Niagara Mohawk Power d/b/a National Grid has submitted a “Binding Term Sheet for Bilateral Agreement for Dunkirk Power Generating Units” with NRG Energy (NYSE: NRG) that would handle transmission-related impacts of NRG’s plan to mothball the coal-fired Dunkirk power plant.
The agreement was filed July 20 with the New York Public Service Commission as part of an ongoing review by the commission of the mothballing plan. The term sheet agreement sets forth the terms under which National Grid would procure reliability support services (RSS) from NRG’s Dunkirk Power LLC generating station to maintain transmission system reliability in western New York for an interim period. In addition, National Grid is requesting approval to amend its tariff to establish an RSS surcharge for recovery of costs incurred under the term sheet agreement and for authority to defer all amounts paid to NRG for RSS until such time as current recovery of such costs begins.
NRG on March 14 filed a notice with the commission it plans to mothball the Dunkirk plant by no later than Sept. 10 of this year. Dunkirk consists of four generating units: Dunkirk 1 and 2 each with a nameplate rating of 100 MW and interconnected to the transmission system at 115 kV; and Dunkirk 3 and 4 each with a nameplate rating of 217.6 MW and interconnected to the transmission system at 230 kV.
At the time of NRG’s mothball notice, neither National Grid nor the New York Independent System Operator (NYISO) had performed a study evaluating the impacts of and solutions to the mothballing of all four Dunkirk units while all other generation remained available. However, based on other studies that had been performed prior to the mothball notice, National Grid found that the proposed mothballing of Dunkirk units 1-4 will result in significant impacts to transmission system reliability in western New York.
Nation Grid had outlined a timeframe for completing additional studies to identify system impacts of the proposed mothballing, determine the number of units at Dunkirk the continued availability of which would be needed for short-term reliability needs, and identify long-term solutions to the reliability needs presented by mothballing Dunkirk. Because the transmission system investments needed to address the reliability issues created by mothballing of the Dunkirk units cannot all be implemented by the Sept. 10, some portion of the Dunkirk generation resources must remain available to maintain transmission system reliability, National Grid said in the July 20 filing.
“Based on system needs and solutions analyses performed to date, National Grid has determined that Dunkirk units 1 and 2 must remain available for an interim period to maintain system reliability until permanent transmission system reliability solutions can be implemented,” National Grid wrote. “Specifically, based on its project implementation schedule, National Grid anticipates the need for two 115 kV units (Dunkirk 1 and 2) through May 2013. After May 2013, the Company anticipates the need for continued RSS until it is able to implement certain transmission reinforcements scheduled for completion by June 2015. The Company has determined that this need for continued RSS could be met by one 115 kV unit from June 2013 through approximately May 2015.”
NRG’s Dunkirk Power unit filed with FERC on July 12 a plan to temporarily keep part of the money-losing Dunkirk coal plant in operation to meet regional electric system reliability needs. Despite significant investments by NRG Energy over the past several years, the facility is not currently economic to operate, it said.
The company noted in the FERC filing that its plans are to mothball the plant for later possible restart, not retire it. But, NRG also has said it has plans within the next few years to add combined-cycle natural gas generation at Dunkirk in place of the coal-fired capacity.
The aging coal plants in New York are something of an endangered species. Cayuga Operating Co. LLC filed a July 20 notice with the New York 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 filed at the commission. “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.”