NRG Energy tries to clear way for Bowline plant repowering

Subsidiaries of NRG Energy (NYSE: NRG) told the Federal Energy Regulatory Commission that restoration of the badly deteriorated, gas and oil-fired Bowline power plant depends on timely creation of a New York ISO market zone.

In a Nov. 12 filing, the NRG companies answered NYISO’s request for partial reconsideration of the commission’s order accepting proposed tariff revisions.

“The NRG Companies submit this short answer to alert the Commission to the severe market disruption that will occur unless it swiftly rejects requests from the NYISO to eliminate, or defer the impact of, the Lower Hudson Valley Zone,” they wrote. “Two facts are indisputable: first, there are real deliverability constraints that exist today, but that are currently not reflected in the NYISO’s capacity pricing. Second, there are market participants, including the NRG Companies, that are poised to bring new investment into the constrained Hudson Valley Zone that may be forced to delay those investments because of the regulatory uncertainty created by the NYISO’s untimely request for rehearing.”

Within the past few years, NRG’s Bowline power plant, which is located in the Lower Hudson Valley zone, has been significantly derated.

“Market clearing prices have been and continue to be insufficient to justify the capital investment that would be required to effect the restoration of Bowline’s capacity,” the NRG companies said. “Accordingly, the economics of restoring the Bowline facility are highly dependent on projected capacity market revenues. Under the current market structure, Bowline is only eligible for Rest-of-State capacity pricing, and projected capacity revenues in that zone are not anticipated to be sufficient to justify the investment necessary to bring Bowline back to its pre-derated condition. However, prospects improve greatly if the new Lower Hudson Valley zone is allowed to take effect promptly, as was contemplated by the NYISO until just a few weeks ago.”

In anticipation of the new zone, NRG said it has made preparations to advance the restoration of Bowline. But in light of NYISO’s recent actions, it faces crippling regulatory uncertainty as to whether any new investment in the Lower Hudson Valley Zone is warranted.

The necessary permits for Bowline have been obtained and construction could commence as early as spring 2014. Contrary to NYISO’s contention that it would take several years to generate investment and incremental capacity in the Lower Hudson Valley, NRG said it is poised to respond swiftly to market signals, such as the new Lower Hudson Valley Zone, that encourage reinvestment.

In the face of the uncertainty created by the NYISO’s untimely request for rehearing, NRG said it is now forced to wait at the starting block until the commission has an opportunity to address the NYISO’s untimely request for rehearing. “Furthermore, when (and if) the starting gun is fired, sprinters will face unnecessary hurdles of regulatory risk and a finish line that has moved further away,” NRG said. “The Commission’s rules on timely participation exist, in part, just to avoid this type of artificial uncertainty.”

The NRG companies said they largely share the concerns of the Independent Power Producers of New York, previously filed in this docket. NRG agrees with IPPNY that the figures cited by the NYISO are speculative.

The NRG companies are NRG Power Marketing LLC, GenOn Energy Management LLC, Arthur Kill Power LLC, Astoria Gas Turbine Power LLC, Dunkirk Power LLC, Huntley Power LLC, NRG Bowline LLC and Oswego Harbor Power LLC.

NRG has offered to repower the Bowline plant as part of an ongoing New York State Public Service Commission review of fallback options if the 2,040-MW Indian Point nuclear plant has to be shut. The offered repowering options are:

NRG Bowline 2 – This project is a proposed 564-MW repowering of the NRG Bowline 2 facility. NRG owns and operates two dual-fuel (No. 6 fuel oil and natural gas) utility boiler/steam turbine units located in West Haverstraw, N.Y.

NRG Bowline 3 – NRG presented the Bowline 3 Project, a combined-cycle project with an approximate net plant output of 775 MW.

The GenerationHub database shows Bowline Uni 1 with 621 MW of nameplate capacity and 575 MW of net summer capacity, while Unit 2 also has 621 MW of nameplate capacity but only 178 MW of net summer capacity.

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.