The new owners of the coal-fired Cayuga and Somerset power plants of bankrupt AES Eastern Energy told the New York Power Authority (NYPA) the existing plants are needed for system reliability and that there is no need to shut or repower them.
The bondholders of AES Eastern Energy were approved June 29 by the New York State Public Service Commission to take control of the two plants. The bondholders have formed a new company, Upstate New York Power Producers, to take ownership and maintain operations. That company filed a recent proposal with the state under its Energy Highway program, which is a process of identifying New York’s future power supplies and needed transmission infrastructure. AES Eastern Energy is an affiliate of AES Corp. (NYSE: AES), which is not in bankruptcy.
The bondholder plan for Cayuga and Somerset is in contrast to a plan offered by NRG Energy (NYSE: NRG) to the NYPA for adding new natural gas-fired capability at the Dunkirk and Huntley coal plants, potentially backing out future coal use at both of those plants.
Upstate New York Power Producers said in its proposal that it seeks a partnership with the state to help meet its fixed cost obligations in the near-term while pursuing a key role in the state’s long term energy plan. One short-term proposal would provide for NYPA to enter into a power purchase agreement to buy power from these facilities over the next three years. The power purchased by NYPA would be available for use as part of the state’s Re-Charge NY program providing low-cost power to support regional economic development at the same time it provides stability to the Somerset and Cayuga facilities and their employees and neighbors, said the company proposal.
“Ultimately, these facilities should play an important role in the New York Energy Highway,” said the company. “Upstate New York Power Producers is taking steps to ensure that the Somerset and Cayuga plants are able to be a part of New York’s long term energy plan. New York’s energy needs require a diverse blend of fuel-type resources to provide the state’s residents and businesses with a dependable and affordable energy pool,” Upstate New York Power Producers said. “Somerset and Cayuga are in compliance with the current environmental regulations and well positioned to meet upcoming environmental regulatory change. Historically, Somerset and Cayuga have invested significantly in environmental control technologies,” the company said.
Both plants are fitted with fairly new emissions controls
Somerset is a 675-MW pulverized coal-fired plant located in Barker, N.Y., on the southern shore of Lake Ontario, and began commercial operations in 1984. The facility has one General Electric steam-turbine generating unit and is supplied steam from a Babcock & Wilcox balanced draft, drum type boiler. The Boiler Draft system features a Combustion Engineering electrostatic precipitator, a Peabody flue-gas desulfurization (FGD) system and a 613 foot reinforced concrete stack. The site was designed to accommodate a second unit, which was never built. In 1999, Somerset underwent a major boiler and turbine maintenance outage, during which the installation of the selective catalytic reduction (SCR) system was completed. The boiler control system was upgraded in May 2005. In 2009, Somerset completed a major maintenance and turbine outage.
Cayuga is a 306-MW pulverized coal-fired plant located in Lansing, N.Y., on the eastern shore of Cayuga Lake. The facility has two operating units: Unit 1 was commissioned in 1955 and is comprised of a 150-MW Westinghouse Electric steam turbine. Unit 1’s steam turbine generator is supplied with steam from a Combustion Engineering tangentially-fired, pulverized coal, single reheat boiler. Unit 2 was commissioned in 1958 and has a 156-MW GE steam turbine generator. Unit 2’s steam turbine generator is supplied with steam from a Combustion Engineering tangentially-fired, pulverized coal, single reheat boiler. Both units at Cayuga were retrofit with wet scrubbers, low NOx burners, new ID fans, new mills and a control upgrade around 1995. In 2001, Unit 1 was retrofitted with an SCR in order to achieve a 90% NOx reduction. Unit 2 does not have an SCR.
Somerset and Cayuga can burn coals from most of the U.S. coal basins, including Northern Appalachia, Central Appalachia, Illinois Basin and the Powder River Basin, and petroleum coke based on economics and origin. Somerset is served by CSX Transportation while Cayuga is served by the Norfolk Southern rail. Historical coal supply largely has originated out of the Pittsburgh #8 seam out of Northern Appalachia, while other sources are used based on the evaluated cost.
Company says these plants needed for grid reliability
“In addition to providing inexpensive and reliable energy, the projects are also highly suitable for participation in all of the NYISO ancillary markets,” the proposal said. “Their dispatch ability and ramping capability allows them to participate in the operating reserve and regulation markets, and their automatic voltage regulation capability allows them to make a significant contribution to the NYISO Voltage Support Service market.”
The New York Independent System Operator relies on these projects to maintain adequate operating reserves. As an example, on Jan. 31, there was a request for Somerset to the NYISO to schedule a planned maintenance outage for May, which was denied due to lack of sufficient operating reserves. More recently a request was submitted for Cayuga and denied on May 24 for a short term maintenance outage. “That request was also denied due to the lack of sufficient operating reserves,” the company noted.
The Somerset and Cayuga projects are interconnected with New York State Electric & Gas (NYSEG). Somerset is located in Zone A and is connected to the main 345 kV, East/West transmission corridor with NYSEG at the Kintigh Switchyard. Cayuga is located in Zone C and is connected with NYSEG at the Milliken Switchyard at a voltage level of 115 kV. Both projects have rights to deliver the full amount of their generating capability.