Members of a group established to study the future of Watertown’s hydroelectricity plant are looking into an interesting proposal.
The city sells excess energy generated by the hydroelectricity facility on Marble Street to National Grid. This arrangement came about partially from the destruction of the city municipal electric distribution system during the ice storm of 1991.
Niagara Mohawk Power Corp., which was eventually acquired by National Grid, paid $7 million for this electrical distribution system that year. The city devoted half the money to paying debts and the balance toward revitalizing the plant.
The agreement between National Grid and Watertown provides more than $4 million annually for the city. This is expected to increase to more than $6 million by 2029, the final year that National Grid will be on the hook for buying surplus power generated by the plant.
The City Council has used this revenue to plug holes in its budget each year. Unless members figure out how to wean themselves from the money coming from National Grid, they’ll have a huge mess on their hands when the cash spigot is turned off in 2030.
Given the contract’s pending expiration, city officials have been confronted with two challenges: how to compensate for the loss of this revenue and how to market the energy produced by the hydroelectricity plant in new ways. It’s unlikely that National Grid will have any interest in renewing its contract with the city, so expertise has been needed to explore what can be done to continue running the plant in a cost-effective manner.
Adding to the problems is the fact that the facility is nearly 100 years old. It requires periodic maintenance, operations that certainly aren’t cheap.
In 2020, the city formed a task force to look at what could be done to mitigate this loss. The City Council approved an agreement with AMBER Energy U.S. Inc. in August 2021 to advise members of the task force on how to proceed.
The firm recommended the city keep the hydroelectricity facility and sell power to residential and business customers. Watertown should begin participating in the Community Choice Aggregation program, overseen by the New York State Energy Research and Development Authority, in preparation for launching this process once the contract with National Grid expires.
The CCA program allows municipalities to take advantage of their collective resources to obtain electricity. Lower rates get locked in from one year to 36 months even if market volatility drives up electricity prices.
All electricity customers are automatically enrolled in the program, although they may opt out at any time if they wish. National Grid continues to deliver the power via its physical grid, maintains the power lines and addresses any outages.
On this page, we have endorsed the idea of communities participating in the CCA program. It’s been shown to save customers money on their electricity bills. The fact that anyone may opt out whenever they like makes this a good option.
AMBER Energy U.S. Inc. believes Watertown could earn between $576,000 and nearly $2.8 million in annual revenues by purchasing energy on the wholesale market and selling it to customers. Once the contract with National Grid expires, the city could sell the output from the hydroelectricity plant through the CCA program, deriving revenues of between $1 million and $4 million, according to the consulting firm.
There are still questions the city would need to address before proceeding with this plan. For example, would the revenues it could earn be enough to pay for the ongoing maintenance and repairs the plant requires? And how would the City Council adjust its spending to reflect the loss of National Grid money?
However, this proposal has possibilities. We commend members of the task force for working diligently to examine this issue and encourage the city to study this plan further to see if it would resolve the problem.
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