LOCKPORT — A judge ruled last week that AES Corp. does not have to pay the tax bills it received from the Town of Somerset and the Barker Central School District in the wake of a court decision canceling its tax break.

State Supreme Court Justice Richard C. Kloch Sr. on Thursday granted AES’ request to be allowed to ignore the bills because efforts are being made to appeal the case to the state’s highest court.

Somerset Supervisor Richard J. Meyers reiterated last week that he wants to make a deal with AES on a fixed assessed valuation for the coal-burning power plant on Lake Road. It’s the largest property taxpayer in Niagara County, even with the payment-in-lieu-of-taxes arrangement, or PILOT, it received in October 2006 from the county Industrial Development Agency.

In the wake of the May 1 ruling from the Appellate Division of State Supreme Court that the PILOT was improperly granted, Barker Central and Somerset sent AES revised bills.

AES had paid the school district $9.76 million for the 2007-08 school year and $9.6 million for 2008-09. Barker’s bill demanded another $2.78 million for 2007-08 and $3.11 million more for the current school year.

The company had paid Somerset nearly $1.36 million on its 2008 PILOT and almost $1.32 million this year.

However, at full-value taxation, the bills suggested the town was owed another $387,294 for 2008 and an additional $425,876 for 2009.

But Kloch said because the IDA and AES are trying to get the State Court of Appeals to take the case, the Appellate Division ruling is stayed, the litigation is still on, and the PILOT is still in effect.

After Kloch’s decision, attorneys for the town, the school, the IDA and AES huddled in Kloch’s chambers to try to work out a negotiation schedule. However, because of various time conflicts, they failed to do so, Meyers said.

Attorneys for the town and the school agreed to meet Monday to discuss strategy for defending against AES’ lawsuits against the town, charging the plant is overassessed at $666.7 million.

Those suits, demanding tax refunds from as far back as 2005, are scheduled for trial before Kloch in November unless a settlement is reached.

The PILOT terms called for those lawsuits to be dropped, but when the Appellate Division threw out the PILOT, a side-effect was to reinstate those cases.

“I wanted to assure the existence of the AES plant under what they deemed confiscatory tax practices,” Kloch said.

AES, whose Somerset plant once was highly profitable, now says it’s in the red, and a depressed electricity market and government hostility to coal-burning plants has the company wondering about the plant’s future, executives told The Buffalo News last month.

“This is a dinosaur that’s waiting to go extinct and fall into the tar pit,” Kloch said.

He told Somerset Town Attorney Arthur Herdzik, “Your epitaph is going to be that you killed the goose that laid the golden egg, and mark my words, it’s going to happen. . . . Who’s going to explain the loss of jobs and the loss of revenues?”

Herdzik said, “There could be a program that is palatable to everybody.”

Meyers said, “We want fair taxation of AES.”