An appeals court has ordered the agency that regulates the Great Sacandaga Lake to return roughly a half-million dollars wrongly charged to a downstream hydroelectric dam operator for so-called headwater benefits between 2003 and 2007.
Justices with the Appellate Division of the state Supreme Court decided the Hudson River-Black River Regulating District did indeed owe Albany Engineering Corp. the bulk of the $516,655 determined by the lower court in April 2012. The order, however, was amended so that the lower court will determine the actual amount of headwater benefits — a term used to describe the amount a hydroelectric company owes an upstream dam owner for the benefits it receives.
Matthew Hug, an attorney representing Albany Engineering, said this amount is a “fraction” of the money due back to his client. He estimated the regulating district will ultimately return around a half-million dollars once the headwaters benefit is determined.
“My clients are happy to have this resolved,” he said. “This is money they’ve been paying to the Hudson River-Black River Regulating District for years under protest.”
A 2003 study of district billing determined that Albany Engineering receives only 0.11 percent of the lake’s benefits while paying 2.7 percent of the district’s budget. At one point, the company was paying the regulating district about $120,000 in headwater benefits.
“Hudson River-Black River was charging for a whole panoply of other things,” Hug said.
The regulating district had appealed a state Supreme Court judge’s award to Albany Engineering, claiming that the company didn’t properly state a cause of action. Officials with the regulating district could not be reached for comment late Friday afternoon.
The repayment stems from a 2008 decision by the federal Court of Appeals, in which the regulating district was told it could not charge downstream hydropower companies for the costs of operating the agency. The decision blasted a major hole in the budget of the regulating district, which lost roughly 80 percent of its operating budget.
Established during the 1920s, the regulating district’s purpose was to control flooding along the Hudson River by controlling the flow of the Sacandaga River. The Conklingville Dam allows the district to hold back waters of the Sacandaga during the spring in a giant reservoir that stretches across parts of Saratoga and Fulton counties.
For years, the regulating district was allowed to bill downstream beneficiaries to aid their operating budget. But that funding scheme was supposed to change in 2002 when the regulating district obtained a federal operating license under FERC, which stated that it could only bill for interest, maintenance and depreciation.
“Essentially, what they were doing was collecting 95 percent of their operating budget from hydro plants downstream,” Hug said.
After losing the federal lawsuit, the regulating district ultimately sought to patch the hole by billing downstream counties. Last year, a state appeals court affirmed the regulating districts could legally bill five counties downstream of the lake for its operating costs, but had overbilled them.