Part Three: 2007—2014
BY CHERYL SLAVIN
The death knell sounded for the Lovett Power Plant in 2006. Judge Thomas Dickerson, in deciding the fair market value for the plant, found that Lovett was both functionally and economically obsolete. “It would cost more to reconstruct (Lovett) than it would to build an equivalent and more efficient modern facility,” he wrote in his opinion deciding the tax certiorari case that Mirant Energy, Lovett’s owner, had brought in 2003.
At that time, Lovett was still subject to a 2003 consent decree in which Mirant had agreed to either bring the emissions controls of the aging plant up to code or discontinue operating the plant. It’s no surprise, then, that Mirant opted in 2007 to close Lovett. By 2009 nothing remained of the plant but a bare plot of land and an ash pit.
Did deregulation play a role in this decision, as well? Arguably, yes. For better or worse, deregulation had created an environment where cost/benefit analysis of retaining a power plant primarily focused on corporate profit.
Lovett went from producing 48 percent of Stony Point’s tax revenue to being worth nothing more than the land on which it once stood. It’s valuation of around $400 million in 1999 dropped to about $200 million in 2006.
The big energy company wasn’t done yet. Mirant had committed to refrain from further tax challenges for the next two years, but in 2009—as soon as it could—it again petitioned the court, this time for a 94 percent reduction of its tax assessment for the Bowline plant. Ultimately, Mirant’s assessment went to $4 million in 2010.
How did such a large corporation stay motivated to shake every last penny out of local governments across the country? Simple: by hiring their lawyers on contingency. Corporate attorneys who stood to gain financially from a large settlement led the efforts in each case, local officials have told the Rockland County Times.
The strategy helped. During the same time period, Mirant completed a cash disbursement to its stockholders of $4.6 billion dollars.
In 2010, Mirant became GenOn, but the tax litigation remained. This time, however, the Town of Haverstraw and the school district seriously pursued settling the case. They entered into negotiations in 2012 which included the prospect that GenOn would, as a part of the deal, build and utilize a third plant at the Bowline site.
But then GenOn merged with NRG as a way, the companies claimed, to bolster its “sagging stock prices.” The merger would “deliver immediate value to the shareholders of both companies,” GenOn stated in its announcement. NRG expected a rise in annual earnings of $200 million by 2014, while saving an average of $100 million in interest payments a year.
The merger, however, did nothing but spell more bad news for Rockland. According to Howard Phillips, Haverstraw Town Supervisor, NRG refused to continue settlement negotiations for almost a year. Then, when it did, it ultimately withdrew interest in building a new Bowline plant.
The parties finally did reach a settlement in early 2014. In exchange for relinquishing any claims to over-assessments for the next seven years, NRG would receive an additional $8 million total refund. As before, the school district bore the brunt, shouldering about half of the amount. The Town of Haverstraw was responsible for another third, with the remainder divided among the other taxing jurisdictions including the county and the Village of West Haverstraw. Additionally, NRG agreed to a Payment in Lieu of Taxes (PILOT) agreement of $2.7 million a year, to be divided proportionately among the parties, for the seven years.
To add insult to injury in the eyes of most North Rocklanders, the state Public Service Commission-the same agency that promoted deregulation a decade and a half ago-now is seriously considering the approval of the Champlain Hudson Power Express, a power line to be run from Quebec down to New York City. The PSC sees CHPE as serving an increased power need in the city—a need that was once met by Hudson Valley power plants such as Lovett and Bowline.
From a high of $60 million a year in 1999, the total tax revenue generated by the large power plants of North Rockland dropped to barely $3 million in 2014. In addition, Rockland’s energy production capacity has become highly limited; Lovett is gone, and Bowline is severely underutilized. However, the energy conglomerate NRG did report a $200 million increase in profits recently.
A similar scenario is currently playing out in Newburgh, where the energy corporation Dynegy is in the process of selling off and closing the Roseton and Danskammer power plants after emerging from its own near-bankruptcy. The situation there is complicated by the damage to Danskammer by Hurricane Sandy, but the result would have been the same in the end: the diminishment of a once thriving local industry and the economic fallout that comes along with it.