Power struggle: rate increases spark battle between WNY industry, state authority. (Western New York)(includes related article) (Special Report: Energy & Utilities)

For decades, Niagara's coveted hydropower was not only a bargain, but a powerful magnet -- luring big-name industry to the Niagara Frontier.

"We came to Niagara Falls in 1930 because of the power, and that's the only reason," says John Monago Jr., vice president and plant manager of Niagara Falls-based Carbide/Graphite Group Inc.

But with 2000 just seven years away, companies say they now fear that that same low-cost electricity may bleed away or even cripple an already struggling industrial base.

The culprit is simple: a projected 400 percent to 500 percent leap in replacement power costs for many companies through 2006 if the New York Power Authority raises industries' rates through 1997.

"They're talking about taking the single most competitive advantage we have and increasing it four to five times. That's going to hurt," says John Stuart, Occidental Chemical Corp.'s director of Western New York public affairs.

"To get increases of that nature is a big, big kick," Monago adds. "There aren't million-dollar tickets laying around the plant to cut costs."

This bitter clash of wills between big business and an autonomous agency amounts to a rhetoric-charged feud. Each side accuses the other of not providing hard proof for its respective arguments.

As the 4-year-old battle plays out, the nearly 60 local industries that receive the hydropower say their competitive edge is at stake, along with a possibly shrunken work force in years to come.

The power authority defends its proposal, saying it needs the rate increases to help pay for a $274 million upgrade at its Niagara Power Project in Lewiston, another $403 million for other upgrades and the elevated cost of producing the power.

And, …