Power plant, GE deal on hold

GEP developer undeterred by financing loss
By MICHAEL LAMENDOLA
Schenectady Gazette Reporter

May 15, 2003

GLENVILLE - Developers of a proposed power plant in the Scotia-Glenville Industrial Park have lost their primary source of funding, General Electric Power Systems.

Opponents said the loss of GE's backing could spell the end of the 520-megawatt power plant project. This was denied by one of the developers.

GE placed its relationship with Glenville Energy Park "on hold" in late January and early February, said Jan Smith, GE Power Systems spokeswoman.

"We haven't severed ties with GEP. I'm not aware of any additional money that's changing hands," she said.

GE signed a joint development agreement with GEP managing partners Thomas Macaulay and Robert Votaw in 1999. Since then, the company has paid GEP's legal, engineering and consulting fees related to the project.

Power plant opponent Neil Turner estimated GE has spent close to $1.5 million on the project. He said GEP agreed to buy GE equipment in return for the company's financial commitment.

Turner is president of Citizens Advocating Responsible Development. The grass-roots organization has fought GEP's proposal for more than three years.

"If he does not have a financial backer, he won't be able to go forward with this. He'll need $5,000 per week if this thing starts up again," Turner said.

Neither Smith nor Macaulay would release details on the financial arrangement.

Macaulay said GEP is still moving forward with the project and that GE still wants to build the power plant.

"We had a meeting with them last week. They're still supporting the project," he said.

Smith said GE is re-evaluating the agreement because of a volatile energy market.

"While there remain uncertainties, we're on hold," Smith said. "We're still looking at it to see if it's financially feasible."

U.S. electric utilities are experiencing their worst credit crunch in 60 years, which has delayed the construction of power plants throughout the country, according to the Wall Street Journal and industry publications.

Macaulay said the project still needs financing to be built. The project is estimated to cost more than $350 million.

Last year, Duke Energy North America canceled an agreement to buy the project. "GE would have built the power plant and Duke would have owned and operated it," Macaulay said.

Despite his latest setbacks, Macaulay said he plans to drill test wells shortly and will submit a revised application to the state Siting Board on Electric Generation in July. The siting board will determine after a lengthy review process whether to grant GEP a permit to build the power plant. GEP can retain the permit until market conditions improve and sell the project to a power company.

GEP is proposing a "merchant power plant" for the industrial park. A merchant plant sells electricity wholesale to the Independent System Operator, which manages the state's power grid.

The test wells will determine whether GEP can draw millions of gallons of water per day from the Great Flats Aquifer to cool the proposed power plant. Macaulay would not disclose where the wells will be drilled.

GEP had wanted to buy water from the city of Schenectady and use the village of Scotia's sewer system to dispose of waste water.

Schenectady's City Council decided against selling GEP water and the village's Board of Trustees voted not to let GEP use the sewer system.

Their actions forced GEP to revise its application to include alternatives to obtaining water and disposing of waste water.