New York backs deal on Dunkirk coal-to-gas conversion

State of New York officials said Dec. 15 that there will be a $150m conversion of NRG Energy’s (NYSE: NRG) Dunkirk coal plant to natural gas.

Under this agreement, the refueled facility, which will be in service by fall 2015 and be 435 MW in size, will improve the reliability of the electric system and bring lower electric supply costs to consumers, officials said. The agreement assures the operation of the plant for 10 years.

“This agreement will result in a larger, cleaner power plant at Dunkirk that will meet reliability needs, reduce costs for consumers, create jobs and stabilize the local property tax base,” New York Gov. Andrew Cuomo said in a statement.

NRG has been pushing at the New York State Public Service Commission for Dunkirk to be switched to gas, or the plant to be repowered to gas, or a combination of both. Local transmission provider National Grid said that it could make up for the loss of the plant with cheaper grid fixes only, and that the only reason to save the plant in refueled form would be for local economic needs, which includes saving jobs in the community.

Dunkirk now consists of four units with a total nameplate rating of 635 MW (net). NRG’s offered options for the plant were:

  • 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.

Cuomo said: “Thanks to the Dunkirk community, which brought the information and facts to the table and worked with the state and local governments, and the PSC staff who directed NRG and National Grid to develop a more cost-effective project, we have arrived at a win-win solution.”

Under this agreement, NRG and National Grid will agree that three coal units at the facility with a capacity of 435 MW will be repowered with natural gas. Currently only one 75-MW unit is operating on coal. The repowering provides an environmental benefit by switching to cleaner-burning natural gas and provides critical local system reliability benefits for National Grid customers, New York officials said. The project will also help relieve transmission bottlenecks in the region and will reduce electricity supply costs to consumers. The project also will provide an opportunity to convert the plant to an advanced combined cycle facility if future market conditions warrant.

The terms of the deal must be submitted to the PSC for final approval.

Deal gets support from various parties

Sen. George Maziarz, Chairman of the Senate Energy and Telecommunications Committee, said: “Making prudent investments in modernizing our electric generating fleet in New York State is vitally important as we look to protect jobs and local tax bases while strengthening grid reliability and reducing emissions. This investment, to convert the Dunkirk Coal plant to natural gas, will not only have a positive impact on the local economy, but will also serve as a model approach to these issues across our region and our state moving forward.” 

Sen. Catharine Young said: “There are tears of joy in Dunkirk today. The Governor’s announcement that the NRG coal plant will be repowered into a clean natural gas plant is the fantastic news the community has been anxiously awaiting. It’s our Christmas miracle. NRG is the largest taxpayer in Chautauqua County. Closure of the plant would decimate the tax base and devastate the community. Repowering the plant is our salvation. It stabilizes the tax base, saves and grows jobs, preserves reliable electricity, and gives us cleaner air to breathe.” 

“As the local energy provider in Western New York for more than a century, National Grid’s role is to reliably deliver electricity to our customers at a reasonable cost. Our goal from the beginning of this process was a balanced outcome and this agreement allows us to deliver electricity to this region at a much, much lower cost than earlier electric generation proposals. We look forward to continuing to support the local Dunkirk community by providing safe, reliable power and responsibly managing power costs,” said Ken Daly, president of National Grid New York.

“We are proud of the high performance of our Dunkirk employees during this uncertain period and are extremely happy to continue to be part of the Dunkirk community,” said Lee Davis, NRG Executive Vice President and President of the East Region. “NRG thanks Governor Cuomo for his leadership and the entire Western New York community for their support of this important initiative.”

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.