NRG criticizes National Grid’s assessment of Dunkirk repower plan

NRG Energy (NYSE: NRG) on May 22 asked the New York State Public Service Commission for time to respond to National Grid criticisms of its Dunkirk coal-to-gas repower plan, but did have some rebuttals in the meantime.

National Grid, the local transmission owner, on May 17 filed critical comments on the Dunkirk repower plan with the PSC. “NRG’s review of the National Grid Report reveals that many aspects of the analysis and conclusions are flawed and devoid of logic such that a thorough rebuttal is warranted,” NRG said in the May 22 filing. “NRG respectfully requests two weeks (until June 5, 2013) to develop a comprehensive response detailing the Report’s failures and setting the record straight.”

In the meantime, NRG pointed out what it said are some basic problems with the National Grid report:

  • Reliability: The transmission alternative proposed by National Grid does not meet the minimum requirements of a long-term solution as defined in a January commission order. National Grid fails to satisfy the ten-year reliability period with its set of proposed upgrades, NRG said. Consequently, it said that National Grid has not shown that reliability would be preserved under its proposed solution and ratepayers would thus be at risk of incurring unnecessary, additional costs to fund the reliability gap left by the proposed transmission alternative.
  • Ratepayer Costs: National Grid did not consider the substantial cost-overrun risks borne by ratepayers in its $66m transmission proposal, NRG said. Under traditional utility rate of return ratemaking for the transmission alternative, New York ratepayers will bear all risk for project cost overruns, it pointed out.
  • The Environment: The National Grid report concludes the Dunkirk repower project would result in both local and statewide emission reductions, particularly with the combined-cycle option. “They then conveniently, and without any basis, dismiss these benefits as being insignificant for differentiating among the transmission alternative,” said NRG. “Consequently the National Grid analysis is deficient and has not credibly accounted for the environmental benefits created by the NRG generation proposals.”
  • The Economy: As will be detailed in NRG’s June 5 response, National Grid overstates its economic benefits relative to NRG’s proposals, NRG said.
  • Electric Market Competiveness: National Grid’s conclusion that a clean, new, combined-cycle facility would have no impact on electricity production costs is simply not credible, NRG said. The addition of what would be the most efficient, lowest cost combined-cycle facility anywhere in the state will obviously reduce costs to New York ratepayers, and National Grid’s “findings” to the contrary should be disregarded, it added.

On Feb. 19, National Grid issued a request for proposal to NRG seeking information on the potential repowering of the coal-fired Dunkirk plant. On March 26, NRG responded with three repowering options:

  • Option 1—a new 422 MW combined-cycle gas turbine (CCGT) and refueling of the existing 75-MW Dunkirk unit 2 with natural gas.
  • Option 2—the refueling of the existing Dunkirk units 2, 3 and 4 with natural gas.
  • Option 3—installation of 285 MW of natural gas-fired peaking units.

National Grid evaluated the three Dunkirk repowering options and one set of transmission upgrades. Repowering Options 1 and 2 and the transmission upgrades each satisfy the reliability need identified by National Grid over the study period, and the relative reliability performance of the solutions does not provide a sufficient basis for differentiating among the alternatives on that basis, National Grid reported. “Based on its analysis, the Company recommends the Commission support the implementation of the Transmission Upgrades solution,” said National Grid.

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.