Replacement of coal capacity a key part of New York ISO planning

The Board of Directors of the New York Independent System Operator (NYISO) has approved a 2012 Comprehensive Reliability Plan (CRP) that concludes that additional transmission and generation resources will be needed during the study period (2013-2022).

These new resources will be needed to meet system reliability criteria and that sufficient solutions have been proposed to meet those reliability needs, NYISO said in a March 22 statement.

“Given the expanding universe of potential risks to system reliability that are outside of our control, a robust planning process is absolutely critical,” said NYISO President and CEO Stephen Whitley. “Factors such as extreme weather conditions, public policy revisions and dynamic economic trends can dramatically impact the electric system. We must be vigilant in monitoring a diverse array of risk factors and ready to adapt and respond should conditions change.”

The 2012 CRP is the product of the Comprehensive Reliability Planning Process conducted by the NYISO to provide a blueprint for meeting the reliability needs of the state’s bulk electricity grid. The multi-phased process includes an assessment of reliability needs prior to the development of the reliability plan.

Last September, the NYISO issued the 2012 Reliability Needs Assessment (RNA) identifying transmission security violations, which could manifest as soon as 2013, and resource adequacy violations, which could occur by 2020. To address these needs, the NYISO requested market-based, regulated backstop and alternative regulated solutions. Market-based solutions are the preferred means to meet future reliability needs with the other regulated solutions available for implementation if necessary, NYISO said.

The CRP reports that market-based, regulated backstop and alternative regulated solutions have been proposed to meet the reliability needs identified in the 2012 RNA. Based upon its updated study model the evaluation of the market-based solutions and the most recent Local Transmission Plans (LTPs) from the state’s transmission owners, the CRP made the following findings:

  • Transmission Security and Adequacy—The needs identified in the 2012 RNA for the Rochester and Syracuse areas will be resolved by 2017 with permanent solutions identified in Rochester Gas & Electric’s and National Grid’s LTPs.
  • Resource Adequacy—The market-based solutions, if constructed, are fully sufficient to meet the resource adequacy needs for 2021 and 2022 identified in the RNA. Market-based solutions to the resource adequacy needs include: NRG Energy’s proposal to repower the Astoria plant and provide a net capacity increase of 405 MW of generating capacity in the New York City region (Zone J); Constellation NewEnergy’s proposal to increase demand response by 30 MW in the New York City region (Zone J); and NRG Energy’s proposal to repower the coal-fired Dunkirk plant with 440 MW of gas-fired capacity in the Western New York region (Zone A), which would replace existing generation at the site and could address reliability issues in the area.
  • Risk Factors—While solutions studied in the CRP will result in the system meeting reliability criteria, there are uncertainties and risk factors that could adversely affect the implementation of the plan and system reliability over the 10-year planning horizon. These include: the need for transmission owners’ LTPs to proceed on schedule; factors such as financing, future market conditions and interconnection requirements influencing the timely completion of market-based generation solutions; the retirement of additional generating units beyond those already considered in the 2012 RNA for either economic or environmental reasons could raise additional, adverse impacts on reliability beyond those identified in the CRP; and if the two Indian Point nuclear plant unit licenses are not renewed and the plant were to retire by the end of 2015 or thereafter, this would result in immediate transmission security and resource adequacy criteria violations unless sufficient replacement resources are in place prior to retirement.

NYISO said it will continue to monitor, evaluate and report, on a quarterly basis, the viability and timeliness of all submitted market-based solutions and will be prepared to trigger a gap or regulated backstop solution, if necessary.

Coal capacity takes a hit as New York transitions to more gas-fired generation

Before evaluating solutions included in the CRP, the NYISO updated its RNA study model for the CRP to reflect the announced intention to mothball the coal-fired Cayuga Units 1 and 2, and to reflect the August 2012 rescission of the retirement intention notice for the oil-fired, 160 MW (nameplate) apiece Gowanus 1 and 4. The decision to continue the operation of the Gowanus 1 and 4 units moved the first year of resource adequacy need from 2020 to 2021.

The Jan. 3 notice to the New York State Public Service Commission of the “Intent to retire Dynegy Danskammer,” after the CRP base case was developed, is not modeled in the CRP base case. Danskammer, an old plant that can fire coal, gas and oil, was on the verge of shutdown anyway and then was badly damaged last fall in Super Storm Sandy.

“Retirement of additional generating units beyond those already contemplated in the 2012 RNA for either economic or environmental factors could adversely affect the reliability of the NYCA bulk power system beyond what has been identified in this CRP,” the CRP noted. “The retirement of the Danskammer generating plant, which was announced after the CRP base case was finalized, will advance the year of resource adequacy needs by two years to 2019. The completion of market-based solutions identified in this CRP would address these resource adequacy needs until 2021. The NYISO recognizes that numerous risk factors can contribute to reliability concerns with the need to take swift actions to maintain reliability which, depending on the units in question, may need to be preceded by putting sufficient replacement resources into operation. Emphasis should be placed on identifying generator retirements that could occur from economic or environmental factors.”

Dynegy Danskammer’s Jan. 3 notice filed with the New York PSC that it intends to discontinue operation of the Danskammer power plant and permanently retire all six generating units. On Oct. 29, 2012, Danskammer Units 1-4 were flooded due to high water from Super Storm Sandy and have been in a forced outage status since that time. Units 5 and 6 were not exposed to flood water, but the power transformer for these generators was damaged by the flood. Units 3 and 4, with a combined 374 MW (net) of capacity, were coal-fired.

If the Indian Point licenses are not renewed by the Nuclear Regulatory Commission, and the 2,040-MW plant were to retire by the end of 2015 or thereafter, it would result in immediate violations of transmission security and resource adequacy criteria unless sufficient replacement resources can be put into operation before the retirement, the CRP said. The state PSC recently ordered that a request for proposals be issued to find replacement capacity if Indian Point has to be shut.

National Grid has entered into a short-term contract with the plant owner to keep the coal-fired Dunkirk Units 1 and 2 capable of running through May 2013. By May 2013, National Grid will install capacitor banks and circuit breakers, and modify connections to distribution load, to reduce the dependency on Dunkirk generation from two units to one unit. National Grid has issued an RFP to solicit solutions to address system security concerns that exist without any Dunkirk generation in service between 2013 and 2015. Completion of grid upgrades should eliminate dependence on Dunkirk generation.

In addition, the PSC has issued an order instituting a proceeding and requiring evaluation of generation repowering alternatives to transmission system upgrades when a facility needed for reliability proposes to retire. The order directs National Grid to solicit a bid from the owners of the Dunkirk plant for the repowering of the facility and to file a report and recommendations at the commission within 90 days on the relative reliability and other impacts of the options.

NRG Energy submitted a proposal for 440 MW of repowered generating capacity at the Dunkirk site in Zone A which would replace existing generation at the site and could address reliability issues in that zone. The proposed combined-cycle gas turbine (CCGT) facility would be in operation by 2017. The project would utilize existing 115 kV and 230 kV connections at the Dunkirk site.

In March 2012, NRG’s Dunkirk Power LLC filed a notice with the New York Department of Public Service (DPS) of its intent to mothball the coal-fired Dunkirk Station no later than Sept. 10, 2012. The effects of the mothball on electric system reliability were reviewed by Niagara Mohawk Power d/b/a National Grid (NG). As a result of those studies, NG determined that the mothball of Dunkirk would have a negative impact on the reliability of the New York transmission system. In July 2012, Dunkirk Power filed a reliability must run (RMR) agreement with the Federal Energy Regulatory Commission. Also in July 2012, NG and Dunkirk Power agreed on the material terms for a bilateral reliability support services (RSS) agreement and submitted those terms to the New York PSC for recovery in NG’s rates. In August 2012, the NYPSC approved terms and Dunkirk Power and NG entered into the RSS agreement that began on Sept. 1, 2012.

NRG also submitted a market-based proposal for repowering generating capacity at Astoria by replacing 595 MW of existing generation with four new CCGT units (four units at 250 MW apiece = 1,000 MW) for a net increase of 405 MW in response to resource adequacy needs that arise in 2021. These units would go into service during the 2016-2018 period. NRG reports that the project is permitted and approved to be constructed in two phases, with the net increase achievable after the completion of the first two units in 2016, the CRP said.

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.