NRG has next move in process

By GIB SNYDER

OBSERVER City Editor

The process of evaluating and determining the future of power generation in Dunkirk took another step recently with a filing by National Grid with the state’s Public Service Commission.

This filing, which examined projected costs of transmission alternatives, will be followed by a filing from NRG Energy Dunkirk presenting the advantages of repowering its Dunkirk plant from coal to natural gas.

In January, the commission instituted a proceeding to examine repowering alternatives to utility power plant reinforcements and directed National Grid to work with NRG to evaluate repowering of the plant. The PSC also directed the New York State Electric and Gas Corp. to work with AES to evaluate repowering of its Cayuga generating station.

Stephen Brady, National Grid’s Media Relations Manager, was asked about the filings.

“In its order last month, the New York Public Service Commission clearly laid out a process for examining various options to help assure electric reliability in the region. That process is not yet complete, so it would be premature to discuss potential recommendations or preferred options,” Brady replied. “Our overall goal is to provide our customers with safe and reliable energy service in the most cost-effective manner. With regard to timing, any long-term recommendation will take time to implement, and we will take appropriate steps to assure continued reliability, as we have in the past.”

Brady noted National Grid’s filing was a list of potential transmission solutions that would be deferred if the NRG Dunkirk plant was repowered.

David Gaier, spokesman for NRG’s East Region, was asked about the company’s take on repowering versus transmission upgrade issue.

“NRG’s repowering solution is superior, for several reasons,” he replied. “First, this would be the most high-efficiency generation available in New York state. It would bring power to the grid at a lower cost for all ratepayers, and rather than importing it and exporting the economic benefits, would retain those benefits for Western New York. Second, by adding additional generation, it would lower capacity prices. Capacity costs are payments made to generators to ensure that there is always enough generating capability or “installed capacity” to support the demand, or load. Third, it would produce direct and indirect economic benefits from jobs, taxes and economic activity.

“Transmission, on the other hand, produces little economic benefit, and only adds to ratepayer costs.”

While both solutions would address reliability needs, if NRG Dunkirk was out of the loop replacement power could come from out-of-state or Canada. Gaier was asked if NRG would be needed for a period of time in either case.

“We know that there will a reliability need of some kind and we would like the solution to be our Dunkirk facility,” he replied.

Given the current reliability agreement runs through May 31, Gaier was asked if the PSC could have a ruling by that time.

“NRG responded to an RFP from Grid for the post May 31 period, and we’re still waiting to hear on that decision,” he replied.

According to Gaier, NRG has until March 19 to respond to the National Grid February filing, after which National Grid has 30 days to evaluate the Dunkirk repowering and its transmission options.

“At the end of the 30 days, Grid alone is required to make a recommendation to the PSC, which will review the recommendation and rule on it,” Gaier added.

The outcome could have a significant effect on local taxpayers, particularly in the city of Dunkirk. City Treasurer Mark Woods said the city has received its payments from the county’s Industrial Development Agency for the city’s share of the NRG PILOT program. In 2013, the city’s total was $2,748,041.

The PILOT payment schedule was agreed to in 2008 as part of NRG’s back-end controls building project at the coal-fired facility.

As for future PILOT payments Gaier said “that would depend on what happens with contracts at the Dunkirk station.”

It is now a waiting game for area leaders to see whether a repowering with natural gas at the Dunkirk facility will become a reality.

In late January Jon Baylor, Director of Development for NRG Energy’s East region, said the project would be a $500 million investment taking about three years to build. He added it would create about 500 construction jobs and about 22 long-term permanent jobs at the facility.

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