Data center development for coal plants come with questionable assumptions

Oct 23, 2019

Credit Investigative Post

Gov. Andrew Cuomo’s administration is negotiating to award incentives to the would-be developers of data centers proposed for coal-fired power plant properties in the Town of Somerset, in northeast Niagara County, and the Town of Lansing, located about an hour southwest of Syracuse. But are they worth it? Subsidized data centers can be expensive propositions for taxpayers.


Yahoo's Data Center in Lockport, NY
Credit WBFO/Chris Caya

The data centers typically require hundreds of thousands of dollars in taxpayer assistance for every job created — and the price tag is sometimes much steeper. The cost of subsidizing data centers built over the past decade in Lockport, for example, worked out to $1.9 million per job. That’s far higher than the typical cost per job for a government-subsidized project.

Elected officials in Somerset and Lansing said the proposed data centers would help their towns offset the loss of jobs and tax revenue that the coal plants have provided over the years. Property taxes generated by the two plants have dropped over the past decade from a combined $21.5 million to $3.6 million. Both plants are operating at a fraction of their capacity, with closure on the horizon.

Both plants are owned by GSO Capital Partners, a subsidiary of global private equity firm the Blackstone Group. Beowulf Energy operates the facilities.

With assets of $545 billion, Blackstone has noteworthy ties to Cuomo. William Mulrow, a Blackstone senior advisory director involved in government relations work, served as a top aide to Cuomo from 2015 to 2017 and chairman of his campaign committee in 2018. Mulrow has since returned to Blackstone.

Read More from Investigative Post on this topic  HERE | Hear Investigative Post's Jim Heaney with Susan Arbetter from The Capitol Pressroom (Weekdays at 8 p.m. on WBFO)