Cayuga Operating to mothball over 300 MW of coal capacity by January 2013

Cayuga Operating Co. LLC filed a July 20 notice with the New York Public Service Commission that it intends to mothball its Cayuga plant in Lansing, N.Y., which is comprised of two coal-fired units, by Jan. 16, 2013.

Unit 1 has 154 MW net capacity and Unit 2 has 158.7 MW of net capacity. Unit 1 was placed in service in 1955 and Unit 2 was placed in service in 1958 and both have been supplying energy, capacity and ancillary services in New York.

“The current and forecasted wholesale electric prices in New York are inadequate for the Cayuga Facility to operate economically and, therefore, Cayuga Operating Company intends to place the Cayuga Facility in protective lay-up to limit the costs that are incurred at the facility,” said the notice. “Cayuga Operating Company intends to take all steps within its control to avoid permanently retiring the facility by continuing to explore any and all alternatives with its suppliers and other parties, including reductions in its variable and fixed costs.”

During the 180-day notice period and any subsequent protective lay-up period after that point, the company said it will undertake efforts to ensure readiness for a restart reasonably promptly at any time during this period. These efforts are expected to include ongoing compliance activities, maintaining valid environmental operating and related permits, periodic inspection work and maintenance of the plant to ensure quick reactivation, and keeping the plant in the state of New York’s emissions inventory.

Under guidance from the New York Independent System Operator (NYISO), Cayuga Operating has also sent a copy of this mothball notice to the NYISO via e-mail. Cayuga Operating has also provided this notice to New York State Electric & Gas Corp. (NYSEG), the utility to which the Cayuga facility is interconnected.

Finding no market power issues, the commission on June 29 had approved the transfer of control of the coal-fired Cayuga and Somerset power plants to financial entities including affiliates of J.P. Morgan. On April 13, AES Eastern Energy LP, AES Somerset LLCAES Cayuga LLC (known collectively as the “AES Entities”) and Somerset Cayuga Holding Co. Inc. requested approval to transfer ownership of two coal-fired facilities – the 668-MW Somerset and 311-MW Cayuga plants – from these “AES Entities” to NewCo, or one of NewCo’s to-be-formed subsidiaries. The AES Entities are bankrupt affiliates of AES Corp. (NYSE: AES), a company not itself in bankruptcy.

The transfer arises out of a bankruptcy settlement authorizing creditors of the AES Entities to acquire Somerset and Cayuga, with the transfer itself approved by the bankruptcy court conditioned upon obtaining further approvals from FERC, the state Siting Board and the commission.

A single interconnection agreement with NYSEG currently governs the utility’s provision of delivery services to Somerset, Cayuga and four other non-operational coal plants that are owned by affiliates of the AES Entities.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.