Brookfield, state continue to square off over water-use payments

Federal agency sides with hydropower plant operators on Great Sacandaga Lake

By Larry Rulison, Times Union

HADLEY — Next to the Conklingville Dam on Great Sacandaga Lake sits an unassuming, nearly century-old hydropower plant that has become embroiled in a multimillion-dollar controversy that could have wider implications.

The facility, known as the E.J. West hydropower plant, is owned by Brookfield Renewable U.S. For the past several decades, Brookfield has been paying an annual fee of $1.5 million to the Hudson River-Black River Regulating District, the state public benefits corporation that regulates Great Sacandaga Lake and Indian Lake, two large reservoirs critical to the upper Hudson Valley’s water supply. The regulating district also oversees dams.

The payments date back to 2002, when the Federal Energy Regulatory Commission issued a new license for the hydro-plant that called for Brookfield to compensate the regulating district for the E.J. West plant’s use of Great Sacandaga Lake water. The plant diverts water to its two power-generating turbines when it needs to generate electricity to sell into the power grid.

The plant can generate up to 22 megawatts of electricity when fully operational — enough to supply tens of thousands of houses with electricity, although that is a rough estimate.

Under that agreement, the payments were required through 2022, although the two sides agreed to extend the agreement through the end of June of this year so they could try to negotiate a new payment plan. Brookfield had said it would be willing to pay $250,000 a year. The regulating district believes the payment should be closer to $2.5 million. They have yet to come to an agreement.

In a ruling in June, FERC sided with Brookfield that it no longer is required to make the annual payments. The Federal Energy Regulatory Commission also ruled that the regulating district must keep providing water to the Brookfield plant despite the end of the compensation arrangement.

On July 14, the regulating district asked FERC to reconsider its ruling and schedule a rehearing. FERC has 30 days to act on the appeal, said Celeste Miller, the commission’s spokeswoman.

“If the commission does not act in that timeline, the request is automatically denied,” Miller said.

Brookfield did not respond to a request for comment on the dispute and the FERC ruling.

The Hudson River-Black River Regulating District said the loss of revenue from the E.J. West plant is part of a larger effort by hydro-plant owners to reduce their annual payments to the regulating district through litigation and other efforts in recent years, forcing it to raise access fees for residents and businesses that utilize the Great Sacandaga Lake.

The increases, put into place in 2020, ranged from 16 percent to 34 percent. 

John Callaghan, executive director of the Hudson River-Black River Regulating District, said he is hopeful that Brookfield will contribute its fair share so that taxpayers don’t have to make up the entire shortfall. He added that the regulating district is still releasing water to Brookfield for the hydro plant.

“We are very hopeful we will be able to reach a deal with Brookfield that would result in fair compensation back to the state and help protect taxpayers,” Callaghan said.

There is also the issue of New York’s strict climate change law that will eventually require all electricity generated in New York state to be carbon-free.

Although a small hydroplant isn’t going to make a huge difference in the grand scheme of the law, New York is going to have a huge struggle just meeting the requirements of the 2019 law, called the New York’s Climate Leadership & Community Protection Act, according to a new report by state  Comptroller Tom DiNapoli.

Callaghan said the regulating district is usually best known for its flood protection mission. The Great Sacandaga Lake is a man-made reservoir created in the early 20th century to help prevent flooding in the region by damming up the Sacandaga River.

But the generation of renewable energy, he said, is arguably no less important to the region and the state.

“The hydroelectric plants at and downstream of reservoirs under the (district’s) jurisdiction produce enough electricity annually for over 450,000 homes,” Callaghan added.