The Replacement and Expansion Power programs constitute 695 mw.  If 1/3 if this is unused and monetized by the Authority currently through the ISO auction process, that means that about 210 mw are being converted to cash.  Under current conditions, the monetization of 5 mw of hydropower produces about $1.5 million per year.[3]  Therefore, allocated but unused Replacement and Expansion Power currently contributes about $63 million in cash to NYPA’s bottom line annually.
• Replacement and Expansion Power were always meant to be solely for the benefit of the host community.  At the very least, these $63 million in annual proceeds should be devoted to pressing needs in the host communities.
• The $63 million in annual revenue would provide a predictable stream of funding for the use of:
• the Erie Canal Harbor Development Corporation
• the Olmsted Parks Conservancy, and
• the regions’ leading cultural institutions
• downtown Niagara Falls redevelopment
• the Buffalo Niagara Medical Campus.
• These dedicated, recurring funds could be the revenue source for the repayment of bonds which would be sold to finance roughly one half billion dollars in immediate and much-needed capital improvements for these efforts.