Repowering of plant brings higher electric rates

By DENNIS ELSENBECK

During the past months much has been said and written about the future of the generating station in Dunkirk and the impact it will have on the community. Recently, the rhetoric has become increasingly heated, some of it misdirected at National Grid. We want to clarify some of the basic facts on the issue.

National Grid understands the community’s concerns including the potential loss of significant tax revenue if the generating station closes. We are invested in the community as well. We pay taxes and provide jobs and we connect homes and businesses to the energy network. The success of the communities we serve drives our success as a company.

This issue affects all of our upstate customers, including those in the Chautauqua region. Over the course of the past few years, we have worked hard at stabilizing rates for all our upstate New York customers.

The repowering plan, as proposed by the plant owner, would have a swift and severe impact on all 1.6 million of our upstate New York customers, from the shores of Lake Erie to the Hudson River and the Adirondacks. Unfortunately, the plant owner has asked that all of the repowering contract pricing information and terms be kept secret, thus keeping you from knowing the full costs they are asking all upstate customers to pay.

Instead, we have been accused of essentially plotting to replace the Dunkirk plant with power from far-off plants in Pennsylvania, and that we would somehow reap huge profits by doing so. Nothing could be further from the truth. Decisions regarding which plants sell power into the New York grid, and the price we all pay for it, are made by an independent energy market operator, not the utility that delivers that power. And the delivery cost to the customer is the same whether the source is one mile or one hundred miles away.

Forgotten as this debate heated up is the reason the debate exists in the first place the owners of the Dunkirk station decided to mothball the plant because it no longer made financial sense to operate.

National Grid which owns and manages the electricity network has a responsibility to provide our customers safe and reliable energy delivery service. Our proposals for reinforcing the delivery system were requested by New York state’s Public Service Commission and would do just that. If the Dunkirk plant is unavailable to provide voltage support and maintain network balance, we must have alternative means to keep the network operating reliably.

National Grid did what it was asked and required to do. We developed a plan that would assure system reliability in the event the Dunkirk plant shuts down, and evaluated the subsequent repowering proposals with an eye toward customer bills. The transaction proposed by the plant owner requiring our customers to be saddled with a generation contract that would be three to seven times more expensive than the transmission upgrades forms the basis for our recommendation.

Stated another way, the repowering of Dunkirk under the proposed terms is a windfall for the developer balanced on the back of National Grid customers through unnecessary higher rates. If the primary concern in the community is the potential loss of tax revenue, is the best solution to saddle electric customers with long-term contracts that could raise commercial customer rates by up to 10 percent and residential rates up to 4 percent? (Just a note part of the plant owner’s proposal requires that National Grid customers reimburse it for those property taxes, over and above the contract costs for energy and capacity.)

We’ve also suggested that if repowering Dunkirk is pursued for any number of legitimate reasons converting from coal to gas and maintaining the economic viability of the city of Dunkirk, to name just two the costs of doing so should be in line with the benefits and shared more broadly and by more than just National Grid customers.

Clearly, opinions will differ on the best path for Dunkirk and the Chautauqua region, for the parties directly involved, and for energy consumers all across the state.

Any solution will be complicated, and will require cooperation from all sides. The final decisions, though, need to be based on sound research and verifiable fact, not rumor or innuendo. National Grid is ready to do its part.

Dennis Elsenbeck is a regional executive with National Grid.