Lockport Union-Sun & Journal Online

Local News

March 5, 2012

AES Somerset offline

BARKER — Nothing is coming out of the AES Somerset smokestack and that may not change until June.

Meanwhile, Barker schools will try to fashion a budget under the cloud of uncertainty that surrounds the troubled facility and its $7.5 million payment-in-lieu-of-taxes.

In a meeting Monday with the Barker Central School District, Somerset Supervisor Daniel Engert said the troubled coal-fired plant went offline Saturday. Engert said AES indicated there wasn’t a plan to bring the plant back online before June, which would be the longest shutdown ever for the plant.

“I think that is a significant indicator,” Engert said. “That is a concern to us.”

AES makes PILOTs to the Barker Central School District, the Town of Somerset and Niagara County. Barker receives an annual payment of $7.5 million from the plant. AES is the largest taxpayer in the county.

AES is a major source of revenue for Somerset and Barker.

“We definitely have some challenges,” Engert said.

AES met with Somerset and Barker officials last week to talk about the status of the plant. Barker Superintendent Roger Klatt talked about the meeting, as well as the district’s budget, with Board of Education members Monday night.

Klatt said the AES bankruptcy reorganization plan was approved last week and would include an auction of the Somerset facility and the AES plant in Cayuga. The auction should take place before the end of the month.

The bondholders who now own the Somerset and Cayuga plants will be placing a minimum bid in the auction, which should be $262 million, Klatt said.

The bondholders will have a chance to match or surpass any bid that exceeds their original bid, which is referred to as the “stalking horse” bid.

“So it is very likely the bondholders will maintain control of the plant,” Klatt said. “And it’s in their best interest, they’re indebted $580 million. For them to lose the plant would be a major loss.”

Regardless of who wins the auction, part of the reorganization plan to make AES a more profitable company would be to negotiate a new PILOT, Klatt said. The PILOT and personnel are the biggest costs for AES.

Barker’s budget is between $19 and $20 million. Klatt shared a number of staffing cuts, but the district still faces a deficit of $319,000 for the 2012-13 school year.

Board members will decide on how much to raise the tax levy, the amount of budget revenue that comes from property taxes. Klatt recommended the board raise the levy, something Barker has not done in four years.

Under the state’s property tax cap, Barker can raise taxes by 31.6 percent. Klatt said obviously that won’t happen.

But a 2 to 3 percent raise is possible, as board members discussed it Monday. The Board of Education will meet again March 13.

Contact reporter Joe Olenick at 439-9222, ext. 6241.

Text Only
Local News
Featured Ads
Front page
Community Events
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
AP Video
Raw: Obama Tours Gyeongbok Palace Swimmer Michael Phelps Back in Competition Raw: Obama Lays Korean War Memorial Wreath Obama Leads Naturalization Ceremony in Seoul Calif. School Bus Crash Hurts Driver, 11 Kids Country Club for Exotic Cars Little Science Behind 'Pollen Vortex' Prediction US Proposes Pay-for-priority Internet Standards Wife Mourns Chicago Doctor Killed in Afghanistan FDA Proposes Regulations on E-cigarettes Kerry Warns Russia of Expensive New Sanctions Mideast Peace Talks Stall on Hamas Deal Cody Walker Remembers His Late Brother Paul Grieving South Korea Puts Up Yellow Ribbons Raw: Kerry Brings His Dog to Work Raw: Girls Survive Car Crash Into Their Bedroom Three U.S. Doctors Killed by Afghan Security Yankees' Pineda Suspended 10 Games for Pine Tar Colleagues Mourn Death of Doctors in Afghanistan Ukraine Launches Operation Against Insurgents