Lower Assessment Wanted For Massena Co-gen Plant

MASSENA - A co-generation plant here sold for only 20 percent of its total assessed value, prompting the facility's new owners to begin discussions with the town on getting on a lower assessment for the property.

A reduced assessment could spell the loss of as much as $398,000 in town, county and school district tax revenues.

Assessed at $15.3 million, the Massena Energy Facility was sold for approximately $3 million last year by RPL Holdings LLC, a subsidiary of British power firm Renewable Power and Light, to MEG Development Co. LLC, a subsidiary of Morris Energy Group of Eatontown, N.J.

Sale agreements were signed in early July and approved by the Federal Energy Regulatory Commission July 31. Morris Energy closed on the deal to purchase the 85 megawatt co-generation facility in late October, according to federal records.

A record of sale has not yet been filed with the county's office of real property, according to Massena Town Assessor Michael C. Ward, but officials expect those documents to be submitted soon, making the deed transfer official.

Since acquiring the facility, Morris officials have contacted Mr. Ward about the discrepancy between the value the town has assessed the facility for and the amount of money it drew in the sale.

"We are in discussions with Morris right now about the assessment," Mr. Ward said.

Discussions have included an initial meeting at the plant, which the assessor said was productive.

"They talked about the economic conditions of co-gens right now and what happened with the sale," he said. "They were very forthcoming with information and easy to work with. We're optimistic we're going to work out a good settlement with them."

Morris Energy has two options for pursuing a lower assessment. The firm can come to a mutually-agreeable decision with the town or the company can file an official grievance with the town by grievance day, which will be held May 25.

Mr. Ward is hopeful the town and company will be able to work out a fair solution on their own, he said.

Property taxes on the facility totaled just over $478,000 this year, including $287,596 in school taxes, $124,974 in county taxes, $54,401 in town taxes, $6,066 in chargebacks and $4,985 for fire protection and health district services.

If the plant's assessment was lowered to the sale value, tax contributions would drop by about 80 percent to approximately $95,600 total, though Mr. Ward said the town will be working closely with the company to come up with a fair assessment, which may not drop as drastically as that.

Construction of the Massena co-gen plant began in 1991 and was completed in 1993. Until 1998, the facility sold the bulk of its electricity to Niagara Mohawk Power Corp. and its steam to Alcoa.

After federal regulations on utilities changed in 1998, utilities like Niagara Mohawk stopped purchasing power directly from power plants and the Massena plant began selling their power into the open market.

Currently, the plant operators here bid their power to the market on a daily basis at a price that is based on the amount it costs them to produce that power. If demand for energy pushes the market price of electricity above the Massena plant's price, the facility begins to produce power and sell it into the grid.

RPL Holdings purchased the Massena plant in 2006 from Alliance Energy, which also owns a co-generation facility in Ogdensburg.

In 2007, work began to switch the facility from fossil fuels to biodiesel. Facility Manager Shaun Prentice said the plant now has the necessary state and federal permits to run on biodiesel.

While the energy market has not given the Massena plant many opportunities to produce power in recent years, Mr. Prentice said the important thing is that the facility is still here and still able to produce power. There are currently six employees working at the site, all of whom are now employed by new owner Morris Energy.

"We're still here," Mr. Prentice said. "Most of the other co-gen plants in the North Country are gone. We're still bidding into the market every day. We're just hoping the load forecasts change and get more favorable."

While the plant has encountered some challenges in recent years, the manager said the company is hopeful things will improve.

"It all comes down to economics," Mr. Prentice said. "If New York State starts to really get behind that renewables portfolio, it puts us in a better spot because we're green. We were one of the first in the state to accomplish that - the economics of the business drove us in that direction. When the opportunity presents itself, we're ready."