SOMERSET — AES Somerset, the coal-burning power plant on Lake Ontario which is the largest tax-payer in Niagara County, is shut down now, but has potential.
That’s what the taxing jurisdictions learned Wednesday in a meeting at the Niagara County Industrial Development Agency.
Representatives of the Barker School District, Niagara County and Town of Somerset met with representatives of the bondholders who are left with the bankrupt facility and hope to recoup their money.
The bondholders are not an energy company, but investors who are out to cut their losses and make a profit. To do this, AES Somerset has to become a money-maker again.
According to Dan Engert, the Somerset supervisor, RPA Advisers of Paramus, N.J. feel this can happen.
“The guys are confident this coal plant can succeed with its workforce and efficiency,” Engert said. “They are looking at every line and came away with belief this plant can make it.”
RPA advisors talked about fixed costs of the current PILOT and employees.
AES Eastern Energy filed for filed for Chapter 11 in December and group of debt holders agreed to buy the Somerset facility. The plant was put up for auction, but had no buyers last week, leaving the debt holders in position to try to turn it around.
The school district, county and town have a stake in keeping the business alive. There are three years remaining on a payment-in-lieu-of-taxes deal that would provide the jurisdictions $12.8 million in the years 2013, 2014 and 2015. Barker School gets more than half the money.
However, the debt holders need reduction of 40-60 percent, according to Engert. Those are the negotiation parameters now, the supervisor said.
“We have a short window to succeed,” Engert said. “We see this as a one-shot deal to make this work. The investors are trying to recoup their investment. We’re striving to be part of a survival story. We’re all in this.”