Several gas-fired power generators came out Nov. 12 in opposition to any plans to convert the coal-fired Cayuga and Dunkirk power plants, on their last legs as power generating facilities, to burning natural gas.
The opposing independent power producers include Lockport Energy Associates, Indeck Energy Services and Lakeside Energy.
NRG Energy (NYSE: NRG), which owns the Dunkirk plant, and Upstate New York Power Producers, which owns the Cayuga plant located a Lansing, N.Y., recently announced that the companies will mothball their plants unless they receive approval from the New York State Public Service Commission (PSC) to repower the plants from coal to natural gas. NRG and Upstate Power Producers also want the PSC to direct National Grid and NYSEG to sign guaranteed above market rate 20-year power purchase contracts for both plants in order to pay for the conversion.
“The conversion plan will result in the loss of jobs and tax revenues in our communities and some of our facilities will simply not be able to compete because of what is a subsidy for NRG and Upstate New York Power Producers,” said Thomas Gesicki, General Manager of Lockport Energy.
In order to pay for the guaranteed contracts, National Grid has stated that it would be forced to raise residential rates by up to 4% annually and 10% on commercial customers throughout its service territory. NYSEG residential customers also could see similar rate increases, the power producers said. In a second re-powering scenario proposed by NRG and Upstate New York Power Producers, there is the potential that electric rates for all residential and commercial customers in New York State could increase to pay for the contracts.
Lockport Energy Associates and Indeck Energy Services, in a joint filing to the New York commission, instead are urging the PSC to pursue the transmission alternative over the re-powering proposals put forth by NRG and Upstate New York Power Producers. According to the filing, “repowering alone will not satisfactorily resolve many of the reliability needs on the system – some level of transmission upgrades are necessary to ensure reliability.”
Further, the transmission alternative that would address reliability needs comes at a significantly lower cost, poses the least risk to ratepayers and has minimal impacts on the competitive marketplace, the power producers said.
The 13 independent power plants owned by the companies opposed to the conversion have a combined generating capacity of approximately 1,200 MW. Company officials said most of the plants are not running at full capacity and with an estimated 2,000 MW of excess generation capacity currently in New York, the proposed conversion of the NRG and Upstate plants would make matters worse for these independent operators.
“Giving NRG and Upstate New York Power Producers guaranteed above market rate 20 year contracts will put some existing independent producers out of business; we are extremely concerned about the viability of all of our plants over the long term,” Gesicki continued. “The approval of this conversion also will send an extremely negative message to investors as it would directly violate the principles of free market competition that is the basis of the state’s energy marketplace.”
- Indeck Energy Services owns and operates five natural gas-powered plants in Tonawanda, Olean, Oswego, Silver Springs, and Corinth totaling 365 MW.
- Lakeside Energy owns plants in Syracuse and Beaver Falls that total 204 MW.
- Alliance Energy Group owns plants in Batavia, Hillburn, Ogdensburg, Middletown, Massena and Sherrill that total 351 MW.
- The Lockport Energy Associates LP plant has a total capacity of 225 MW.