WHEATFIELD – The new owner of the Niagara Generation power plant in Niagara Falls will assume the remaining time on a tax break on that facility, and have applied for a similar abatement for a new warehouse that would be used to store the plant’s wood fuel.

Sterling Energy Group of Gary, Ind., plans to invest $2 million in the biomass plant at 5300 Frontier Ave.

Plant manager Michael Boslet, who will stay with the company under its new owners, said the plant last operated in March of this year. He said the workforce, once totaling 30 people, currently is down to himself and one other person. Sterling Energy’s application to the Niagara County Industrial Development Agency projects 18 jobs within three years.

The IDA board voted to allow Sterling to take over the 14 years left on a 20-year payment-in-lieu-of-taxes arrangement granted the former owners in 2007.

Besides those property tax reductions, the board granted Sterling an exemption from sales tax on building materials and equipment used in refitting the plant, a savings estimated by the IDA staff at $64,000.

Sterling also seeks to construct a 200-by-300-foot warehouse, which would include a compressed natural gas fueling station, about a quarter-mile from the power plant.

That $3 million project is to be erected on the now-vacant site of the former Carborundum Co. plant on Niagara Falls Boulevard. Sterling plans to buy the site from NFB Carbon Products for $1.25 million.

The IDA board set a public hearing for 3:30 p.m. Aug. 28 in Niagara Falls City Hall on the 15-year PILOT request, which includes a sales tax exemption as well. These incentives are estimated by the IDA to be worth $318,837. Two jobs would be created at the warehouse.

The IDA board is expected to vote on the incentives Sept. 11.

CEO William J. Harrington said the main fuel for the 40-megawatt power plant will be wood, mostly ground-up remnants supplied by BFI Canada. It looks like yard mulch, he said.

“It’s the best biomass fuel I’ve seen,” said Harrington, who said he has been in the energy business for 45 years.

He said Niagara Generation was burning 100 percent wood and also tried tire chips.

Harrington said the plant’s air permit from the state Department of Environmental Conservation would allow the use of all coal or as much as 40 percent tire-derived fuel, but the most effective formula for biomass electricity production is 90 percent wood and 10 percent coal, which is what he intends to burn at the new plant.

The power plant, built in 1991, was sold by Niagara Generation in 2006 to USRG Niagara Biomass, a subsidiary of U.S. Renewables Group of Santa Monica, Calif., for $31 million. The plant has continued to operate under the Niagara Generation name and still will under Sterling Energy’s ownership, Harrington said.

It is now assessed at $35 million, according to the county real property services office. The PILOT payments are $300,000 a year, according to Sterling’s IDA application.

Harrington said his firm owns a natural gas pipeline in Kentucky, is building a boiler facility for Southern Illinois University, and is about to acquire a gas-fired power plant in Crawfordsville, Ind.