Eight million dollars to $420,000 is a steep drop, but less so when considering it could drop to essentially nothing.

The Chautauqua County Industrial Development Agency recently approved an interim amendment to NRG’s Payment In Lieu Of Tax (PILOT) agreement that would decrease its overall tax payment to $420,000 while it undergoes repowering from coal to natural gas.

That $420,000 would be paid to the Dunkirk City School District, city of Dunkirk and Chautauqua County with percentages based on the original PILOT.

According to a document provided by the CCIDA, that split distributes 49 percent to the school, 32 percent to the city and 19 percent to the county. This means the school would receive $205,800, the city $134,400 and the county $79,800 until 2023 or at least one unit is generating power.

By comparison, in 2017 NRG’s PILOT payments dropped by 85 percent and it still paid out over $1.2 million to the three agencies — $600,000 to the school, $402,000 to the city and $225,000 to the county.

However, according to the PILOT, now that all four coal-fired units have been inactive for six months, NRG is not obligated to pay anything.

“They could have paid nothing, they could have done that. There were some people who wanted to terminate the PILOT and put it back on the tax roll, but they wouldn’t have gotten a lot of money from a plant that’s not running,” CCIDA Chief Financial Officer Rich Dixon said.

The interim agreement is seen as a good compromise on both sides with NRG still paying something into the community that has supported it, but $370,000 will be subtracted for each $420,000 payment credited backwards from the end of the PILOT, but also NRG agreeing to pay the same $8 million it paid on four coal-fired units on three gas-powered ones despite fewer megawatts.

“The other thing that’s important to know here is the agreement between National Grid, the Public Service Commission and NRG to repower the plant, even though they’re going to reduce the megawatts, they’re going to pay the full PILOT. This PILOT document was crucial to that agreement and if that PILOT went away, we believe that the repowering would have went away because that agreement was no longer in force. They wanted to keep the PILOT in place, we wanted to keep the PILOT in place, we just wanted to mandate some money and they agreed to that, so it’s a good thing,” Dixon added.

This is not the first time NRG has been willing to pay taxes it is not obligated to pay.

“In December of 2014 and January of 2015, that was the assessment year 2014 payment, and the 2015 payment … for both of those years, NRG under the PILOT because of the amount of megawatts that were available for generation, we were only required to pay $1.2 million for both of those years. Instead of paying $2.4 million, we paid over $16 million. So we paid almost $14 million more than we were required to under the PILOT agreement purely out of good will to the community. We had not obligation to pay more than $1.2 million a year and we still made the full payment for two years in a row of over $8 million. So the community basically got $14 million more PILOT payments out of NRG than they were owed,” NRG Spokesman David Gaier explained.

Gaier said NRG understands the difficulty faced by the Dunkirk community and wants to continue to be a good corporate citizen with this interim agreement.

The interim agreement spans until 2023 or a unit comes back online, this outlasts the three taxing jurisdiction’s available transition aid from the state by two years. The Electric Generation Facility Cessation Mitigation Program, also known as transition aid, is a five-year program starting with up 80 percent reimbursement of lost tax revenue and decreasing to 20 percent reimbursement by the end.

This year the school received $2.7 million, the city $1.8 million and the county $1 million as part of the program. It is not guaranteed if the program will continue until the state budget is finalized.

When asked about a timeframe on the repowering, Gaier said NRG is still committed, but timing is complicated.

“There’s a lot of moving pieces involved. There’s something called an interconnection with the New York System Independent Operator, there is the requirement to order long-lead equipment, there is involvement with the Public Service Commission and National Fuel Gas, so I can’t put a timeline on it, but we’re going to continue to work as hard as we can to return the units to service on gas and at that point the payments under the PILOT will ultimately ramp back up to the full payment of over $8 million,” he said.