NYSEG ANNOUNCES COST OF TERMINATING SOUTH CORNING PROJECT -- MOVE SAVES CUSTOMERS $300 MILLION
BINGHAMTON, N.Y., Jan. 25 /PRNewswire/ -- New York State Electric and Gas Corporation (NYSEG) (NYSE: NGE) today announced that, to save its customers $300 million over the next 25 years, it will pay Kamine/Besicorp Corning L.P.
and its affiliates $34 million to terminate a power purchase agreement for the 79,000-kilowatt South Corning Cogeneration Project.
The agreement termination, which was announced last month, means that Kamine/Besicorp will abandon plans to develop the South Corning plant. "This termination is in the best interest of our customers," said Brian Eldridge, NYSEG's manager for the Elmira Division. "We do not need the electricity this South Corning plant would have produced. We have enough generation now to take care of our customers' needs through the rest of this decade. "If we had gone ahead with this agreement and bought electricity from the South Corning plant, it would have cost our customers approximately $300 million in higher electricity bills over the 25-year term of the agreement. That's a heavy penalty," he said. In the near future, NYSEG will petition the New York State Public Service Commission (PSC) for approval to recover the $34 million cost of the contract termination through rates. If approved, the typical residential customer will benefit by 41 cents a month over the first three years and the full 82 cents a month in subsequent years. Federal law required NYSEG to enter into the South Corning contract, which was signed in May 1990. According to Eldridge, the law's original intent was good. However, conditions have changed. By 1995, NYSEG expects to have an excess of generating capacity of over 800,000 kilowatts. The major factors contributing to this surplus are reduced load growth due to the economy, greater energy conservation, and the many independent power producers (IPPs) expected to supply electricity to NYSEG. "NYSEG is anxious to see an improvement in the economic conditions in all the areas it serves," said Eldridge. "Controlling the cost of electricity for our industrial and commercial customers in particular is good for the economy and for employment. Our goal is to retain existing industries and attract new ones. Reasonable electric rates can assist in achieving this goal," he said. To keep rates down, NYSEG is also aggressively marketing its excess electricity to other utilities in the northeastern and middle Atlantic states and Canada. NYSEG paid Kamine/Besicorp $20 million when the contract termination agreement was signed Dec. 18, 1992. An additional $14 million will be paid in 12 installments through April 1996. "Economic IPPs can be a viable alternative for electric generation when a utility needs more generating capacity," said Eldridge. "Many are well-managed, reliable providers of electricity. When NYSEG needs more capacity, we will likely seek bids from IPPs." The South Corning project would have supplied steam to heat a greenhouse and produced electricity for NYSEG. Kamine/Besicorp had planned to start building the facility early next year and to begin operating it in late 1994. -0- 1/25/93 /CONTACT: Ken B. Hooper, manager-media relations, New York State Electric & Gas Corporation, 607-762-4407/ (NGE)
CO: New York State Electric & Gas Corporation ST: New York IN: UTI SU:
BM -- CL014 -- 8552 01/25/93 13:40 EST
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|Date:||Jan 25, 1993|
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