Young testifies to Public Service Commission

The following was State Sen. Catharine Young’s statement to the Public Service Commission Monday night:

The possible loss of the NRG plant is devastating a blow from which this community would never recover. So much hangs in the balance. What will Dunkirk and Chautauqua County’s destiny be?

Massive property tax hikes, the annihilation of the school, deep and painful cuts in essential city services such as fire and police, private sector job losses, higher electricity bills, reliance on out-of-state power those are the very real consequences of the NRG plant closing.

Or a stable tax base, teachers kept on the job and our children receiving the education they need and deserve, essential city services protected, existing jobs secured and 500 new construction jobs added for three years while the plant is built, cleaner air to breathe, lower electricity bills, and the expansion of our economy those are the incredible outcomes of repowering the NRG plant.

Many months ago, I received a frantic call from local leaders. The NRG plant was going to be mothballed and was in grave danger of closing for good. The impact on the community was a $40 million loss in tax revenue, wages, and goods and services spent at local businesses.

NRG is by far the largest taxpayer in Chautauqua County, Dunkirk City School District and City of Dunkirk. The elimination of NRG’s annual payment in lieu of taxes, currently at $8.2 million, has serious consequences for every county property taxpayer, and particularly for those who live in Dunkirk.

Dunkirk’s residents are by no means wealthy. In fact, many people struggle financially. According to the 2010 U.S. census, the median income for households is $33,849, while the poverty rate is 25.8%.

Property taxpayers already are heavily overburdened. According to the Tax Foundation, Chautauqua County already pays the eighth highest taxes in relation to the value of its homes in the country!

Imagine school property taxes exploding by another 47 % and city property taxes skyrocketing by 42 %. Add a county-wide property tax hike on top, and it is a recipe for disaster.

Our assessor says that the average value of a home in Dunkirk is $50,000. Without the stable tax base provided by NRG, taxes on the average value home would have to spike by more than $1,000 annually to make up the difference something folks simply cannot afford.

Recently, I was speaking to a senior citizen from Dunkirk. She said her current property taxes are $5,000 annually. There’s not enough money left over from her fixed income to buy groceries, so she is forced to go to the food pantry to survive. Her husband is having a hard time dealing with what he calls “taking handouts.” As she talked, she began to sob, her shoulders shaking in despair as she told me she did not know what to do or where to turn.

Residential taxpayers are not the only ones concerned. Our economy has suffered in Western New York. Job losses, companies closing Dunkirk has seen it all. Enormous tax hikes threaten the viability of the manufacturers and small businesses that we have left. We could lose many more jobs and our economy will get even further behind.

If taxes are not raised to make up the lost tax base from NRG, the school would be forced to lay off 58 teachers. Don’t our children need and deserve to have a quality education?

The City of Dunkirk would have to make deep cuts in essential services. Fire and police may have to be eliminated. Don’t our people need public protection?

Chautauqua County would have to look at cutting non-mandated programs for the aging and veterans. Don’t our seniors and those who made so many sacrifices to safeguard our freedoms as Americans deserve to keep their services?

All of the current jobs at the power plant would be wiped out, taking away families’ livelihoods. We would lose our ability to be energy independent by generating our own power in Western New York, kneecapping future job growth, especially through manufacturing. We would depend on dirty coal power generated in another state, exporting our jobs and tax base.

The solution in fact, the salvation is to repower NRG to a clean natural gas plant. Repowering Dunkirk will stabilize our tax base, save existing jobs and put 500 New Yorkers to work for three years while they build the plant, give us much cleaner air to breathe, reduce energy costs for consumers, and ensure that our electric system is safe and reliable.

This year’s final state budget language agreed upon by Governor Andrew Cuomo, the Senate and the Assembly established certain requirements when evaluating power generation, including ratepayer costs, the environment, the economy including temporary and permanent jobs, economic development and tax revenue, and electric market competitiveness.

The Governor has shown great leadership through his NYS Energy Highway Blueprint to upgrade the in-state transmission super highway in order to move power from upstate plants like Dunkirk to meet growing power needs downstate. If we don’t promote the continued development of generation in the region, the highway could be a bridge to nowhere. No one wants to see that and a Repowered Dunkirk together with its ability to work in unison with wind in Western New York is a perfect match for the energy highway.

THE NRG project meets the Governor’s Energy Highway goals to assure long term reliability of the electric system is maintained, contribute to an environmentally sustainable future for New York, encourage the development of utility scale renewable generation, create jobs for New Yorkers, and provide projects that connect Western New York power to projects downstate.

We are here now because it has been determined that there is an energy reliability need in Western New York. There are competing projects through NRG and National Grid. The Public Service Commission will decide between the two.

In 2000, National Grid, a foreign-owned company from the United Kingdom, bought out Niagara Mohawk, a U.S. company which used to be one of our state and region’s major employers. Since that time, National Grid has eliminated the jobs of hundreds of New Yorkers and moved its U.S headquarters out of New York to Massachusetts.

Because it is not deregulated, National Grid is a monopoly for transmission and distribution and the ratepayers are held hostage.

Unfortunately, National Grid’s proposal to the Public Service Commission regarding the future of the Dunkirk plant continues that pattern of hardship and lack of commitment they have hoisted on New York’s economy, ratepayers and taxpayers. It begs the question why should a faceless company that makes all of its decisions out of the U.K. be dictating our future in Western New York?

I have compiled quite a bit of material that leads to several compelling questions. I ask that the Public Service Commission answer these questions in a formal response, and take this information into serious consideration during its decision-making process.

As stated in their report, National Grid’s confidence in its solution to fully meet reliability needs is limited to 2021 a period of only six years. Unlike the Dunkirk Repower initiative, the National Grid option falls short of the Public Service Commission’s stated minimum requirement for long-term solutions of 10 years.

Questions: Why shouldn’t National Grid’s proposal be rejected outright because they did not follow the Public Service Commission’s requirement of showing reliability for 10 years or greater? If National Grid still is considered, what upgrades need to be added to meet the full 10 year need?

Governor Cuomo’s Energy Highway Blueprint calls for upgrading aged NYS transmission systems, and moving at least 1000 megawatts of power-stranded in western NY-down to the NY City area.

Question: Doesn’t the Dunkirk proposal match up ideally with the transmission construction upgrades to move more power from upstate to downstate?

According to the reports from both Grid and NRG, ratepayer benefits from the Dunkirk project go far beyond just Western New York or National Grid’s service area.

Questions: How does the PSC define which ratepayers benefit from the project? How does the PSC propose to allocate the costs of the project if there are benefits that extend across the state?

National Grid advertises the up-front cost of its transmission upgrades as being about $66 million, but says in its report filed in this proceeding that the costs could be higher as much as $156 Million with a total cost over 20 years of nearly $500 million. This seems like a bait-and-switch, since National Grid maintains the option to recover its costs no matter how much they are from ratepayers. NRG says it will commit to its bid up front, while National Grid will not. The real comparison of the transmission option should be to the $500 million price tag.

National Grid stands to make enormous profits at the consumers’ expense. Its most recent rate cases 12-E-0201 and 12-G-0202-18 allow for a 9.3 % return on equity for capital improvements that would last for 30 plus years.

By contrast, the NRG plan is the most cost effective for ratepayers, with millions of dollars in private investment and ratepayer benefits exceeding costs by $350 million per year. Repowering Dunkirk will provide clean, reliable, local energy at a guaranteed price, all while benefiting our local economy and putting our energy future in our own hands. That is the right choice for New York.

Question: National Grid’s transmission will not produce any power only transport it. Where will that power come from, how much will it actually cost and will it meet New York’s standards for the environment? Can National Grid guarantee that if their expenses exceed $66 million that the ratepayers will not have to pay one dime more?

In a power point presented to the New York Independent System Operator (NYISO) dated October 24, 2012, National Grid outlined projects including reconductoring of the Five Mile Road-Homer Hill 115kV lines for eight miles, and reconductoring of the Falconer-Warren #171 115 kV Line for six miles in New York State and 11.5 miles in Pennsylvania. On page 13 of the report National Grid states “Completion of the work described should eliminate dependence of the transmission system on Dunkirk generation.” I have attached a copy of this power point for the Public Service Commission’s review. These projects were not included in National Grid’s alternative to repowering Dunkirk, yet there clearly is linkage between the timing and costs of these additional projects. This information is another demonstration of evidence that National Grid’s estimation of actual costs is grossly understated and should be reworked to include all expenditures because of a huge negative impact on the ratepayers.

Questions: These proposed line upgrades and the building of a substation in Humphrey will cost hundreds of millions of dollars. If these additional costs are needed to eliminate power produced at the Dunkirk plant, why are they not listed in National Grid’s submission to the Public Service Commission? Why isn’t National Grid required to revise its analysis to include these additional costs? What is the true impact on the ratepayers?

National Grid’s Five Mile Road-Homer Hill line and Falconer-Warren line as outlined to the NYSISO would directly connect to the PJM transmission system out of Pennsylvania and Ohio, which has a large share of its power generated by dirty coal plants that generate high amounts of pollution, in sharp contrast to the clean and efficient natural gas repowering at Dunkirk. PJM has the highest CO2 densities in the nation. Therefore, importing power from PJM will dramatically raise overall CO2 emissions when compared to repowering Dunkirk.

National Grid claims in its report regarding NYS PSC docket 12-E-0577 “The emission reductions (both water and air) described in NRG’s proposal are compared to the historic baseline of existing facility operating on coal. However, if the existing facility is retired as planned, future emissions would be zero.”

This statement by National Grid is highly misleading, disingenuous, and entirely the wrong benchmark. In reality, power transmitted from the PJM system would double emissions not have zero emissions.

On the other hand, the Dunkirk repowering proposal clearly identifies dramatic and significant environmental benefits, reducing all major emissions including mercury by 100 %, sulfur dioxide by 99%, nitrogen oxides 98%, particulates by 83%, and greenhouse gases by 73% while greatly benefiting our local economy and putting our energy future in our own hands.

Repowering Dunkirk will provide support for other renewable generating assets, especially wind and solar power in Western New York. The intermittent nature of wind resources can be a challenge for the Western New York grid, and the repowered Dunkirk plant will help balance the variability of wind resources for grid operators because the combined-cycle units can ramp up quickly and load follow as demand rises and falls on the system.

Question: National Grid’s plan as outlined to NYSISO connects to PJM. Why isn’t National Grid required to include actual data in their proposal about power produced in the PJM system including CO2 emissions, in addition to other coal-generated pollutants, including mercury, sulfur dioxide, nitrogen oxides, particulates, greenhouse gases?

Another serious environmental flaw with National Grid’s submission is that by importing power from out of state, this power is not subject to Regional Greenhouse Gas Initiative (RGGI) carbon tax.

Questions: Doesn’t this fact defeat the purpose of the NYS RGGI system? Doesn’t imported Pennsylvania energy create an unfair advantage?

Some Sierra Club members will try to make repowering NRG an issue related to allowing high volume hydraulic fracturing for natural gas in New York State which currently is under consideration by the Department of Environmental Conservation. This argument is a red herring because repowering Dunkirk would use existing supplies of natural gas and does not propose using gas produced from New York’s Marcellus Shale. Whether or not to hydrofrack in New York State simply has no bearing on repowering NRG.

It is surprising that Sierra Club favors National Grid’s plans to tie into the dirty PJM system that has high CO2 emissions and does not pay RGGI fees. Sierra Club’s record shows they have opposed every major form of energy production in some form or another, even renewable energy projects. However, in January and February of 2013, the Sierra Club signed on in support of agreements with AEP and MidAmerican Energy to convert a number of existing coal units to natural gas. This is noteworthy as their opposition to repowering the Dunkirk facility here in New York appears inconsistent with their most recent actions in similar cases.

In addition to the environmental concerns raised by National Grid linking to the PJM system, another glaring flaw with National Grid’s plan is that it increases our reliance on external markets, while effectively transferring our own jobs and tax benefits out of state.

It is risky to depend on power from other states, as we unfortunately found out in 2003 during a major blackout that left 50 million people in eight states in the dark. The economic and government costs were staggering, estimated to be up to $8.2 billion. The problem began when power lines in Ohio sagged into trees that had not been properly trimmed, causing fires and forcing lines out of service something that was out of our jurisdiction.

Now, National Grid’s plan to connect to Pennsylvania transmission throws the ability to control our destiny out of our hands once again. The age and condition of Pennsylvania’s lines is unknown and not under the authority of New York State.

Questions: If National Grid ties into the PJM system, what jurisdiction and recourse does the Public Service Commission have over Pennsylvania transmission to ensure that reliability needs in New York State are met? If our electrical grid is connected to Pennsylvania, and the out of state system fails, what impact would that situation have on our economy, especially in Western New York?

In summary, National Grid fails to provide the complete impact analysis on transmission upgrades that was required by the Public Service Commission’s order, and more specifically, ignores the long-term impacts on the community, future economic viability of the region, and does not consider certain factors that are sure to affect market projections.

NRG’s repowering meets and exceeds all of the requirements.

You see the overwhelming majority of the hundreds of local residents who are directly impacted here in support of repowering Dunkirk. You see that most of the naysayers have traveled from outside of our community. Those who are most against repowering have no personal stake in this issue.

Repowering Dunkirk will bring hope, opportunity and prosperity to our region. Our future depends on it. On behalf of my people, I respectfully ask as a state Senator who is privileged to represent this area Public Service Commission, please choose repowering NRG.