Long-Stalled New York Repowering Project Is Revived

Plans to repower NRG Energy’s coal-fired 435-MW Dunkirk power plant near Buffalo, N.Y., to natural gas that have been stalled for years owing to a legal challenge may finally be revived.

NRG Energy mothballed the four-unit plant in January 2016. The company had filed to mothball the facility nearly four years earlier, in March 2012, because it said costs were too high to justify continued operation, but the Public Service Commission (PSC) ordered the company to keep some units at the plant operating to help maintain grid reliability.

Then in December 2013, New York Gov. Andrew Cuomo announced an agreement with NRG to repower the plant to a 435-MW natural gas facility in a project that was strongly supported by the city of Dunkirk along with a handful of state lawmakers. The project, which sought to keep the plant open through 2025, got the PSC’s approval in June 2014, and again in October 2014 during a rehearing prompted by legal challenges filed by Earthjustice and other environmental groups.

In February 2015, however, Entergy Corp. also filed a lawsuit against the state, challenging its approval of the Dunkirk repowering term sheet. Plaintiffs listed in the lawsuit include Entergy Nuclear FitzPatrick, owner of the James A. FitzPatrick nuclear plant located in Scriba, N.Y., a facility that Entergy said in November 2015 it would retire for economic reasons, but which is now being sold to Exelon Corp. just months after Gov. Cuomo asked the PSC to adopt a Clean Energy Standard that essentially subsidizes troubled nuclear plants in upstate New York. Plaintiffs named also include Entergy Nuclear Power Marketing, which sells power from FitzPatrick in wholesale markets, and Entergy Nuclear Operations, FitzPatrick’s licensed operator.

In its complaint, Entergy claimed that Dunkirk, an “uneconomic generation plant,” would be kept open “propped up by subsidies from a local utility and from a state agency,” and that this interfered with market processes approved by the Federal Energy Regulatory Commission.

“In the short term, other generators will be harmed because lower prices mean lower revenues,” the Entergy divisions argued in documents seeking injunctive relief that were filed with the U.S. District Court for the Northern District of New York. “And in the long term, after some of those generators exit the market and new generators have been deterred by lower prices from entering the market, supply will be reduced and prices will increase for local utilities, and ultimately for the homeowners and businesses that they serve.”

On November 22, however, Entergy confirmed that it had withdrawn its lawsuit related to the Dunkirk power plant, telling POWER the decision was “because the company is focusing on other business priorities.”

Also on November 22, NRG spokesman David Gaier told POWER that withdrawal of the suit bodes well for the repowering project. “Entergy Corporation’s lawsuit challenging the Dunkirk contract with National Grid had prevented NRG from moving forward with the project,” he said. “But now that Entergy and the other parties to the lawsuit have asked that it be dismissed, development work should be able to proceed again soon.”

Gaier said that once the court acts to permanently dismiss the lawsuit, NRG will reengage key project stakeholders, including the PSC, National Grid, National Fuel Co., and Empire State Development. “Assuming they confirm their previous commitments to the project—which we believe they will and which are critical to the project’s development—NRG can move forward,” he said.

Construction of the repowering project is expected to take about 24 months once it receives required permits and approvals.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)