Watertown braces for loss of hydro plant revenue

Published: Dec. 16, 2022 at 5:46 PM EST
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WATERTOWN, New York (WWNY) - How does a city prepare to lose millions of dollars in revenue? That’s the reality in Watertown as a contract over the city’s hydroelectric power plant is set to expire in 2030.

It’s the third largest revenue source for the city behind sales and property tax: Watertown’s hydropower plant.

“Comparing it with how much things cost, it’s equal to about half our police department or half our fire department. So it’s an important part of our budget,” said Watertown City Manager Ken Mix.

But not for much longer. It’s a reality the city is facing as its hydropower deal with National Grid, which brought in about $5 million in revenue this year is set to expire at the end of the decade.

Right now, the plant generates electricity for city buildings. The excess is sold off to National Grid.

That electricity was sold this year at 26 cents per kilowatt hour even though market rates today are 3 to 4 cents per kilowatt hour.

That means National Grid is paying a lot more for the electricity than it’s worth. And without the deal, the hydro plant would barely hit $500,000 yearly in revenue for the city.

But options are in the works. One of them: buying electricity at a wholesale price and selling it to residents and businesses in the city which would cut about 10 percent from their electric bill.

At the same time, the city could sell the electricity generated from the hydro plant to the New York Independent System Operator, which manages the state’s electric grid when it’s needed.

“What it is is a win-win for both the city in generating new revenue and for the residents in saving money on their electric bill,” said City Council Member Cliff Olney.

But still, Mix says none of the options will make up for all the lost revenue when the deal expires. The city could still lose a couple of million dollars.

“Again, that will not produce as much income as we get now from the National Grid contract,” said Mix.

Olney says the hydro plant will be one of the first items of discussion for city council in the new year.