CH Energy Group (NYSE:CHG), through its subsidiary CH-Auburn Energy, LLC, has committed to a 15-year contract to supply the City of Auburn, located in Cayuga County, New York, with a portion of its electric needs. The firm will construct and operate a 3-megawatt electric generating plant using renewable energy from the municipality’s landfill, and will invest up to $6.7 million in the project to sell low-cost electricity to the city.

To help finance the project, the City of Auburn was awarded $2.5 million in grant funding from the U.S. Department of Energy and the New York State Research and Development Authority to assist with the purchase of three GE Jenbacher cogeneration engines, and to cover necessary legal, environmental and engineering costs.

The landfill gas electric generation plant will produce enough electricity to supply the equivalent of 1,600 homes, providing the city with significant electrical savings at the Wastewater Treatment Plant and economic development opportunities at the Auburn Technology Park through competitive electricity rates.

“We’re very pleased to partner with the City of Auburn on this exciting project, which is the culmination of discussions that began with the city in 2007,” said Ron Flax-Davidson, Vice President of Business Development for CH Energy Group. “Not only will the plant provide lower-cost electricity to help the city attract and retain businesses, but also clear environmental benefits by utilizing landfill gas, a renewable source of energy,” he said.

“This project grows our portfolio of renewable energy investments, which includes biomass, wind, landfill gas and ethanol,” said Flax-Davidson.

Groundbreaking began in August 2009, and construction is slated for completion by year-end.