January 17, 2008
Alliance Energy Offers $10 Million for Mirant's Stony Point Plant
Laura Incalcaterra
STONY POINT - An upstate New York company has offered $10 million to buy the Lovett Generating Station and convert it into a "green" facility.
The possible sale brought praise for its environmental aspects but concern about the potential tax burden if Alliance was to seek a property-tax reduction based on the sales price. The value of the plant, which is owned and operated by Mirant Corp., is assessed at more than $300 million.
The Alliance Energy Group has submitted a formal proposal to buy the site, Alliance spokeswoman Jane E. Rubinstein of Rubenstein Associates of Manhattan said yesterday.
The company made the offer on behalf of Alliance Energy Renewables LLC, which last year purchased several Mirant properties, including a gas turbine in Hillburn, Rubinstein said.
Mirant spokeswoman Felicia Browder did not respond to requests for comment.
The Journal News obtained a copy of a letter written Jan. 11 by Alliance's managing member, Samuel G. Nappi, to Mirant CEO Edward R. Muller, outlining Alliance's intentions to buy Lovett and convert it to use renewable fuel sources.
In the letter, Nappi states that Alliance is prepared to purchase all of Lovett for $10 million in cash. A condition is that Alliance would be free of all liability concerning the property upon the final sale.
The two-page letter also outlines benefits of the sale to the community and the environment, including ending the practice of releasing wastewater into the Hudson River after it has been used to cool Lovett's turbines.
Nappi also said that the sale would allow the retention of skilled workers, ensure a stable tax base and enhance the overall availability of power in the Lower Hudson Valley.
Stony Point Supervisor Phil Marino said yesterday that the concept of converting the coal-burning Lovett plant to an environmentally friendly fuel was appealing, but that the low purchase price offer was a concern.
"That's a lot less value than we place on it," Marino said.
Mirant pays about $12 million a year in town, school and county property taxes on Lovett.
Marino said an extremely low sales price could bring severe consequences for taxpayers if Alliance chose to challenge its assessment based on the sale price.
"The town and the school district would take a hit," Marino said.
Town and North Rockland school district taxpayers would have to pay more to make up for any reduction in taxes paid by the plant's owner. Taxpayers already have been grappling with higher school and town taxes due to a successful property-tax assessment challenge filed by Mirant.
Jim Johnston, director of finance for North Rockland, said it was up to the town to determine Lovett's value.
"The school district is not the assessing agency, and all comment on assessment should be answered by the town," Johnston said yesterday.
County Executive C. Scott Vanderhoef said he had only preliminary information about a possible sale, but was hopeful about Lovett's future.
"I was encouraged by the offer to purchase it and make it green," Vanderhoef said.
Keeping the plant operating would retain jobs, provide a cleaner source of electricity and help keep taxes stable, he said.
George Potanovic, president of the Stony Point Action Committee for the Environment, said it was too soon to know if Alliance's offer would benefit the community or the environment because no details were available.
"The prospective sounds interesting," Potanovic said. "It's hard to know right now."
The coal-burning Lovett plant has routinely landed on the list of worst polluters in New York and the country, according to the state Department of Environmental Protection and the federal Environmental Protection Agency.
A 2003 legal agreement involving Mirant, the DEC and the state Attorney General's Office required the company to shut down its two coal-fired units unless it upgraded pollution controls or converted to a cleaner fuel source, such as natural gas.
Mirant shut down one unit in the spring of 2007 and is expected to shut down the second in April.
Alliance owns and operates mostly natural-gas-fired power plants in upstate Batavia, Massena, Ogdensburg and Sterling.
It also owns and operates the Mongaup, Rio and Swinging Bridge hydro facilities in Orange County, and has natural-gas-fired plants that are tapped on an as-needed basis in Hillburn and at an Orange County facility called Shoemaker.
Rubinstein said Alliance approached Mirant several months ago, but the company said it was not able to talk about a sale. Alliance has gone ahead and made a formal offer to Mirant's board of directors and called company representatives to bring about a sale, she said.
Reach Laura Incalcaterra at lincalca@lohud.com or 845-578-2486.