Citing weak power demand and the cost of maintaining this old plant, Dunkirk Power LLC, a subsidiary of NRG Energy (NYSE:NRG), filed a March 14 notice with the New York Public Service Commission that it intends to mothball Units 1-4 at the coal-fired Dunkirk facility no later than Sept. 10.
NRG told the commission it is requesting a waiver of a 180-day notice requirement and seeks the commission’s consent to cease operation of any of these units in advance of this date. The units are located in Dunkirk, N.Y., and are interconnected to the National Grid system in the New York Independent System Operator‘s (NYISO) Zone A. The unit nameplate capacities are: Units 1-2, 100 MW apiece; and Units 3-4, 217.6 MW apiece.
“Due to the current and forecasted wholesale electric prices in Western New York and the underlying cost of operation, the Dunkirk facility is, and would continue to be, operating at a net loss,” said the Dunkirk Power letter. “Thus, because the facility is not currently economic and is not expected to be economic, NRG intends to mothball the units until such time as market conditions improve. NRG reserves the right to rescind this notice and will continue to evaluate the economic conditions for any change that may warrant continuing operation of the Dunkirk facility.”
NRG said it exercised its right to request that a confidential Additional Reliability Study be performed to assess the impact of the lay-up of Dunkirk Units 1-2. This study was performed by the NYISO and Niagara Mohawk Power Corp. d/b/a National Grid, to assess the bulk power and local reliability impacts from the lay-up of these units.
Additionally, a more comprehensive reliability assessment of the impact of Western New York coal retirements, including the entire Dunkirk site, has recently been completed by National Grid at the request of Department of Public Service Staff. So, the potential impact of the mothballing of these Dunkirk units is already known and it should be possible for a determination to be made shortly after receipt of this notice in order to facilitate the requested waiver, the company noted. NRG is simultaneously providing a copy of this notice to the NYISO and National Grid.
NRG also owns the 380-MW Huntley coal plant in the NYISO, which wasn’t mentioned in the March 14 letter to the PSC.
The plans to mothball Dunkirk come at a time when a lot of coal capacity in New York is going down for the short and sometimes long count, dealt blows like advanced age, new air emissions limits and slack power demand. Air emissions alone shouldn’t be a major issue for Dunkirk, since NRG’s Feb. 28 annual Form 10-K report said that in the 2009-2010 period, all four units at the plant got new dry sorbent injection (SO2 reduction), fabric filters (SO2 and particulates), selective non-catalytic reduction (NOx) and activated carbon injection (mercury) systems installed. These controls, of course, have the downside of adding to plant costs.
AES takes down a lot of coal capacity in New York
Coal plants in New York have taken a big hit lately. For example, AES Eastern Energy LP, a unit of AES Corp. (NYSE:AES), is in bankruptcy and working to sell its coal-fired Somerset and Cayuga facilities in upstate New York. AES on Dec. 30, 2011, put AES Eastern Energy into Chapter 11 protection at the U.S. Bankruptcy Court for the District of Delaware. AES Eastern Energy noted in a first-day court filing that the debtors control, directly or indirectly, six coal-fired plants in New York. The six plants are Somerset and Cayuga, which are active, and the inactive Greenidge, Westover, Hickling and Jennison facilities.
Both Cayuga and Somerset are “modern” coal plants equipped with flue gas desulfurization equipment that allows them to burn relatively cheap medium and high-sulfur coal and to achieve relatively low fuel costs compared with competitors, AES told the court. They are among the largest facilities in the NYISO. Somerset is a one-unit plant, dating from 1984, with 675 MW of capacity. The two-unit Cayuga plant, dating from 1955 and 1958, has 306 MW of net capacity.
On the other hand, Jennison and Hickling were retired in 2002. In March 2011, to save money, AES put Westover and Greenidge into “protective lay-up” status, which means that although they are expected to be offline for some time, they are being maintained and can be restarted, AES told the court. Westover has two existing units, 7 and 8, with a combined net capacity of 126 MW, and Greenidge has two existing units, 3 and 4, with a combined 161 MW of net capacity.