North Country officials seek control over electricity transmission

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February 3, 2008

Local customers may save

By DENISE A. RAYMO The Press Republican Sun Feb 03, 2008, 11:00 PM EST

MALONE -- Legislators here recently endorsed creation of a public-power authority to help 21 Franklin and St. Lawrence county municipalities control their electricity.

Robert Best, executive director of the Alliance for Municipal Power, said customers could eventually save between 5 percent and 9 percent by owning and maintaining transmission and distribution lines and power poles.

He said independence would allow the authority to negotiate power rates with the New York Power Authority the same as 54 other municipal-power entities across the state do, rather than remain tied to a foreign-owned utility company.

The towns of Westville, Bombay, Moira and Fort Covington would join with the St. Lawrence County villages of Potsdam and Canton and several townships all the way southwest to Fowler, south of Gouverneur.

Best said the alliance has up to $16 million in financial backing for the idea, depending on how much National Grid fights the formation plans.

It holds a special agreement with the state Public Service Commission to collect stranded fees that are paid by customers locked in to its service contract.

National Grid, based in the United Kingdom, could lose 4,000 customers if the alliance can convince the PSC to let communities out of the agreement established in the mid-1990s when its predecessor, Niagara Mohawk, was on the verge of bankruptcy.

To keep the company going, the state created Power Choice and allowed NiMo to keep its distribution and transmission lines but had to give up its interests in hydropower, Best said.

NiMo agreed, but wanted a bonus because it said it would lose money on the agreement.

The PSC awarded NiMo a five-year deal to collect $104 million in fees from rate users, beginning in 1998, he said.

Municipalities were also prevented from leaving the power grid during those five years, and customers paid the fees through their monthly bills.

Best said, in the fourth year of the deal, NiMo obtained an extension from the state, carrying the stranded-fees agreement forward to Dec. 31, 2011.

It also continued to prevent municipalities from leaving.

NiMo has since been bought by National Grid, which retained the stranded-fees agreement.

But, Best said, the alliance has already let the state and National Grid know "we intend to leave the system on Jan. 1, 2012."

Its argument is that National Grid is very solidly back on its financial feet and no longer needs or is entitled to the fees.

The Public Service Commission will decide the issue, but the alliance expects it will be challenged in state court and may have to go to the Federal Energy Regulatory Commission for a final ruling.

In the meantime, Best said, the alliance needs to make some changes in order to bolster its chances and be prepared to move forward if it wins.

"We have one problem," said Best. The alliance "is not a legal entity, so if we succeed, we'd have to have 21 separate executive directors, and that's not feasible."

He proposed a single, pared down steering committee to represent the alliance communities.

Its members would then report back to and continue to receive instructions from the 21 individual municipal commissions.

The issue of formation of a power authority rests with the state Senate and Assembly, and its membership would be done as governor appointments, Best said.

Suggestions from the member communities would be forwarded, and the members chosen from there, he said.

And if the authority is formed, it would buy transmission and distribution lines and existing power poles from National Grid.

Best said the alliance would figure out the tax-holding value on the items, deduct for depreciation and pay the company the difference.

Legislature Chairman Guy "Tim" Smith (D-Fort Covington) said he favors the idea of creating an authority.

"I don't see a problem, and I would support it," he said. "We want to keep the resource here. We provide a huge amount of cheap power but pay the third-highest price."

draymo@pressrepublican.com