New Jersey board okays gas supply deal for Red Oak power plant

The New Jersey Board of Public Utilities (BPU) on Dec. 18 approved New Jersey Natural Gas’ (NJNG) request to provide natural gas service to the 830-MW Red Oak plant, a combined-cycle facility located in Sayreville, N.J.

The gas would be supplied under a contract executed between NJNG and TAQA GEN-X LLC. The agreement calls for NJNG to provide natural gas delivery service to TAQA-Red Oak, which may be interrupted by NJNG when cold weather or other conditions occur.

At its option, NJNG will supply natural gas to TAQA-Red Oak under its gas supply incentive program with margins to be shared with customers. TAQA-Red Oak will be responsible for the cost of connecting to NJNG’s distribution main, which currently runs within 600 feet of the facility. The agreement will be effective through Sept. 30, 2022.

NJNG said it expects to begin serving and supplying natural gas to Red Oak in the fall of 2014, once the connection to its main is completed. At that time, the Red Oak facility will be NJNG’s largest customer. NJNG already serves another generating station in Sayreville.

“We are pleased to welcome Red Oak as our newest and largest customer,” said Laurence Downes, president and CEO of New Jersey Natural Gas. “Supplying safe, reliable natural gas service to TAQA-Red Oak is truly a win-win proposition not just for New Jersey Natural Gas and its shareowners, but for our customers and the state as well.”

The agreement is expected to bolster New Jersey’s energy master plan, since NJNG’s natural gas supply options should allow TAQA-Red Oak to reduce its generating costs, which should reduce the cost of the electricity it produces. This price differential could then potentially lead to more power being generated and sold by TAQA-Red Oak on the regional power grid. The BPU, in a related recent order, said this price differential and increased generation would lead to lower electricity costs for New Jersey consumers, as well as reduced air pollution, since the state will be less reliant on electricity from environmentally dirtier and less efficient coal-fired power plants.

A Nov. 22 BPU document said that the gas supplier to Red Oak has been PSEG Energy Resources and Trade, through TAQA, and that New Jersey Natural Gas was lined up as a replacement supplier when talks to extend that deal failed.

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.