Governor Paterson Approves Hydropower Contract Extensions with More Than 100 Western New York Companies

ALBANY, NY (12/21/2010)(readMedia)-- Governor David A. Paterson today announced that he has approved long-term contract extensions for the continued supply of low-cost hydropower to more than 100 of Western New York's leading companies. In celebration of the achievement, representatives of the New York Power Authority (NYPA) and Power for Economic Prosperity (PEP) were joined by State officials and business leaders at Praxair, Inc. in Tonawanda. The Governor's actions will help protect nearly 30,000 jobs and a combined annual payroll of over $2 billion and ensure annual capital investments of tens of millions of dollars.

"The long-term contract extensions I have approved today will serve as a cornerstone for Western New York manufacturers to manage production costs and operate competitively," Governor Paterson said. "Niagara hydropower-some of the lowest cost power in the country-is a tremendous asset for protecting and creating jobs and bringing about the expansion of crucial New York industries. The contractual arrangements that the New York Power Authority has reached for this power for years to come is in keeping with my Administration's emphasis on using all the tools at our disposal to encourage and support the success of our State's businesses. This initiative is especially imperative in today's challenging economic climate, and the hydropower contract extensions are a key element of our efforts in this part of the State."

The new contracts, most of which extend over seven years, from 2013 to 2020, contain increased job thresholds that hydropower recipients must meet and maintain for the term of the contract, and, for the first time, include annual capital investment commitments over the lifetime of the agreements. Praxair, a global chemical company serving the aerospace, food and beverages, healthcare and semiconductors industries with facilities in Erie and Niagara Counties, receives low-cost hydropower that supports its more than 1,300 employees in its Western New York facilities. In addition to Praxair, some of the more than 100 companies that receive low-cost hydropower from the Niagara Power Project include Ford Motor Company, 3M, DuPont, General Mills and Nestle Purina.

Under the contract extensions, the businesses receiving hydropower, including those in such major industries as automotive, chemicals, metals, printing and food-processing, each must meet an agreed-upon "base employment level." In addition, recipients must also undertake capital investments at their Western New York facilities receiving the hydropower which collectively will total approximately $150 million a year over the term of the extensions. Prior to these contract extensions, capital investments had only been required when the initial hydropower allocation was awarded. Also, under the contract extensions, the companies will be required to conduct energy efficiency audits and verify the implementation of improvements.

NYPA President and CEO Richard M. Kessel said: "Under Governor Paterson's leadership, the Power Authority made it the highest priority to negotiate contract extensions with the Niagara Project's more than 100 business customers to optimize the benefits of the low-cost hydropower for the Niagara Frontier economy. The long-term certainty of this power will ensure that these companies, many of which are highly energy intensive, are well positioned to make significant capital investments in their wide ranging industrial operations and effectively compete with out-of-state and overseas enterprises that may have other cost advantages. The economic benefits of the hydropower also extend to the other enterprises in the area that the customers do business with, so there is an extensive multiplier effect with billions of dollars in gross regional production directly or indirectly linked to the low-cost power."

D. Patrick Curley, a NYPA trustee from Orchard Park, said: "The considerable economic activity that the hydropower customers generate in Western New York underscores the importance of the contract extensions. These customers, who account for more than 70 percent of the manufacturing jobs in the region, are integral to the area's economy with wide-ranging impacts associated with spinoff jobs, payments to suppliers for goods and services, local tax revenues and financial support of local communities and organizations. In short, they have a sweeping impact."

Kelly Brannen, Managing Director of Niacet and Co-Chairman of Power for Economic Prosperity (PEP), said: "Governor Paterson has secured his legacy in Western New York by protecting the industrial base of the regional economy and with his actions tens of thousands of manufacturing jobs will be sustained for years to come. Our community also owes a great deal of thanks to NYPA President and CEO Richie Kessel and his staff for their hard work and persistence in finalizing these contract extensions with area manufacturers."

NYPA's Niagara Power Project hydropower is provided under State law to Western New York companies under two power programs, known as Replacement Power (RP) and Expansion Power (EP). The two large amounts of power, accounting for about one-third of the Lewiston project's firm generating output, are reserved for businesses within a 30-mile radius of the facility or for businesses in Chautauqua County. The statutory criteria for allocations of RP and EP center on new jobs and capital investments. The hydropower is provided at rates that are more than 50 percent less than current wholesale market prices in the State.

###

The following statements were provided in support of the Governor's approval of long-term contract extensions for low-cost hydropower to Western New York's companies:

Congressman Brian Higgins said: "Western New York thrives when we take advantage of our unique resources. Our access to low cost hydropower is helping to reduce the cost of doing business in WNY, creating and retaining quality jobs for local residents."

Congressman Chris Lee said: "Extending the existing contracts for the sale of hydropower to Western New York will sustain and create jobs in our communities and provide additional wide-ranging economic benefits. These extensions will ensure that the energy created here in Western New York stays in our region and contributes to the strengthening of our economy and the job creation efforts within our communities."

Dennis M. Mullen, Chairman and Chief Executive Officer, Empire Development, said: "Governor Paterson's approval of hydropower contract extensions in Western New York build upon the region's strengths and marks an opportunity to retain jobs and bring new capital investment to the area. Low cost hydropower is one of the State's most vital economic development tools and I am pleased that the Governor and NYPA recognize its importance. These long-term power agreements will undoubtedly support our local businesses and allow them to further invest in Western New York."

Senator George Maziarz said: "The Expansion and Replacement Power Program, has been an economic lifeline for businesses in Western New York. In particular the low-cost power generated at the Niagara Power Project has protected thousands of existing area jobs, and assisted in making our area attractive to new ventures such as the Yahoo Data Center. The signing of these contracts today shows that we are meeting our commitment to use a Western New York resource to improve our local economy and create jobs, right here in Western New York."

Senator Antoine Thompson said: "Much of the Western New York economy grew up around our great natural resource of Niagara Falls and the low cost power it provides. I have always fought to keep that power working for us locally and am pleased that today's announcement will extend this lifeline to so many local businesses. This initiative will also make Western New York more competitive and help create good paying jobs."

Assemblyman Jim Hayes said: "It is a positive development when electricity generated in Western New York stays here to create jobs in our community. Electricity costs are frustratingly high in New York State, so it is important that our valuable hydropower resource be used here to aid these businesses and the workers, families and communities that depend on them."

Assemblywoman Crystal D. Peoples-Stokes said: "The signing of Expansion Power and Replacement Power contracts with these important businesses will help to retain and provide needed assistance to many of our region's most important energy intensive employers. During these difficult economic times this is an important tool to help create the incentives needed for critical capital investment and the creation of jobs. I would like to thank Governor Paterson for his leadership on this issue and area business leaders for their long term commitment to Western New York."

Assemblyman Robin Schimminger said: "This contract extension of low-cost Expansion Power and Replacement Power is wonderful news to our region. Western New York's major energy-intensive industries are dependent on our low-cost hydropower to remain competitive in today's global market. Today's contract extensions will provide these industries with the tools corporate management needs to invest, upgrade, and perhaps expand their local operations. Praxair and the other corporate members of PEP are the cornerstone of Western New York's industrial base and the source of thousands of jobs. I am very pleased that the State and affected industries have come together to strengthen our industrial base, secure local jobs and move forward to promote our local economy."

Kenneth Adams, President and CEO of the Business Council of New York State, said: "Many New York companies, especially upstate manufacturers with energy-intensive production processes, depend on competitively-priced NYPA power. These extensions of hydropower contracts are key to assuring local job retention and growth, as well as new capital investment. This announcement is good news for Western New York and for the entire State's economy."

Andrew J. Rudnick, President and Chief Executive Officer of the Buffalo Niagara Partnership, said: "Low-cost hydropower is a precious Buffalo Niagara asset that can have a major economic impact on our region. With the contracts announced today, low-cost power will be doing what it should - supporting jobs and private sector investment, where it should - within 30 miles of the Niagara Power Project."

Deanna Alerio Brennen, President and Chief Executive Officer of the Niagara USA Chamber, said: "The extension of hydropower contracts is critically important to the economic base of the Niagara County and in particular the City of Niagara Falls. We are pleased that Governor Paterson recognizes the importance of these jobs to our community and we look forward to continuing to work with NYPA President and CEO Richie Kessel on other hydropower issues that impact Niagara County."

###

Additional news available at www.ny.gov/governor | High resolution images available at www.ny.gov/governor/mediaimages | password: paterson | New York State | Executive Chamber | press.office@chamber.state.ny.us | 212.681.4640 | 518.474.8418 | Follow us on Facebook and Twitter