Wednesday, January 22, 2014

A Tale of Two ODs . . .

At left is a comparison of two "ODs" -- Operating Diagrams -- for the Hinckley Reservoir. The top was drafted in 1920 and became part of a 1921 Agreement between the State and Utica Gas & Electric. The bottom was drafted in 2012 and became part of a 2013 Agreement between the State Canal Corp and the Mohawk Valley Water Authority.

The former was the subject of litigation between Erie Boulevard Hydropower, LLC and the State over the State's deviation from the 1920 OD during the 2007 drought.  The State released less water from Hinckley Reservoir than called for in the OD in order to keep reservoir levels above MVWA's intake.  (Had levels dropped, the intake would be high and dry and we would have no water at our taps).  Less water released from the dam means less water turning the power company's turbines -- producing less power to be sold causing lost income to the power company. The Court of Claims threw out Erie's lawsuit citing language in the 1921 agreement that allowed deviations from the OD without compensation to the power company in certain emergency situations.  Erie appealed . . .

A few days ago the Appellate Division reversed the Court of Claims saying . .
Because defendants altered the release rate for the purpose of preserving safe drinking water during a drought – a legitimate public and State purpose (see ECL 15-0105 [5]) – and not for a canal-related purpose, defendants are liable for breaching the contract.
So, unless deviations are for a canal-related purpose, the State's taxpayers will be responsible to the power company for the lost income the deviations cause.

The 1920 OD assumed that Utica's water supplier adds to the flow into Hinckley from its own reservoir to make up for what it takes out of Hinckley during dry periods.  The 2013 agreement between MVWA and the Canal Corp does away that requirement.  The 2012 OD takes that into account and controls reservoir levels to protect MVWA's intakes.

So does not that make the 2012 OD a deviation from the 1920 OD for a non-canal-related purpose?

With MVWA not contributing water to Hinckley, but taking more out as it ramps up to taking 48.5 million gallons a day per its new proposal, how much money will the power company lose in the future?

Since the power company did not approve of the 2013 agreement, it seems like the Canal Corp just locked itself into a course of conduct that exposes us taxpayers to liability to the power company.

I wonder how long this situation will be allowed to last???

1 comment:

Raleigh said...

So now the Canal Corp will use both operating diagrams....one for daily operations, and one to tally up how much they'll owe Brookfield. Maybe Thruway tolls will go up to pay for it.