Frank Parlato Jr: Higgins half right

By Frank Parlato Jr.

November 22, 2005

Some things don’t add up.

Even if the Buffalo News quotes “Independent Experts” to do the “fuzzy” math.

The New York Power Authority (NYPA) has had control of Niagara’s hydro- electric power since 1957. The people living in the region, however, reap little benefit from it. Almost every kilowatt is directed elsewhere- to New York City, and seven other states, while people here pay high electric rates.

According to Electric Power Monthly, only two states pay more than NY for electricity: New Hampshire and Hawaii. In fact, 13 states pay less than half.

According to News’ experts, Buffalo had the 16th highest rates out of 62 major cities.

Either way, that’s pretty high.

It’s ironic, too, since it was in Niagara Falls that hydro- electric energy was demonstrated to the world and people were promised "low cost" electricity.

In 1957, however, Albany brought in NYPA --to manage our power, and that was the end of “low cost" electricity.

Albany wangled a 50 year license for NYPA - - which expires in 2007. Now NYPA wants another 50 - until 2057. What is rarely, if ever, mentioned is that renewal is not guaranteed.

NYPA requires community support or the Federal Energy Regulatory Commission will not approve re-licensing. Congress could bring the power back to Niagara.

This is why you are reading so much about NYPA and the deals they are offering local municipalities in return for support.

Niagara Falls, Niagara County, Niagara and Lewiston townships, and three school districts have agreed to support NYPA’s renewal for a paltry $5 million per year – split among the seven. A shortsighted arrangement, the five million isn’t factored for inflation.

The cost of electricity, however, outpaces inflation almost every year.

Consider, also: NYPA, if it were managed properly, could make more than $500 million per year from the Niagara River.

This $500 million, by the way, was the crux of the issue in Monday’s News article. It quoted experts who attempted to discredit Congressman Brian Higgins- who claimed NYPA actually makes $500 million annually.

NYPA claimed $82 million in surplus cash in 2004. And so-called “experts” said Higgins $500 million claim is “ridiculous”.

However, in a document filed with federal regulators, (and quoted by the News) the truth comes out: NYPA estimated the market value of Niagara's energy to be $672.5 million in 2007 “if all [power project] generation was sold into the market." NYPA estimated operating costs at $134.9 million.

Subtracting costs from market value, Higgins came up with $537.6 million in profit.

He was half right. The article was spun, however, to make him appear all wrong.

By law, because the power plant is owned and operated by Albany/NYPA –- most of the power is (mysteriously) sold at bargain rates to municipal power companies and private utilities – located and selling outside our area.

So it’s technically true: NYPA does not make $500 million in profits.

But Higgins’ premise is right:

No matter how you torture the numbers to support NYPA- the results are the same – $2/3 of a billion in electricity is generated, it goes to people outside our area, while we pay higher rates than they do, and, lastly, we do not see any of the immense profits from a local asset currently under NYPA’s control.

The News article made Congressman Higgins appear to be misinformed and dealing with “fuzzy” math, yet everything Higgins said would be precisely right, if, and only if we take NYPA’s license away!

If, instead of Albany, the people of the Niagara region owned and operated their own power plant- $537 million is a reasonable, if not conservative number to expect -- and that’s better than the puny $5 million NYPA offered Niagara county or the $2 million offered to Buffalo.

By the way, Albany has monopolized not one, but two of our regional assets. By aggressive, pro- Albany management of the Niagara Falls State Park – the most visited state park in the USA - Albany, which controls all major concessions and parking, diverts tourists away from the surrounding area, and sends the profits to Albany. Tantamount to a Tourism Authority, it’s helped bankrupt a city where 17 million tourists visit annually.

Have you ever heard of a city like Niagara Falls - which gets 300 paying visitors for every resident --which is broke? Have you heard of a place where they have one of the most lucrative hydro- electrical energy plants in the world, but the people pay high electric rates?

Imagine, if your two best talents – whatever they are - were taken from you, and then you were told, “Now, kid, go out and compete in the world.”

Niagara Falls should be rich - because of hydro-power and tourism.

Every region has the right to benefit from its natural assets, as it has to compensate for its disadvantages. We generate electricity here.

We should therefore demand local control of our power. Then we can decide what to do with our $½ billion per year (or more) in hydro-profits. We might consider eminent domain --to take our property back from Albany.

We should demand the cheapest electricity in the world for people living here. We will have it, too, because it belongs, not to the political patronage hogs, and corporate robber -barons, but to us, the people of the Niagara.

Goodbye, NYPA.

Higgins half right! Buffalo New "Experts" half wrong Result still the same: Power Authority must go