NYS Exposed: Financial weight of Canal Corporation shifted onto Power Authority

August 07, 2017 11:30 PM

Last year, New York State shifted responsibility for New York canals and a more than $100 million annual operating deficit from the Thruway Authority to the state's Power Authority.

The state Power Authority does not use tax dollars -- they make money selling power to business. But critics are concerned the new burden could mean significant financial stress for the state agency. And it sounds like the burden is getting bigger.

"There's still a lot of assets that we're learning about still in canals," says Joseph Kessler, New York Power Authority.

The 200-year-old Erie Canal runs from Buffalo to Albany and is closely tied to so much of our area's history, but now it costs a lot to maintain. And last year's decision to shift control of the aging canal cut the Power Authority's net income by more than 50 percent.

"We got under the hood of canals organization and we see that maybe there's a significant amount of work done that we didn't capture in our original plan," said Joseph Kessler, New York Power Authority.

The Power Authority budgeted $170 million for capital projects, but they're finding the old canal infrastructure cost big money to fix. That's on top of inheriting an operating budget that had been spending about $100 million more each year then it brought in.

"I think the estimates that we provided in December for the budget, um, were accurate for what we knew at the time and I think as we got involved and saw the cascading issues that are involved with managing these assets," says Kessler. "I suspect that number from a capital perspective will probably go up."


"NYPA is highly focused on numbers and expenses as they should be in their highly regulated industry," said Kal Wysokowski, Canal Society of New York.

The Canal Society of New York State's mission is to preserve the canal. Their president knows the heighten financial focus from the canal's new operator is important. The canal season has already been shortened, saving money and allowing time to work on infrastructure. The Power Authority is also stream-lining jobs to maximize efficiency.

"It's not strictly about the money," said Wysokowski. "If it was, perhaps the canal would go away. It's not going away, it's coming back stronger."

Wysokowski just hopes the dollars and cents doesn't negatively affect the historic waterway. It's not a money-making operation, so the Canal Society hopes the focus will be on tourism and economic benefit to the communities along the canals including many in Rochester.

"The canal is much more than numbers: there are intangibles that come with that waterway," said Wysokowski. "And I think they're learning that."

"The canal is a huge economic driver, communities know it, the Canal Corporation knows it," said Wysokowski. "New York State knows it; they're making investments."

In a statement, the New York Power Authority said they'll continue working to identify opportunities for efficiencies and optimal operations, but say operating the canal system won't impact utility rates for their customers.


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