National Grid said at an Oct. 31 technical conference that it still thinks that transmission fixes are a cheaper and better way to go to replace the to-be-shut Dunkirk coal plant, and not the gas-fired repowering of the plant that NRG Energy (NYSE: NRG) proposes.
National Grid on Nov. 1 filed with the New York State Public Service Commission a copy of its slide presentation from the Oct. 31 conference. The slides noted that National Grid was asked by the commission to examine repowering of Dunkirk as an alternative to transmission upgrades needed to maintain local reliability.
Said the presentation:
- Transmission upgrades address local reliability concerns and based on generation request for proposals (RFP) cost information received to date they appear to be less costly than potential generation solutions;
- National Grid is not opposed to repowering Dunkirk but repowering should be done through the competitive markets;
- A regulated above-market repowering contract is inconsistent with competitive markets;
- Such a contract shifts nearly all the financial risk from developers (i.e., NRG Energy) to customers;
- National Grid is not willing to enter into a repowering contract voluntarily that would require its customers to pay more than the costs of providing reliable service with a lower cost transmission solution; and
- If a subsidized repowering solution at Dunkirk is deemed in the public interest, a state entity should be identified as the counterparty and a broader statewide allocation of costs should be adopted.
NRG proposed to mothball the aging Dunkirk plant in March 2012 because the facility is not currently economic and is not expected to be economic. National Grid and NRG entered temporary “RSS” agreements to keep Dunkirk available, at a cost of about $110m over the less than three-year RSS period. NRG later offered an RFP response that included three repowering options for Dunkirk, all involving gas as the plant’s new fuel and the total end of all coal consumption at the plant.
NRG and some local residents say a repowered plant is needed to maintain jobs and economic activity in the area, above any consideration of whether transmission-only projects are the cheapest replacement options.
Dunkirk now consists of four units with a total nameplate rating of 635 MW (net). Units 1 and 2 are identical 100 MW units that began commercial operation in 1950. Units 3 and 4 are identical 218 MW units that went into commercial operation in 1959 and 1960, respectively. NRG’s offered options for the plant are:
- Option 1—a new 422 MW combined-cycle gas turbine (CCGT) and refueling 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.