As Alliance Battle Goes On, OMH Stalls Project

OGDENSBURG - The state's plan to put a decentralized heating system in the St. Lawrence Psychiatric Center has been on hold for the past year.

The state Office of Mental Health, which operates the psychiatric center, decided to indefinitely halt the project to install heating and ventilation systems in about 12 buildings after determining that costs for energy and construction could be around $50 million over the next nine years.

Sullivan County-based Alliance Energy is under contract to provide the steam heat, air conditioning and ventilation to all the facilities on the state owned property until 2019. However, the company is trying to renegotiate the contract, claiming that operations have become unprofitable.

According to OMH spokeswoman M. Jill Daniels, the state spent about $400,000 in 2008 on designing the project before deciding to stop.

She said it did not make sense to install the heating and ventilation systems since Alliance Energy is already providing the steam for all buildings, including the Ogdensburg Correctional Facility, in lieu of rent for the 3-acre site on the psychiatric center campus.

"Right now we have a contract to have steam provided for us," she said.

In 2006, the state Legislature authorized OMH to spend up to $7 million on the project. Mrs. Daniels said, aside from the design costs, the money has not been spent and is still in the state coffers.

"OMH felt it necessary to explore options when Alliance Energy suggested that it may refuse to honor its contract with the OMH," she said. "The decentralization project was initiated to determine what would be required to make each building independent for heating and cooling."

She said that OMH will ensure all residents and staff at the facilities have adequate heating, but did say if the state was looking into alternative heating sources.

In March, Alliance Energy sued the state claiming that it was in breach of contract because nothing has been done to make the facilities more energy-efficient to help lower the cost of providing the free heat. The suit asks for the contract to be voided and that $30,150,000 be paid for damages.

Alliance Energy Regional Manager Joseph Klimaszewski said the company is unaware of the decentralization project and did not comment on whether no longer providing free steam to the state would affect the plant.

He said AG Energy, which is owned by Alliance Energy and operates the Ogdensburg facility, currently makes no revenue at the plant. He said the contract makes the rent equivalent to $1.25 million per acre per year.

The company has proposed a $55 million "green" overhaul to make the plant run on low-grade wood for heat and electricity. Company officials said the project could bring about 50 permanent jobs to the area, but is contingent on renegotiating the contract.