The fledgling St. Lawrence River Valley Redevelopment Agency suffered a major setback Wednesday when Gov. David A. Paterson refused to sign a contract between the agency and the New York Power Authority for the release of 20 megawatts of low-cost power to spur economic development.
Despite assurances to River Agency officials over the last two months that Mr. Paterson would approve the contract, the governor's legal counsel said there were too many conflicts with NYPA's statutory requirements for it to be approved in its current form, said Thomas C.C. Congdon, the state's deputy secretary for energy.
"We've made it clear to all the parties that we wanted to find a way to make something like this work," Mr. Congdon said. "It did not meet the existing statute."
The River Agency had sought the power to rectify what officials have called major discrepancies between NYPA's 50-year relicensing settlement to operate the St. Lawrence-FDR hydrodam in Massena and the relicensing settlement for the Niagara power project in Western New York. NYPA trustees in September finalized a contract releasing the power to the River Agency, which represents the towns of Lisbon, Waddington, Louisville and Massena and St. Lawrence County.
The agency was going to use the low-cost power to attract new industry and help the county's existing businesses expand.
Mr. Congdon said a major problem with the contract was that no specific businesses to receive power allocations were named. River Agency officials had planned to accept applications from businesses seeking power, a process that has not yet been finalized.
He said the law says NYPA power allocations to specific entities require public notice, a public hearing, approval by NYPA trustees and final approval by the governor.
"It was essentially abdicating the responsibility of NYPA to oversee allocation decisions to another entity that would not be subject to the same transparency laws and oversight as a typical power contract," Mr. Congdon said.
He said that likewise, NYPA would have no oversight of River Agency cash allocations to businesses from proceeds from the sale of power that was not being used.
"We don't know of anywhere in the statute that allows NYPA to administratively monetize power and give another entity the authority to make expenditure decisions," Mr. Congdon said. "The Legislature this past year passed a bill that expressly authorized NYPA to monetize a chunk of Western New York Power, so if NYPA had the authority to do it, why did the Legislature act to give them that authority in a limited situation?"
Mr. Congdon said that despite the legal issues, Mr. Paterson is not opposed to the idea. He said that if the River Agency and NYPA submitted a plan that conformed to the law, it likely would be approved.
"I'm hoping we can get a positive resolution to this in the next few months," he said.
NYPA President and CEO Richard M. Kessel said late Wednesday that he is not giving up. He said he will appeal to Governor-elect Andrew M. Cuomo when the latter takes office in January.
"I'm very disappointed, but I believe in this, and I'm not going to let it die," Mr. Kessel said.
He said it's too early to tell whether major changes would be made to the agreement.
"We want to take a look at the governor's letter, and we obviously want to consult with local officials who we've been working with," Mr. Kessel said. "Then we'll figure out where to go from there."
River Agency Chairman Robert O. McNeil could not be reached for comment Wednesday night, but had said early Wednesday afternoon that the contract still was on target for the governor's approval.
County Administrator Karen M. St. Hilaire said she hopes the power contract still can move forward.
"I think everyone thought everything was OK," she said. "It wasn't until today that people understood there were legal issues, but at this point they're determined to go back and fix those issues."