Oct. 25--PLATTSBURGH -- Efforts to reach a new payment-in-lieu-of-taxes agreement with Saranac Power Partners are seen as crucial for regional economic development.

County of Clinton Industrial Development Agency Executive Director Adore Flynn Kurtz said it's not just the co-generation plant, which uses natural gas to produce electricity, but the North Country Gas Pipeline, which brings natural gas from the Canadian border to the plant.

"Natural gas is the backbone of industrial development," she said.

The pipeline provides natural-gas access to large customers, such as CVPH Medical Center, Wyeth and Peru Central School, and will do so for Nova Bus.

The co-generation plant also supplies steam energy to Georgia-Pacific and Pactiv.

PAYMENTS

Saranac Power Partners pays $2.215 million a year total to Beekmantown Central School District, Clinton County and the Town of Plattsburgh.

A separate agreement has the town sending $850,000 of its share to the City of Plattsburgh each year.

The company wants to reduce its total payment to the municipalities to about $500,000 per year, Kurtz told Plattsburgh Noon Rotary Club members.

The IDA has retained a Buffalo-based consultant with the firm Conestoga-Rovers & Associates to review Saranac Power Partner's assertion that it will not be as profitable in the future.

The hope is an agreement can be reached that will allow the taxing jurisdictions to continue to receive PILOT payments and also satisfy the company's need to make an acceptable profit.

The consultant's report was due Friday, Kurtz said, so it will now be reviewed by the IDA and taxing jurisdictions, who will make a decision on whether to amend the agreement and if so, how.

INDUSTRY CHANGES

Kurtz said the plant was very profitable for the first 15 years of the 30-year PILOT agreement, as seen by its ability to pay off the mortgage on the facility and still make its PILOT payments.

The PILOT payments were supposed to increase during the second 15-year portion of the agreement, she said.

"It was always expected the plant would stay in business for 30 years and revenue would only go up."

That's no longer the case, she said, due to deregulation of electric utilities.

An agreement that allows New York State Electric and Gas to purchase the plant's electricity expires early next year, and NYSEG has stated it will not be renewed.

Saranac Power Partners officials have been unsuccessful in finding a new buyer and say it will need to operate as a merchant, or tolling, plant. It would not have a steady customer, as it does at present, but would produce power when a customer needs it.

The company could have trouble doing that because it is expensive to transport electric power from this area to downstate, where more potential customers are located, Kurtz said.

It also means the plant would probably not run every day of the year, as it does at present.

That would make it difficult to determine how much money it would make and how many employees would be needed, Kurtz said.

ASSESSMENTS

Saranac Power Partners has also challenged the plant's $200 million assessment. It has filed an Article 7 proceeding in Clinton County Supreme Court to reduce the assessment to $32 million.

Town of Plattsburgh Assessor Effa Sullivan said the assessment was set in 1993, when the plant, then called Falcon Seaboard, reached the PILOT agreement with the three taxing jurisdictions.

North Country Gas Pipeline has also challenged pipeline assessments in the municipalities it passes through.

dheath@pressrepublican.com

-----

To see more of The Press-Republican or to subscribe to the newspaper, go to http://www.pressrepublican.com/.

Copyright (c) 2008, The Press-Republican, Plattsburgh, N.Y.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NYSE:WYE, NYSE:PTV,

A service of YellowBrix, Inc.