BROOKFIELD RENEWABLE ENDS CONTRACT WITH REGULATING DISTRICT FOR
E.J. WEST PLANT, SUSPENDS PAYMENTS FOR USE OF CONKLINGVILLE DAM &
GREAT SACANDAGA LAKE
E.J. West Revenue from Brookfield to Drop by 97%
Brookfield Renewable Partners/ Erie Boulevard Hydropower, LP (Brookfield) has ended payments dating back nearly a century by the company and its predecessors for the use of Conklingville Dam & water from Great Sacandaga Lake used in the production and sale of hydroelectricity at the company’s E.J. West power plant. The company had recently been providing $1.5 million annually under the agreement, which had expired in 2021 but had been extended through the end of June as the parties continued to negotiate. Brookfield Renewable Partners (reported
market cap $20 billion
and approximately $80 billion
in assets under management as of first quarter, 2023) had informed the Regulating District that it believed it did not need to revise or renew the agreement, but would be willing to provide the Regulating District a payment equal to 16.7% (around $250,000) of what it had been paying for the privilege of “timing” releases from Great Sacandaga Lake to maximize profits. The Regulating District rejected that proposal from the company, a subsidiary of Brookfield Asset Management, which reported
raising nearly $100 billion
in capital over the previous 12 months, with over $825 billion
in assets at the end of the first quarter, 2023.
The elimination of these payments for the use of State assets and property comes on the heels of a ruling from the Federal Energy Regulatory Commission (FERC) which bolstered Brookfield’s position, and continues an alarming trend of hydroelectric companies providing less revenue to support the State’s water management operations. For instance, in recent years, through litigation and other efforts, hydroelectric companies in the Hudson River Area have been successful in reducing their annual payments to the Regulating District for the use of water regulated by the Regulating District in the generation and sale of hydroelectric power from $3,512,648 annually just two decades ago, to $1,968,050, a reduction of 44%. Increasingly, area taxpayers, specifically in five downstream counties in the Hudson River Area, have been asked to pick up the tab as payments from these companies to the State have decreased.
Brookfield’s financial relief has been even more generous than that, as revenue from the multi-national, multi-billion-dollar company will be just $365,100 in the Hudson River Area in the current fiscal year, compared to $1,881,099 in 2003, representing a decrease of over 80% from what it was paying just two decades ago. Specific to payments related to the E.J. West hydroelectric plant, the revenue the company provides back to the State will go from approximately $1.5 million last year, to approximately $50,000 in the upcoming year (as part of Erie’s headwater benefits payment), a decrease of nearly 97%.
As costs associated with Regulating District operations have increased, and payments from hydroelectric companies have decreased, other groups have been asked to contribute their fair share, and have done so. In 2020, the Regulating District worked closely with the Sacandaga Protection Committee and Great Sacandaga Lake Association to enact a reasonable increase in residential and commercial access permit fees beginning in 2021, the first such increase in 20 years. Though modest in terms of actual dollar increases depending on type of permit & length category, these increases ranged from 16% up to 34%.
The Regulating District continues to believe that it is both just and equitable that Brookfield be required to pay its fair share for the value that the State of New York provided – and continues to provide – in the construction and ongoing maintenance and operation of the Conklingville Dam, to the company’s generation and sale of electricity at the E.J. West power plant. As required by law, the Regulating District has commissioned an independent, third-party appraisal of the benefit to Brookfield that suggests the company’s compensation should be within a range of approximately $1.3 to $2.5 million annually, depending on a variety of factors.
Following FERC’s June, 2023 ruling, the Regulating District promptly took steps to ensure that it can continue its mission of protecting public health and safety, without further burdening downstream taxpayers:
- On July 5th, 2023, the Regulating District submitted a request to FERC seeking authorization to make releases from Great Sacandaga Lake directly from the Conklingville Dam, rather than through Brookfield’s turbines at the E.J. West power plant. This would at least suspend the benefits that the company is receiving from the State without the State receiving fair market value, in violation of Public Authorities Law.
- On Friday, July 14th, 2023, the Regulating District formally appealed FERC’s ruling, arguing that the ruling was predicated on a procedural error, and that FERC conflated the issue of the payments for headwaters benefits (HWB) provided from other downstream hydroelectric plants, with how the E.J. West plant – located at rather than downstream of Conklingville Dam – should be categorized, in making its ruling. The Regulating District also argued in the appeal that FERC erred in determining that it did not have jurisdiction over, and as such the ability to required Brookfield to maintain, the expiring agreement.
A link to the Regulating District’s July 5th
letter appears here.
A link to the Regulating District’s July 14th
appeal appears here.
The Regulating District maintains an excellent operational relationship with Brookfield, which operates several hydroelectric plants either at (in the case of Conklingville Dam) or downstream of its operations in both the Black River Area and Hudson River Area. Regulating District personnel continue to meet monthly with Brookfield to review meteorological & hydrologic short & long-term forecasts, coordinate activities, and ensure operational synergy. Outside of the monthly meetings, Brookfield and Regulating District staff communicate frequently and effectively on releases and other operational issues. The suspension of these payments from Brookfield, while representing a financial hardship for the Regulating District and unwelcome news for downstream taxpayers, has not impacted the Regulating District’s operational readiness or impaired its ability to deliver on its mission of providing flood protection and flow augmentation in the Hudson River Area and Black River Area, nor is it expected to.
The Regulating District will keep residents, local elected officials, and other partners and stakeholders informed regularly as it seeks just compensation from a company with total reported
assets of $80 billion
, and looks forward to prevailing with its appeal to FERC or through the courts to that end.