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NYPA trustees approve hydropower allocation for APP Pharmaceuticals

by jmaloni
Fri, Apr 8th 2011 04:00 pm

Low-cost power to support 5 other WNY businesses for 145 new jobs, $175 million in capital investments

The New York Power Authority Board of Trustees on April 4 awarded an allocation of low-cost hydropower to APP Pharmaceutical of Staley Road on Grand Island.

APP is among six manufacturers in Erie and Niagara counties who have received the power in return for their creation of new jobs and capital investments.

The allocations, to be drawn from a block of electricity from NYPA's Niagara Power Project, also go to: Yahoo! Inc., Lockport; Graphic Controls Acquisition Corp., Buffalo; I Squared R Element Co., Akron; Niagara Coatings Services, Niagara Falls; and Time Release Sciences, Buffalo.  Five of the six companies benefit from prior hydropower allocations that have spurred their capital investments and creation of jobs, according to NYPA.

"Under Gov. Cuomo's leadership, the New York Power Authority will continue to work with state and local economic development agencies to maximize our low-cost hydropower resources in support of efforts to revitalize the state's economy and, in particular, Western New York," said Michael Townsend, chairman of the NYPA board of trustees.

The latest allocations provide for the allotment of 4,070 kilowatts from a block of Niagara electricity known as replacement power, which is provided for under state law for Western New York businesses committed to creating new jobs from expansion projects.  The allocations are to be provided over five-year contracts commencing when the expansion projects are completed.

APP Pharmaceuticals will receive an allocation of 2,000 kw. The Grand Island Town Board discussed the news at its board meeting on Monday. The allocation of power is part of a package aimed at assisting APP in possible expansion on the Island.

Councilman Gary Roesch said when APP purchased Astellas, its next-door neighbor to the east, in 2008, Astellas already had an allotment of power from NYPA.

"Through negotiations with the public service commission, the town, Empire State Development, (Erie County Industrial Development Agency), they were allowed to access that power," Roesch said. If APP can access about 5 more megawatts, the company would be able to conduct new work at its GI location "that requires a tremendous amount of power." The company would install new and used production equipment at the Grand Island facility: heating, ventilating and air-conditioning system upgrades, according to NYPA.

More work would lead to the addition of about 50 more jobs to the Grand Island facility, Roesch pointed out. The injectable pharmaceuticals manufacturing operations are expected to take on an expanded role in handling some of the production of an APP facility in Puerto Rico that the company closed.

APP's Illinois parent company, Fresenius Kabi Pharmaceuticals Holding, had been considering two other sites for the expansion, Roesch said.

Moving some operations to GI would entail a 50,000-square-foot addition to combine two buildings on Staley Road and would represent a total investment of about $28 million, he said.

"That allotment of power is part of the package that Empire State Development Corporation has put together and has presented to APP to allow that additional work to be done on Grand Island," Roesch said.

"If this goes through, obviously it enhances the longevity of that facility, and right now APP employs 570 people."

Replacement power and another large block of Niagara Power, referred to as expansion power, account for more than one-third of the project's firm generating capacity, with the electricity under the two programs reserved for companies within a 30-mile radius of the facility or for businesses in Chautauqua County.

Late last year, long-term NYPA contract extensions, beyond 2013, were approved for the more than 100 Western New York companies currently benefiting from Niagara hydropower. The new contracts will help protect nearly 30,000 jobs and a combined annual payroll of more than $2 billion and ensure capital investments of at least $150 million a year.

Other Hydropower Allocations

Yahoo! will receive 1,000 kw of low-cost hydropower in support of its plans to expand its Lockport datacenter operations to accommodate growth and move operations from overseas and other states to its Western New York facilities.  The project plan includes a capital investment of $130 million for a 120,000-square-foot expansion adjacent to existing facilities and the purchase of new computer equipment, including data servers, routers, storage devices and related hardware.

In May 2009, the NYPA trustees had approved 15 megawatts of hydropower in support of the company's plans to open a $150 million state-of-the-art data center in Lockport and create 125 new jobs in the region. Just last September, Yahoo! celebrated the opening of the data center. The more recent allocation supports the expansion of the data center, which will be phased into full operation over a three-to-five year period. As a result of the project, Yahoo! will create at least 15 additional jobs with average starting wages and benefits of $55,000 per job.

"The expansion plans of Yahoo! demonstrate how the Power Authority's resources can be the catalyst for improving and diversifying the economy of Western New York," said John S. Dyson, NYPA trustee. "Yahoo! has demonstrated its commitment to investing in New York state and to continuing to add new high-tech jobs."

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