David Robinson: WNY scores small victory on power
For once, Western New York won’t be getting zapped by the New York Power Authority.
A political uprising, spurred in a sinking economy by the unsavory combination of a power authority rate hike and bonuses to its workers, forced the agency last week do an about-face and freeze rates for its hydropower customers through April 2010, while blocking bonus payments this year.
Richard Kessel, the power authority’s president and chief executive officer, admitted the proposed rate hike and the potential for $3.4 million in bonuses was an explosive combination at a time when the bonus scandal at bailout baby AIG has taxpayers on high alert.
Eventually, the power authority bowed to the political powder keg it ignited, one that was especially volatile after more than $500 million of the agency’s profits—more than half of which come from the Niagara Power Project— were swept into the state’s general fund.
With Gov. David Paterson urging the power authority to reconsider the bonuses and the rate hike, the heat was too much.
“Extraordinary circumstances sometimes require extraordinary actions,” Kessel said.
Local critics, including U. S. Rep. Brian Higgins, D-Buffalo, weren’t impressed by the relatively small-scale victory. Higgins said it was “insulting” that power authority officials came to Buffalo to reverse what he described as “bad policy.” Calling NYPA the “mother of all arrogant, unaccountable public authorities,” Higgins said the agency tried to spin the temporary rate freeze, which saves its customers $16.5 million, as a major consumer victory.
Left unresolved was the watered-down impact that the electricity from our greatest natural resource has on the Western New York economy. “All of this misses the larger point: Western New York is bleeding jobs and the power authority is making enormous profits,” he said.
Despite the success in temporarily blocking the rate increase, which likely will be revisited next spring, the Western New York delegation did the region a disservice by not banding together to stop the agency’s funds once again from being swept into the state’s general fund.
In spite of the insistence of NYPA officials that the transferred money couldn’t have been used to lower power prices, which by law must be sold at cost, state Sen. George Maziarz, R-Newfane, is convinced the two go hand-in-hand.
Constant pressure from Western New York is the only way the region will ever see more of the economic benefits from its greatest natural resource, Higgins said. “Unless and until Western New York stands up for itself, we’re going to continue to get rolled,” he said.
Keeping the power authority from granting bonuses and freezing its hydropower rates for a year is a small victory. “It’s not a demonstration that they’ve learned a lesson. They got called out and folded to the pressure. But the community is no better off,” Higgins said.
Even better for the region would be a long-sought change in policy so that the profits from selling unallocated hydropower would be set aside and used to spur economic development in Western New York. In most cases, that cheap hydropower, which costs a little more than a penny to generate, can be sold in the state’s wholesale power market for prices six to seven times higher, yielding huge profits for the power authority.
Even Kessel thinks that should change. He’s pushing for a change in the state’s Power for Jobs incentive program that would reauthorize the program for another year and also give the authority the ability to quickly reallocate electricity that had been granted to companies that have since gone out of business. That unallocated power now is sold into the wholesale market.
“It’s good for NYPA, but not for our customers,” Kessel said.
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