Niagara Generation files with New York PSC for Sterling takeover

Niagara Generation LLC, USRG Finance Co. LLC and Sterling Energy Group filed a joint request with the New York State Public Service Commission on Sept. 3 for a deal under which Niagara Generation will become a wholly-owned subsidiary of Sterling.

Niagara Generation owns and operates Niagara Generation Facility which is an approximately 53 MW facility that can burn bituminous coal, petroleum coke, biomass and tire-derived fuel located in Niagara Falls, N.Y. Petitioners are asking for expedited action on this petition so that this transaction may close on or before Nov. 30, 2013.

Niagara Generation is a direct, wholly-owned subsidiary of USRG Finance. Niagara Generation owns the facility, which was originally constructed as a coal-fired, fluidized bed cogen supplying both electricity and steam. Electricity from the facility was originally sold to Niagara Mohawk Power (NiMo) under a long-term power purchase agreement that was subsequently terminated as part of NiMo’s restructuring process. Thereafter, the facility operated as a merchant supplier of electric power in the wholesale markets administered by the New York Independent System Operator (NYISO).

In April 2002, the commission authorized WPS Power Development to acquire the facility from Central Hudson Energy Services. In January 2007, the commission authorized Niagara Generation to acquire all of WPS’s ownership interest in the facility and to continue to operate the facility as a wholesale supplier of electric power under lightened regulation.

After its acquisition of the facility, USRG Finance made substantial investments designed to permit the facility to be co-fired using biomass and obtained a contract from the New York State Energy Research and Development Authority (NYSERDA) under the Main Tier of the commission’s Renewable Portfolio Standard (RPS) program.

“Unfortunately, the low level of the payments received under that agreement and the substantial decline in wholesale market prices occurring in recent years have made operation of the Facility uneconomic,” said the application. “As a result, Niagara Generation informed the Commission by letter dated February 7, 2013 of its intention to place the Facility into inactive or mothballed status effective May 9, 2013. The Facility ceased operations on that date and has remained in mothballed status at all times thereafter.”

Niagara Generation filed Aug. 29 with the Federal Energy Regulatory Commission for authorization of this same transaction.

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.