At the time the deal was sealed, it sounded like a sure bet. Constellation Energy would buy and operate the Ginna Nuclear Plant, located on the shore of Lake Ontario in the Town of Ontario. The previous owner, RG&E, would sign a 10 year agreement with Constellation to buy the majority of its energy requirements, locking in what everyone thought would be rising energy costs.
Everyone would benefit. Constellation would have a sure customer at set rates for 10 years, RG&E knew what their energy costs would be for the decade. A P.I.L.O.T. (Payment In Lieu of Taxes) agreement was reached with Wayne County, the Town of Ontario and the Wayne Central School District. The negotiated value for Ginna property taxes was set at $260 million dollars for the 10 year agreement. Constellation Energy would fork out $8.6 million in property taxes to the three taxing entities.
The agreement between RG&E and Constellation Energy expires in June of 2014. There is one problem no one saw coming. Hydrofracking, the drilling and the fracturing of rock to capture escaping natural gas, has provided a glut on the energy markets and has driven down costs considerably.
Even though New York State has yet to establish and license a viable hydrofracking policy here, the amount of natural gas nationwide has other forms of energy trembling in their boots, trying to compete. More power companies are looking at natural gas to generate electricity for their customers.
Bottom line, the hefty drop in energy costs, will result in less revenue for Constellation, with the assessed property value likely to drop considerably at the Ginna Plant.
At a meeting last week, Wayne County Town Supervisors and County officials were informed of the situation at a meeting held at the Ginna Plant by Constellation officials. They were also told that any idea of adding more reactors and possibly another nuclear plant were shelved.
“As an RG&E consumer, I like this, but as a town official, the $8.6 million was a nice chunk of change,” said Ontario Town Supervisor Bob Kelsch. “Natural gas and hydrofracking has changed the price of electricity. Who would have thought hydrofracking would affect the town and school taxes in the Town of Ontario?,” he added. Kelsch said that he still believes natural gas is not the long term answer for the nation’s energy consumption. “Economic dynamics change. Who knows what the future will bring, but we need them,” stated Kelsch of the Ginna Plant.
Wayne Central School District Superintendent Renee Garrett indicated that she was not aware of the meeting held with the County Supervisors, nor that hydrofracking was discussed in relation to the cost of energy. In September they (Constellation) paid $5,429,024.65 to the District. This included 5 separate parcel numbers. In January Constellation paid $101,978.00 for the 12/13 Assistance payment for the Ginna Nuclear Power Plant. Total In-Lieu was $5,531,002.64 from Constellation.
In a prepared statement, the District said: “The district is working corroboratively with the town and the county in discussions with Ginna. We have retained experts to assist us in the negotiations and we anticipate that the company may raise the drop in natural gas prices as a reason why it’s payments should be reduced. We will have to evaluate all the information and see if the parties can reach an agreement.”
Another fly in the ointment is the possible rise of lake levels now being discussed which may contribute to more hydroelectric power being produced in plants on Lake Ontario. They too compete with the Nuclear Plant.
A Constellation spokesperson stated “Low natural gas prices do not diminish Constellation Energy Nuclear Group’s commitment to paying our fair share of property taxes. While we work with local officials to establish an updated tax agreement for Ginna Nuclear Power Plant, we will continue to support the community through existing tax agreements, local service contracts, corporate sponsorships and charitable donations.