Legal & Regulatory

NRG Ends Effort to Repower Dunkirk Plant

NRG Energy will not restart its Dunkirk power plant in western New York, with the company on July 11 saying the cost to reconnect the facility to the state’s electric grid prohibits reopening the retired coal-fired plant as a natural gas-fueled facility.

David Gaier, an NRG spokesman, told POWER the project’s increased costs, along with needed upgrades to the plant, made the conversion and restart unworkable. He cited the project’s financial uncertainty and the possibility that the upgrades could delay the project until 2024.

“The project was put on hold in 2015 because of an Entergy lawsuit filed against the NYPSC [New York Public Service Commission] challenging the legality of the Dunkirk contract,” Gaier wrote in an email to POWER. “We moved forward once the lawsuit was dropped, but the delay rendered Dunkirk a ‘new’ project—requiring the NYISO [New York Independent System Operator] interconnection process and its associated costs of $15 million. More recently, we were informed that these costs could rise to nearly $114 million—inclusive of NYISO, PJM and National Grid costs. Additionally, these interconnection upgrades may not be ready until 2024, further delaying the project. This financial uncertainty, along with a significant schedule delay, rendered the project unworkable.”

In June, NRG said the project could be in jeopardy due to uncertainty about the interconnection process. Gaier on June 7 told POWER,“When we restarted the study [of converting the plant to natural gas], we were told the interconnection would cost about $15 million.”

NRG in 2012 said it would mothball the Dunkirk plant’s four coal-fired units, saying the facility was “not currently economic and is not expected to be economic.” NRG agreed to keep the plant operating through 2015 to maintain reliability of the region’s power grid. Units 1 and 2 at the 635-MW plant came online in 1950, with the other two units beginning operation in 1959 and 1960. The plant was known as the Niagara Mohawk Power Plant until the late 1990s.

After NRG announced it would close the coal plant, New York Gov. Andrew Cuomo in December 2013 said the facility would convert from coal to natural gas, with an agreement that the repowered plant would be in service by fall 2015. Entergy, however, which owns the Indian Point nuclear plant in Westchester County north of New York City, filed a lawsuit challenging the deal and state subsidies for Dunkirk, saying subsidy payments from the state and ratepayers amounted to unlawful tampering in wholesale electricity markets.

A study of the region’s grid in 2015 raised questions about whether the conversion project was needed. A report by NYISO, in conjunction with National Grid, said Dunkirk could be closed without impacting power reliability in the area. The Dunkirk plant is in Chautauqua County, southwest of Buffalo on the shore of Lake Erie. Supporters of the plant’s conversion to natural gas challenged the study due to its assumption that Dunkirk’s power generation would be replaced by electricity from a coal-fired plant in Pennsylvania, which would negate the environmental benefits of Dunkirk’s conversion to natural gas.

The Sierra Club and a group of more than 70 New York state elected officials in June 2015 asked Cuomo to reconsider subsidies for coal plants in the state, including Dunkirk, saying, “The Dunkirk coal plant bailout will cost New York energy customers over $200 million over the next 10 years, plus an additional $15 million from the New York Power Authority.”

NRG idled the coal plant in January 2016. The Entergy lawsuit was dropped in November 2016 after Exelon agreed to buy Entergy’s FitzPatrick nuclear plant, which is located in upstate New York. NRG then said it would resurrect its plan to repower Dunkirk with natural gas. But NRG said the delay caused by the lawsuit meant the plant lost its original grid interconnect.

The NYISO, which manages the state’s power grid, said NRG’s right to tie the plant back into the grid had expired due to the length of time the plant was idle. The agency now estimates NRG would have to pay between $5 million and $45 million in new interconnection fees. It also said NRG would be responsible for additional costs to bring the interconnections up to current reliability standards.

“It’s important to note that Dunkirk lost its [original] interconnection only because Entergy had sued the NYPSC, seeking to invalidate the contract between Dunkirk and National Grid,” Gaier wrote to POWER. “We share the community’s disappointment that this project has not come to fruition.”

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazin

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