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Watertown could lose money if hydroelectric plant contract with National Grid expires

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WATERTOWN — Since 1991, the city has enjoyed a lucrative contract to sell excess electricity to the Niagara Mohawk Power Corp. — now National Grid.

But that revenue source, which comes from the city-owned hydroelectric plant off Marble Street, could dry up in 15 years, costing the city millions in annual revenues, according to Comptroller James E. Mills.

The Watertown Municipal Hydroelectric Plant brings in about $3 million a year and represents approximately 9 percent of the city’s annual revenues.

“It’ll be a more significant piece of the puzzle in the years ahead,” Mayor Jeffrey E. Graham said, acknowledging that revenues from the 38-year contract will be difficult to replace if the city and National Grid don’t renegotiate their agreement before it expires in 2029.

Watertown entered the hydroelectric industry when the Marble Street plant was built along the Black River in 1927. For decades, the city owned and operated its own municipal power system, powering only its buildings.

In 1991, there was a proposal to spend $25 million to expand the plant, a move that would have been part of a municipal power system. As part of the project, all of Niagara Mohawk’s facilities would have been condemned, and a muncipal power distribution system would have been created in Watertown.

After an ice storm destroyed the city’s street lighting system, the city was forced to consider a deal with Niagara Mohawk.

Following contentious debate among City Council members, Niagara Mohawk finally offered to buy the electrical system for $7 million.

The expansion plans were dropped, and the plant remained in the city’s hands.

The city currently sells the electricity to National Grid for 18.36 cents per kilowatt hour under the contract between the two parties.

According to the agreement, the per-kilowatt-hour rate increases 4.35 percent every year. With the city now receiving about $3 million in annual revenues from hydropower, that number would grow to about $6.8 million if all the same conditions exist in 2029 as they do now, Mr. Mills said.

Hydropower along the Black River isn’t just about the present and future, however.

City Water Superintendent Michael J. Sligar said the river is one of the reasons that settlers ended up in Watertown during the middle of the 19th century, and hydropower became a primary reason that they stayed.

When industrial development began during that century, hydro plants were built solely to power factories and the saw and grain mills that dotted the tributary.

Over the years, several companies along the Black River also supplied electricity to run their manufacturing plants. For instance, the Black Clawson foundry once operated a plant to generate power for its foundry complex off Pearl Street before it closed some 35 years ago.

Besides the Watertown municipal plant, the Black River is home to 16 other hydro facilities, all owned by private renewable-energy companies.

Brookfield Renewable Energy Partners — a global firm with 143 facilities in the United States and a Watertown office that has 38 employees — is one of the biggest hydro players along the river, operating six plants there, along with facilities on the Oswegatchie, Oswego and Raquette rivers and elsewhere in the state.

Acquired in 2004, four of Brookfield’s six hydro facilities on the Black River are in the villages of Black River, Herrings and Deferiet and near Kamargo Island.

The remaining two are within the Watertown city limits — on Sewall’s and Beebee islands.

There are four hydro facilities in the city.

In addition to the municipal plant and the ones on Sewall and Beebee islands, there is the Diamond Island Dam.

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