Cayuga Operating argues for coal-to-gas conversion at N.Y. plant

Cayuga Operating Co. LLC, which controls the coal-fired Cayuga power plant, told the New York State Public Service Commission on Aug. 16 that New York State Electric & Gas is wrong in thinking that transmission upgrades can supplant all of the economic and system reliability benefits of a repowered Cayuga plant.

Cayuga Operating in an Aug. 16 filing offered comments regarding the May 17 “Report on Cayuga Repowering Analysis” submitted by New York State Electric & Gas (NYSEG) concerning the Cayuga Generating Plant located in Lansing, N.Y. Cayuga Operating wants to repower the venerable coal plant with gas, while NYSEG thinks that transmission improvements can replace the plant entirely.

Gov. Andrew Cuomo’s “New York Energy Highway Blueprint” recognizes the many benefits of repowering existing electric facilities in the state, Cayuga Operating argued. The blueprint states that “[r]epowering power plants can improve system reliability by replacing aging equipment.” The blueprint further notes that “[r]epowering also provides environmental benefits to New York State through reduced emissions and the use of previously developed land with transmission and other infrastructure already in place.”

The blueprint identifies the Cayuga plant, which had filed a retirement notice with the PSC, as an appropriate candidate for studying the option of repowering, Cayuga Operating pointed out. To that end, the blueprint recommends that affected utilities evaluate potential replacement options for the retiring facilities, including repowering the existing power plant with a new plant, and transmission and distribution upgrades. In a subsequent order instituting a proceeding and requiring the evaluation of generation repowering, the PSC required NYSEG and Niagara Mohawk Power d/b/a National Grid “to examine the relative costs and benefits of repowering the plants at their existing sites, and to compare those costs and benefits to the costs and benefits of alternative transmission upgrades over the long term.”

Cayuga says NYSEG failed to take into account the whole picture

The NYSEG report on Cayuga fails to comply with the repowering order, ignoring the evaluation criteria required by the PSC, the Legislature and Gov. Cuomo, Cayuga Operating said. “Rather than addressing these multiple factors, the NYSEG Report focuses on just one variable: ratepayer costs. Compounding this error, NYSEG presents a view of ratepayer costs for repowering versus transmission upgrades that is not factually supportable and lacks certain relevant components. Ultimately, but not unexpectedly, the NYSEG Report recommends transmission upgrades, which may benefit NYSEG and its offshore parent’s bottom line with an increased rate base, but does not address reliability in a way that best benefits the ratepayer, the environment, the economy, or electric market competitiveness.”

In contrast to the NYSEG report, Cayuga’s March 26 “Repowering Proposal” addresses each of the PSC’s required factors from the repowering order, Cayuga Operating said.

“In sum, consistent with the PSC’s Repowering Order, the Legislature’s Bill, and Governor Cuomo’s Blueprint, repowering the Cayuga Plant provides lasting and essential benefits to the crucial reliability of the State’s electrical grid, local and state economies, ratepayers, the environment, and electric market competitiveness. The balance of the costs and benefits of repowering the Cayuga Plant compared to NYSEG’s transmission solution clearly favors repowering,” Cayuga Operating said.

It added: “In the event that the PSC determines that repowering the Cayuga Plant is consistent with the Repowering Order and the New York Energy Highway Blueprint, the evaluation turns to which of Cayuga’s four proposed options to implement. As explained in more detail below, Cayuga’s repowering options may be placed in one of two categories: peaking options (1 & 2) and highly-efficient baseload options (3 & 4). The peaking options satisfy all of the PSC’s factors in the Repowering Order, including the reliability need, but run primarily only in the winter and summer. The baseload options also satisfy all of the PSC’s factors, and provide highly efficient energy year round, among other benefits. Although Cayuga remains fully committed to pursuing any of the alternatives presented, it views Option 1 as the lowest-cost solution to the identified reliability need and Option 4 as addressing the reliability need and providing a full suite of benefits to the region.”

The existing plant has run a fair amount over the last year

It is important to note that over the past 12 months the Cayuga plant has operated at a 30% capacity factor as a merchant generator, dispatching as dictated by market prices. This is outside of any operations dictated by NYSEG to address reliability concerns. If the Cayuga plant is retired, its production will be replaced by less efficient plants leading to higher electricity prices, Cayuga Operating said in the Aug. 16 filing.

Cayuga is a 300-MW coal-fired facility located on Cayuga Lake that began operations in 1955. Cayuga Operating’s four repowering options are:

  • Option 1: Repower the two existing coal‐fired boilers with natural gas;
  • Option 2: Construct three new gas‐fired units, in a simple‐cycle configuration;
  • Option 3: Construct one new gas‐fired unit, in a combined‐cycle configuration, using one of the existing steam turbine generators and repower one of the existing coal‐fired units with natural gas; and
  • Option 4: Construct two new gas‐fired units in a combined cycle configuration.

In addition, in order to further the goal of encouraging the development of renewable energy included in the New York Energy Highway Blueprint, Cayuga proposes to construct a 2-MW array of solar photovoltaic panels to supplement the gas‐fired capacity available from the re‐configured plant site.
 The repowered Cayuga station would have at least two units of at least 150 MW each and be capable of producing at least 300 MW.

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.