National Grid To PSC: ‘We Won’t Need NRG Dunkirk’

The future of a repowering project for NRG Energy’s Dunkirk plant will have a major hurdle to overcome – the buyer for the electricity the plant would produce says it won’t be needed.

In January, the New York Public Service Commission tasked both NRG and National Grid with submitting plans for the most cost efficient solution to maintain the reliability of the electric system servicing the southwestern portion of the state. The PSC order described a number of factors to be considered in an analysis, including reliability, cost, impact to consumers, community economics and environmental effects. National Grid has submitted its proposal and in a release said reinforcing the region’s transmission system was the most cost efficient solution.

The announced mothballing of the Dunkirk plant in March 2012 put the process of studying alternatives into motion. The choice to either keep the coal-fired facility open, a tough option given the low cost of natural gas, or build a gas-fired facility at the Dunkirk site, was part of the task for both NRG and National Grid to determine.

In its filing with the PSC, Grid gave its reasons for favoring the transmission line update.

“To support the region’s reliability requirements, the analysis showed that transmission network reinforcement proved to be three to seven times less expensive for customers than the potential continued operation of the coal-fired Dunkirk facility as a repowered natural gas plant. In its filing, National Grid said that it is not opposed to the Dunkirk station being repowered, but stressed that National Grid electricity customers should not be required to bear the costs and risks of continued operations, as was proposed by the plant’s owners, NRG Energy Inc.,” the release stated. “National Grid is the transmission system owner and operator for the Chautauqua area, with rates that are fully regulated. The company’s proposed transmission upgrades consist of an approximate $63 million investment in five specific projects, approximately 2 percent of National Grid’s total upstate New York capital investment over this timeframe, with the final project being completed by 2018 to mitigate the reliability impact from the plant closing.”

According to Grid’s filing, the two proposals for repowering that did meet the anticipated reliability needs of the region, after review and analysis, were found to be substantially more expensive for customers and would not have a long term beneficial impact on the cost of electricity in the region and across the state. National Grid estimated that the transmission upgrade would increase bills for residential customers by 0.5 percent, and for commercial and industrial customers in a range from 1 to 1.3 percent. The two repowering options considered would increase delivery bills for residential users by 1.7 to 3.6 percent, and for business customers in a range of 3.3 to 9.5 percent.

As for what happens next, Steve Brady, National Grid media relations manager, said he neither knew nor did he want to speculate as to whether this was the final step in the PSC process.

Brady said Grid’s current need for NRG is due to the existing system of transmission lines.

“Right now we need it for voltage support, not for actual energy supply, and this is part of the issue that’s got Dunkirk where it is. There’s more than enough supply in Western New York,” Brady explained. “The projects we’ve proposed on the transmission side would essentially upgrade our network in Chautauqua, Cattaraugus, Allegheny, southern Erie County, to the point that we wouldn’t need an outside generator for reliability sake.

“That’s what led us to the point to say that we’re not opposed to repowering. If we do these transmission upgrades at quite a bit less than what it would cost to repower the plant, we don’t need the plant for voltage support. If NRG or another party were to come up with the investors to repower because they think they can compete in the generation market place, that’s fine, that’s up to them.

“It’s just the transmission upgrades would eliminate the need for them simply to maintain reliability.”

Brady was asked if power would have to be imported from out of state as part of Grid’s plan.

“Not necessarily,” he replied. “There’s more than adequate generation capability in Western New York in general. … This isn’t a supply issue, this is just simply a voltage reliability issue. … The PSC, as part of this proceeding, had asked us to sort of look at this in a 10-year planning window. We believe that the proposals we put forward would meet our needs and meet our customers needs very well in that 10-year window.”

NRG spokesman David Gaier said the company is reviewing National Grid’s 310 page recommendation to the PSC.

“Once we’ve had a chance to thoroughly review it, we’ll have a response,” he added.

Along with the PSC and Grid, area residents and government officials will have an interest in NRG’s response, as it is the largest local contributor to the coffers of Chautauqua County, the city of Dunkirk and the Dunkirk City School District.