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Before the end of this year the NYS Public Service Commission (PSC) will rule on whether or not the Cayuga Power Plant remains open.  The Lansing Star is featuring a three-part series that will explore the plant's citizenship in Lansing, Tompkins County and the larger community.  This week we look at the repowering proposal and what led to it.  Next week we'll report on the plant's reputation as a clean coal-powered facility, and in the third week on the plant's participation in the community.
Over the years we have heard that the Cayuga Power Plant, previously AES Cayuga and before that Milliken Station has been a good citizen in the Tompkins County community.  In recent years the news has been about the tax impact, especially on the Lansing school district, of the quickly declining coal-powered plant's value.  Most recently the Cayuga and Somerset plants were purchased by investors who hope to convert to natural gas to allow the plants to function competitively in the New York energy market.  The problem is simple: in today's market a plant powered by expensive coal can't complete with those powered by less costly natural gas.

"The power from this plant and the power from any merchant facility, is sold into the New York Independent System Operator (ISO), says Upstate New York Power Producers CEO Jerry Goodenough.  "The ISO gathers data from all the facilities on a day-ahead basis.  The utilities say 'this is how much load is going to be required between factories and houses and so forth.'  Then the ISO says, 'OK generators, what can you generate and how much does it cost.'  They match that generation to the amount of load."

Then they buy the least expensive energy available in the amounts they need.

The History of the Plant

The plant, then called Milliken Station, was built by NYSEG in the mid-1950s.  Unit 1 was commissioned in 1955 and Unit 2 in 1958.  In the 1980s and 90s NYSEG updated the plant with state of the art environmental controls, among other improvements.  NYSEG property north of Milliken Station was proposed as the location of the Bell Station Nuclear Plant in the 1990s, but that project was never realized.

In 1999 Milliken Station was purchased by AES Eastern Energy and it was renamed AES Cayuga.  While the parent company, AES, was more than solvent, AES Eastern Energy declared bankruptcy in 2011 because the Cayuga and Somerset coal-fired plants could not compete with gas-fired plants and imports into New York State.

The following year investors purchased the plants for $70 million under the name of 'Upstate New York Power Producers', taking them out of bankruptcy.  In July of 2012 the Cayuga plant submitted a mothball notice to the NYS Public Service Commission (PSC) and the New York Independent System Operator (ISO), but in September NYSEG informed the plant that there was a need for the plant to remain open to insure reliable energy delivery.  In December NYSEG signed a one-year reliability agreement with the plant.

Last January the PSC ordered a study on repowering the Cayuga and Dunkirk plants.  By March Cayuga had submitted its proposal, which includes four alternative plans for converting the plant partially or wholly to natural gas.  In May NYSEG submitted its plan to close the plant in favor of upgrading the power transmission lines to provide reliable energy, largely to the Auburn area.

As for the Somerset in Buffalo, also a coal plant no mothball notice was put in for that plant, so UNYPP officials are uncertain about whether there is a reliability need or not.  For now they are running that plant as a merchant facility.

Tax Impacts

It is not too late to tell the Public Service Commission (PSC) what you think about whether or not the Cayuga plant should be repowered with natural gas.  The public comment period ends August 16th.  Comments can still be submitted by calling 1-800-336-2120, or emailing This email address is being protected from spambots. You need JavaScript enabled to view it. and referring to case 12-E-0577.  Searching for that case number on the PSC Web site will yield all public documents to date. The deadline to submit comments is Friday, Aug. 16.
In 2008 The Tompkins County Industrial Development Agency (IDA) reached a PILOT (Payment In Lieu Of Taxes) agreement with plant owners to gradually increase an agreed-upon value that would have increased plant's tax contribution from $3,700,000 in 2008 to an estimated $6,600,000 in 2013. 

But with gas prices continually beating higher coal costs the plant became unprofitable, leading AES to put it into bankruptcy.  An amendment to the PILOT phased in a decrease the plant’s taxable value from the current $112.5 million to $60 million in three steps—to $86,250,000 in 2012, $74 million in 2013, and $60 million in 2014.  The decline would decrease the estimated tax paid by the plant from nearly $3.2 million paid in 2011 to about $1.7 million in 2014, with the Lansing School District the hardest hit.

One of the reasons Tompkins County Legislature Chair and IDA Chair Martha Robertson cited when calling the plant a 'good citizen' when the PILOT negotiations were being held was that it was willing to commit to incrementally pay more when it could, but also agreed to step down to its lower value over a four year period rather than insisting on an immediate $60 million valuation.

Goodenough estimates that the average Lansing homeowner will immediately pay an additional $516.20 in school taxes if the plant closes.  When you add county, town and fire district taxes that number jumps to $571.76 annually.

Tompkins County Assessor Jay Franklin says Goodenough's estimates are based on the average home value in the Lansing Central School District, which is $222,346.

"The number that Jerry is using is the Lansing School District average, as the plant makes up the majority of the school tax base," Franklin says,  "Looking at the effect on them is the best thing to do."

School Business Administrator Mary June King said that number is conservatively low because the percentage of revenue lost from the plant would equal more in real dollars as mandated and contracted expenditures rise, including increases in the Teacher Retirement System and Employee Retirement System systems are typically greater than forty percent.

"That ($516.20 figure) doesn't take into account increased mandated costs that we've been seeing from the State," she said.  "It doesn't take into account what I would call an illegal reduction in state aid that we have experienced.  So I think that that is a very generous number that he put out there.  If we lose the Cayuga Power Plant the impact on the taxpayer is going to be far more significant."

Future Impacts

While the news has focussed on the negative impact of plant value reduction and a possible closing, Goodenough has tried to explain the positive impact of keeping the plant open.  At the end of June he told the Tompkins County Environmental Management Council that there would be significant tangible benefits to Lansing and Tompkins County if the plant remains open.

"In our proposal we laid out exactly the effects of keeping the plant running: high tech permanent jobs in the community, 563 construction jobs and up to 90 permanent jobs," he said.  "There is the tax base it pays.  And we've spent over $4 million dollars in the local community just in the first five months this year."

Aside from some layoffs about three years ago the company has been able to manage the labor reductions through attrition.  At its high there were over 100 employees, with the average of 80 or 85.  Goodenough says that the 90 permanent jobs includes both plant employees and other jobs needed to serve the facility's needs. 

The number comes from Tompkins County Area Development's (TCAD) Martha Armstrong, who used a state model to work out the indirect economic impact numbers.  She calculated the number of permanent employees, the number of construction jobs, and construction spending among other factors to determine the effect on the local economy.

Goodenough says there is a 300 megawatt need right now that the 306 megawatt facility could fill.  He underlines the importance of producing power locally and notes that the state's capacity has dramatically dropped.

"There has been no new capacity," he says.  "577 megawatts have been retired since January 1 of 2013, and total of 1700 since 2011 with nothing new coming in.  So we're importing more and more power and losing more and more of our own generation from within New York.  At some point that's not going to work."

Consequenses to Lansing Schools of the Plant Closing

For Lansing the bottom line is school taxes.  In the past four or five years each school board has had to cope with closing a two or three million dollar budget gap each year, which has resulted in significant cuts including about 40 jobs, while at the same time implementing a plethora of energy-saving initiatives that have saved the district money.

Goodenough says that the plant still accounts for 11.7% of school tax revenue.  There are only two ways to make that up if the plant closes: in higher taxes or in further reductions to school staff and programs.

School Superintendent Chris Pettograsso says the cuts have already been significant, and the district is at the point where it will be forced to cut programs that have made Lansing such a successful district if the plant closes.  She says the district has been fiscally responsible, but the double whammy of state reductions and closing the power plant will force the district to raise class sizes and cut programs including both academic and extra-curricular.

The PSC has pledged to make its decision before the end of 2013. 


Next week: Is the Cayuga Power Plant clean?
In two weeks: How does the plant contribute to the community?
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