Cayuga repowering in question

While the repowering of Dunkirk Power LLC seems to be set, the fate of the other coal-fired plant that is part of the Public Service Commission study in case 12-E-0577 is not so certain.

In January 2013, the PSC ordered the four companies involved to file repowering proposals that met reliability, economic development and environmental needs for the two separate plants. National Grid and Dunkirk Power LLC were one part of the repowering study, with Cayuga Operating Company LLC and New York State Gas and Electric comprising the other.

After negotiations between NRG and Grid, and the December announcement in Dunkirk by Gov. Andrew Cuomo that a deal was made, on Feb. 13 National Grid notified the PSC it had reached an agreement with NRG Energy’s Dunkirk facility. the agreement still needs approval of the PSC, which did not address the issue at its Feb. 20 meeting.

The other part of 12-E-0577 may find a settlement unreachable.

After jointly filing four requests for extensions, Cayuga and NYSEG are seeing things differently. On Feb. 18, Cayuga filed another extension request, this time without NYSEG. Rather than agreeing to the extension request, NYSEG filed its own notice with the PSC, stating it was opposed to any further extensions.

Cayuga and NYSEG were supposed to file a revised repowering proposal by Feb. 28, but Cayuga, through the law firm of Harris Beach, requested an extension to March 31.

“Cayuga has been working and will continue to work diligently with NYSEG to develop a mutually-agreeable revised proposal. In addition to the myriad of technical and financial complexities associated with developing such a proposal, from Cayuga’s perspective, the proposal must not only satisfy the Commission’s criteria but also, among other things, Cayuga’s fiduciary duty to its shareholders,” Harris Beach stated. “While progress has been made, as of today (Feb. 19) Cayuga and NYSEG have not been able to identify a proposal that satisfactorily resolves all issues and it is unlikely that the parties will do so by February 28th. In addition, Cayuga is in the process of reviewing the Term Sheet between National Grid and Dunkirk Power LLC (“Dunkirk”), filed recently on February 13, 2014, which provides for the addition of natural gas capability at Dunkirk. Cayuga is reviewing the National Grid/Dunkirk Term Sheet to determine if anything in that filing can assist in the discussions between Cayuga and NYSEG.”

NYSEG notified the PSC on Feb. 19 that it was not in favor of another extension, which would be the fifth.

“The parties have worked diligently and in good faith for over four months in an attempt to develop a mutually-agreeable revised proposal, but have not been able to identify such a proposal. NYSEG does not believe a fifth extension will result in a mutually-agreeable revised proposal. NYSEG intends to file its recommendation to the Commission on February 28, 2014 as is currently required,” stated Jeffrey A. Rosenbloom, the director of NY Legal Services for NYSEG.

NYSEG was not the only PSC filer opposing the Cayuga request. On Feb. 19, Earthjustice and the Sierra Club filed a letter opposing the extension.

“The apparent concession by NYSEG – one of two parties in the best position to assess the status of negotiations on this issue – that a fifth extension of time will not result in a repowering agreement further demonstrates that NYSEG and Cayuga cannot reach a repowering agreement “consistent with the best interest of the public and ratepayers,” the Earthjustice and Sierra Club filing stated.

On Feb. 20, Nucor Steel Auburn Inc. also filed a letter opposing Cayuga’s extension request, stating in part, “It is reasonable to conclude, therefore, that there are no serious prospects for a negotiated agreement between NYSEG and Cayuga. The Commission should deny Cayuga’s extension request and require Cayuga and NYSEG to file their recommendation on February 28, 2014.”