MAYVILLE - John Gullo isn't a gambler.
The Fredonia Democrat was the sole opposition vote recently to a resolution regarding the county's new methane-to-electric plant.
In his explanation, Gullo questioned whether now is the time to invest more money into the enterprise - especially as it hasn't yet yielded the revenue county officials said it would.
From left, legislators Doug Richmond, R-Westfield, and John Gullo, D-Fredonia, are pictured during the October budget review process. Gullo voted against a resolution last week to expand the county’s new methane-to-electric plant,
P-J file photo
"Is this the time to double down?" Gullo asked. "Is this the time to put more money in? What if the estimates, again, made in good faith by professionals - what if they're wrong? What if the price of electricity goes down further? ... I'm very concerned about doubling down when I have scared money and I think we have scared money at this point."
The vote at the December business meeting was over whether or not to bond $1,403,465 to expand the Ellery plant, adding two new engines. The vote passed 24 to 1 and required at least a two-thirds majority of the body in order to be passed. The total cost of the project is estimated at $3,5 million, with existing funds and grant money offsetting the county's cost.
The plant was budgeted to make $2 million this year, but as of October had only brought in around $300,000. During discussion of the resolution, county Finance Director Darin Schulz told the legislature to expect only $400,000 to $450,000 in profit from the plant by year's end. In addition to being down from its estimated revenue this year, the plant, which began making electricity in mid-February, failed to generate $500,000 in revenue in 2009 because it wasn't yet operational.
With the legislature having just passed a 9 percent property tax increase that drained much of the county's reserves, Gullo suggested waiting a year and reconsidering the proposal.
"I think that we have a situation where, yes, this bet could pay off," Gullo said. "But we could also lose bigger. Our investment could make even less and we're burdening the taxpayer with greater expense ... We don't even have 12 months into this business at this point. With the benefit of some more time, this may be very smart. And I'm not saying it's not at this point. But I'm concerned about spending more money at this juncture when we're in such terrible financial shape."
Other Democrats similarly expressed hesitance during discussion of the project, though they ended up voting to bond the near $1.5 million amount.
"This, to me, really is a very difficult decision," said Keith Ahlstrom, D-Dunkirk. "Was it a wise decision for county government to get into the generating business or should we have gone in another direction? I realize that we're four to six years past making that decision. And we made, as it turns out, maybe not the best decision at the right time. But I have a hard time sometimes in spending more money on the promise of, 'We're going to make more money.' That doesn't convince me."
In the end, Ahlstrom said arguments by Republican legislators that the expansion would make the county's landfill a greener operation is what convinced him to vote for the project.
"Currently we have four generators collecting the gas," said Dick Babbage, R-Bemus Point, of the methane at the county landfill. "They are at capacity at this particular point. We are currently producing more methane gas then we are using and it is, at this point, just going off into the air. It's being burned, but it's not being burned to generate electricity. By purchasing two more generators, you are making that particular facility more efficient. You are making this a green energy project which helps, I'm certain, everybody in the county."
Two additional engines allow the county to process the gas it's currently losing. The electricity from that gas will then be able to be sold for a profit, like the electricity generated by the other four engines.
Each engine will add 1.6 megawatts to the plant. A fifth engine will make the plant an 8-megawatt plant, while the sixth will take it to a 9.6-megawatt plant.
Responding to Gullo's questions, Doug Richmond, R-Westfield, argued that the energy market will only get better - meaning that now is the time to upgrade.
"It's a fact that's been identified to us that we are at a historical bottom in selling the electricity in our society," Richmond said. "That's the time you buy stocks, when you're on the bottom. This is the perfect time for us to move into this particular venture. Spend these dollars now and make even more money when the cost rises and we will receive better remuneration than ever before. ... If we delay, when the price is up, the cost of this equipment is going to be up also. We're buying it at this point at the lowest cost we can now and in the future."
Echoing Richmond's comments, Jerry Park, R-Forestville, explained that the upfront cost for expansion will greatly be outweighed by the long-term financial benefit over the next 20 years. He also commented on the smell of the county landfill and how additional engines will help address the problem.
"I used to get complaints of the smell from the landfill," Park said. "All of a sudden, that's gone away. But if we start producing more gas now without another engine, pretty soon, the smell issue is going to come back up. ... We've got to be able to take away that smell. One more engine will do it and then, another year, we'll add another sixth engine. This is the ideal time."
Legislators later called on Schulz for details about the project and the plant, specifically about the funding which the county has received. Schulz explained that the grant from Sen. Charles Schumer has already been received, but that money from NYSERDA might be taken back.
"NYSERDA is recouping allocations not utilized by counties to give to other counties that are going to use it," Schulz said.
Additionally, Schulz explained that as the bond is a tax credit bond, the county will only pay about 30 percent of the interest on the bond.