Syracuse, N.Y. – Micron Technology’s massive semiconductor plant in the town of Clay is expected to use more water every day than the entire city of Syracuse.
The cost of expanding the region’s water system to meet Micron’s needs could cost the Onondaga County Water Authority $625 million. If OCWA users had to bear the entire cost, the authority said, the typical homeowner’s bill would skyrocket by 60%.
County and water authority leaders cautioned that passing the entire cost onto individual users is unlikely. But users in the authority’s five counties will also benefit from the improvements and will pay for an undetermined portion of them, according to OCWA.
Who will pay for the expanded water system – and how much — remains an open question a year after Micron announced it would build a $100 billion chip-making complex in Clay. The initial agreement between Micron and New York state spelled out the billions of dollars in tax breaks Micron could get and what the company had to invest to get them.
But the agreement was silent on other big-ticket expenses, like who foots the bill for building new infrastructure needed for the Micron project. At the same time, Micron’s estimates about how much water it will require have more than doubled.
A year ago, Micron estimated it would need 20 million gallons of water a day. OCWA said then it could provide that much without needing to build a new pipeline from Lake Ontario. But Micron now says it will need 48 million gallons a day when its four chip fabrication plants, or fabs, are completed in 2043. That’s more than all the water OCWA now delivers to its current 105,000 customers combined.
Costs of a new pipeline and associated upgrades are being negotiated now even as Micron pushes ahead with environmental reports, public meetings, building designs and other actions to meet its goal of starting construction in 2024.
If the entire cost of improvements needed for Micron fell on the backs of water users, rates for the average home would rise from about $317 a year now to $507, according to estimates prepared at the OCWA board’s request.
That’s unlikely to happen, though, said Jeff Brown, OCWA’s executive director. He said the agency hopes to get state or federal grants, and expects Micron to pay a substantial portion of the tab.
“We are having productive discussions with Micron,” Brown said. “They understand that there is a cost associated with getting the amount of water they need.”
The authority sent Micron a proposal two weeks ago that broke down the company’s share of the work, Brown said today at the OCWA board’s monthly meeting. Micron hasn’t responded yet, he said.
In a statement emailed to syracuse.com, Micron indicated it will chip in for the expanded water system through the rates it will pay OCWA when the water starts flowing several years from now. The chip maker offered no details.
“Micron’s rates will include a proportionate amount for water utilities,” the email said. “An agreement will be in place before infrastructure improvements begin.”
Work on the water system expansion would begin in 2025, Brown said. Building the line could take seven years.
To quench Micron’s thirst, OCWA would need to more than double its water production. To do that, the agency would have to build a second pipeline, parallel to the one that already runs underground from the intake plant at Lake Ontario to the reservoir in Clay. The new line would be 54 inches in diameter and 25 miles long.
OCWA would also have to upgrade the Oswego pumping station, build a 15-million-gallon storage tank in Clay, and lay three 54-inch lines from the reservoir to Micron’s plant at White Pine Commerce Park, on Route 31.
OCWA estimates it would have to borrow $625 million by issuing bonds. Over the 35-year life of those bonds, the repayment would total nearly $1.2 billion, according to OCWA estimates.
Brown stressed that the board doesn’t believe that current water users will pick up the whole tab. There will likely be a rate increase, though, for the share of expansion costs that would benefit everybody. Building a second pipeline, for example, would provide a backup for all customers in case a problem in the current line cuts off water, Brown said.
OCWA serves about 96,000 homes and 10,000 businesses in Onondaga County and parts of Oswego, Madison, Oneida and Cayuga counties.
About half of OCWA’s water supply comes from Lake Ontario and half from Otisco Lake. The city of Syracuse is not part of the OCWA system; it draws water from Skaneateles Lake.
The existing OCWA system can provide water for the first fab, expected to start producing chips in 2026, Brown said. When the second fab is completed in 2032, the system expansions would have to be in place.
Last year, Micron and state and county officials had worked out what Micron would pay for the water that will flow through the pipes. The original agreement called for Micron to pay OCWA $1.72 for each 1,000 gallons of water.
At that rate, Micron would eventually be paying OCWA about $30 million a year. That would still fall short of the $34 million per year OCWA estimates it would incur in principal and interest payments on bonds to expand the system. Those payments would last for 35 years.
Much could change in the future. Micron might recycle more water than projected, so it wouldn’t need as much from OCWA. The agency’s borrowing costs could climb if interest rates and inflation continue rising. Water use across OCWA’s network could increase substantially with Micron-fueled growth. Future changes in the semiconductor technology could alter Micron’s plans.
Onondaga County Executive Ryan McMahon said OCWA and the county, which will treat Micron’s wastewater, are negotiating now because Micron’s demands for water and wastewater treatment have grown.
“We can deliver more, but that changes what the costs are, which means that either you have to pay more (in user fees) or you have to pay some upfront,” McMahon said. “OCWA is having those conversations.”