Make the full payments; they are needed.
That was the message to the owners of the NRG Dunkirk plant Monday from U.S. Sen. Charles Schumer as he stood on the city of Dunkirk pier, with the power plant looming in the background.
Schumer made the trip to emphasize his belief that the NRG Dunkirk plant owes the full scheduled payments, regardless of any other considerations.
After the usual introductions and recognitions, the senator got to the essence of his remarks about the plant that came online in the 1950s.
"Since the Dunkirk plant started running it's been an important part of the fabric of the Dunkirk community. NRG employs 145 local residents, plays a significant role in driving the local economy and, I have to say, that I deal with them in Washington all the time, being one of the large power companies in the country and they are good corporate citizens; they do try to do a very good job," Schumer stated. "And so I'm not here that NRG are bad people or anything like that; we just need their help over a short period of time. A big part of the impact that NRG has is of course the jobs number one, but second that, as you know they make payments in lieu of taxes, called a PILOT to the city, school and county.
"This was an agreement that was arrived at four years ago and it's made everybody happy. Over the next two years local officials would receive, if that PILOT continued, about $16 million which goes toward everything, from Dunkirk school payroll to supporting economic development initiatives, to keeping local taxes down. So it's very important to the city of Dunkirk in particular, but to the county as a whole."
OBSERVER Photo by Gib Snyder
U.S. Senator Charles Schumer stops to speak with Dunkirk schoolchildren before holding a press conference Monday at the city pier.
Schumer said that a problem will occur if NRG follows the letter of the PILOT agreement and does not make the entire payment; the city, school and county will face tough choices and likely, higher taxes.
"I am calling today on NRG, whatever the outcome, to be good corporate citizens, live up to the responsibility it has, particularly in the community it calls home," he stated. "Continue their legacy of being good corporate citizens by continuing the payment."
Schumer recounted the sequence of events that has led to current situation of NRG seeking a reliability study by the state's Public Service Commission and an alternative legislative effort to have the New York Power Authority purchase power generated in Dunkirk.
Schumer said the PSC effort could result in the plant being temporarily closed for a few years, or National Grid will have to buy enough power from the plant to keep it open to meet the state's electricity reliability needs. What level of operating capacity the plant would need to remain at would be part of the answer.
"That is our preferred solution, to keep the plant open and have it go full steam ahead. We're working hand-in-hand with our local leaders ... to make that happen," Schumer said. "County Executive Edwards has done a great job working with state and local officials to help advocate for this scenario."
Schumer noted the low price of natural gas is making NRG Dunkirk less competitive at the present time, leading NRG to be willing to shut down the facility. In two years when the dirty coal plants are forced to shut down, NRG Dunkirk will likely be profitable again.
"That's why they only want to temporarily close it because they know they'll be able to use the plant two years from now," Schumer said. "So the question is, what's going to happen to these payments in lieu of taxes, the lifeblood of this community, over the next two years?"
Schumer had his answer ready.
"I am calling on NRG, if we can't keep the plant open one way or the other, to continue those payments in lieu of taxes so that the city of Dunkirk, the citizens of Chautauqua County, won't have a very, very, big burden on their backs. An undue hardship and that would result in fewer services and increased taxes for almost everybody. here," he explained. "That's what we're asking them to do, we're asking them to be good corporate citizens. Chautauqua County, when you look at the PILOT payment, it would be $8.6 million in 2012, $8.4 million in 2013; $8.2 million in 2014."
He added that 2013 and 2014 are the years at risk, given his belief that the plant will be profitable in 2015.
"That money is no chump change to our local governments, school district and county economy, just as the economy is turning the corner," Schumer said. "Twenty-three percent of the city of Dunkirk's revenue streams come from these payments in lieu of taxes."
Schumer said NRG is extremely profitable, having a net income of about $200 million in 2011, adding the local PILOT payments are "really a drop in the bucket for this large company."
"In the next few years the company predicts it will be right back on track bringing millions more in revenue. So they've made a lot of money out of this plant, that's good, we don't begrudge that, and they're going to make more money come 2015," he continued. "They shouldn't, over this two-year period when there's this temporary closing of the plant, take all the money out, squeeze every nickel out, and put our local community, school children, these firefighters, and particularly the city of Dunkirk, but also the county of Chautauqua at significant risk."
Schumer pointed out the company made use of some $58 million in federal tax-exempt bonds through the county IDA in making the improvements to the plant's equipment. He added he works with NRG at the federal level.
"I am asking and saying it's their corporate responsibility, in my judgment, they are not required by law to do it, but if the PSC doesn't require them to stay open, to continue for two years their payments in lieu of taxes and the plant will resume once again," he stated. "It's not our ideal solution. Our ideal solution is to keep the plant open, keep the people working, but if not don't leave people, I'm saying to NRG, please don't leave the people of Dunkirk and Chautauqua County high and dry because they really depend on these payments in lieu of taxes."
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