State provides funding toward natural-gas pipeline

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October 13, 2009

By DENISE RAYMO The Press Republican Tue Oct 13, 2009, 06:21 PM EDT

MALONE — Gov. David Paterson came to Malone Tuesday to announce that St. Lawrence Gas will get $2.5 million to extend its natural-gas pipeline through Franklin County.

The proposed 48-mile project would enter through Moira and follow a preferred path along an abandoned railway to the Village of Chateaugay, bringing potential energy savings to businesses along the route.

Paterson said the plan is to begin construction by September 2011 and have the pipeline completed by December 2012.

BURST OF APPLAUSE

Before a standing-room-only crowd of department heads, invited guests and town representatives in the County Courthouse, the governor was surrounded by a semi-circle of company officials and politicians.

He had been about 20 minutes behind schedule, following a stop in Pulaski, which had many of the men pacing the room like expectant fathers until he arrived.

Paterson began to announce the award but as he mentioned the dollar amount, he was interrupted mid-sentence by boisterous applause and hoots, causing him to joke that it is the first time he’d received an ovation before anyone knew what the money was for.

LURING BUSINESS

During his brief remarks, the governor stressed the need for job creation and lower energy costs for businesses and industries.

He said projects like this one would lead the way.

“This will put Franklin County in a more competitive (position) to attract business and investment,” he said.

“This is the ‘Field of Dreams’ economic policy: Build it, and they will come,” Paterson said, laughing.

St. Lawrence Gas has put up $14 million of the $20 million estimated cost, while Franklin County had offered $1.42 million, and State Sen. Betty Little (R-Queensbury) secured $2 million.

The governor’s pledge does not cover the project’s entire funding gap, “but we believe it is enough of a commitment to move forward with the application process before the Public Service Commission,” said Jim Ward, manager of strategic accounts and planning for the power company.

PILOTS NEEDED

The State Public Service Commission would grant final approval for construction of the project as long as St. Lawrence Gas can prove it will make a 7.7-percent profit in the first five years of operation.

To achieve that, the company needs the taxing entities involved to approve payment-in-lieu-of-taxes (PILOT) contracts.

Ward said his team has met with all but three townships in Franklin County about PILOTs and will begin speaking to the impacted entities in St. Lawrence County soon.

North Lawrence Dairy Inc., manufacturer of Breyer’s yogurt, is one of the high-volume plants officials expect to link to the pipeline in St. Lawrence County.

And the County Legislature there was asked to contribute $450,000 toward the project.

But its members recently learned there is a $10 million funding gap in its 2010 county budget, so a pipeline contribution may not win approval.

BOOST FOR McCADAM

But the enthusiasm for the project in Franklin County has not waned.

“When I heard it, all I could think was ‘Wow! Finally!’ said Ron Davis, operations manager at McCadam Cheese in Chateaugay, one of the major energy users expected to benefit from the project.

He said the company uses 1 million gallons of fuel a year, which represents about 20 percent of the plant’s operations costs.

In addition to cost savings, cheap natural gas might also help attract a long-discussed whey plant to Chateaugay, which Davis said could create another 25 jobs in the region.

HOSPITAL SAVINGS

Other large-volume natural-gas users include the Malone Central School District, the four state correctional facilities and Alice Hyde Medical Center.

Medical Center President and Chief Executive Officer John Johnson said his facility could save as much as $100,000 a year in energy costs by switching to natural gas.

He said Alice Hyde uses 175,000 gallons of fuel each year and spent $500,000 on it in 2008.

The cost is projected slightly lower for 2009 at $400,000, “but we estimate that by 2010, there would be a savings of 25 to 30 percent,” Johnson said.

He said the savings could translate into the hiring of more nurses and the purchase of more medical equipment.

PATIENCE NEEDED

“The governor missed the opportunity to enlighten everyone about the economic benefits of this project,” said County Legislator Timothy Burpoe (D-Saranac Lake).

“This will mean $1 million in savings for the prisons in Franklin County and $100,000 to Alice Hyde Medical Center,” he said.

“McCadam Cheese will save hundreds of thousands of dollars by switching to natural gas in this project.”

Legislator Earl Lavoie (D-Malone), chairman of the Finance Committee, said the grant is welcome news, but being patient may be difficult.

“I wish to hell we could be pumping gas tomorrow, but we’ll have to wait.”

SCHROON LAKE FUNDS

The pipeline was one of 15 projects statewide that the governor announced would receive money in the first of four rounds of grants through the $120 million Upstate Regional Blueprint program, which is part of a larger $1 billion upstate-revitalization initiative.

Schroon Lake Revitalization LLC was also a recipient of grant funds Tuesday, with $975,000 going for development of an 81-room resort considered the cornerstone of reviving the economy in the Town of Schroon Lake.

E-mail Denise A. Raymo at:

draymo@pressrepublican.com