FERC approves waiver for stalled RC Cape May repower project

The Federal Energy Regulatory Commission on April 30 granted a waiver to RC Cape May Holdings LLC related to a delayed coal-to-gas repowering project at the B.L. England plant in New Jersey.

On March 7, RC Cape May filed a request for a waiver of the must-offer requirement which is contained in section 6.6 of Attachment DD to the PJM Interconnection Open Access Transmission Tariff. Specifically, RC Cape May sought a waiver of the requirement to offer the B.L. England plant’s output in the Base Residual Auction (May 2014 Auction) for the 2017/2018 delivery year.

RC Cape May stated that in 2007 it acquired this power plant, currently comprised of one oil-fired and two coal-fired units, as well as four 2-MW diesel generators. RC Cape May said that, pursuant to an Administrative Consent Order issued by the New Jersey Department of Environmental Protection, it was required to cease operations of the two coal-fired units by Sept, 30, 2013, and May 1, 2015, respectively. The Administrative Consent Order also permitted the repowering of the plant, with the company opting to pursue repowering by retiring the two coal-fired units and replacing them with a new state-of-the-art combustion turbine and heat recovery steam generator.

RC Cape May further stated that PJM completed the interconnection queue process and expected the repowered station to be completed by May 1, 2016. RC Cape May further stated that, in 2013, the New Jersey Board of Public Utilities (NJBPU) granted South Jersey Gas Co. authorization to construct a pipeline to provide natural gas to the station and provide reliability to other customers. As a result, RC Cape May offered the output of the station into the May 2013 Base Residual Auction (May 2013 Auction) for the 2016/2017 delivery year, and it cleared. Therefore, the repowered station is subject to the must-offer obligation for May 2014 Auction because it is considered an existing generation capacity resource for the 2017/2018 delivery year.

But, a regional agency in New Jersey called the Pinelands Commission recently deadlocked in a vote on letting a gas pipeline that would supply the repowered plant pass through property under commission authority. So the vote failed, and the company isn’t sure when and whether it can get this pipeline approved. RC Cape May stated that, due to the Pinelands Commission’s non-decision, it does not expect that the repowered station will, in fact, be able to provide capacity in the 2017/2018 delivery year, and as a result RC Cape May qualifies for a waiver of the PJM Tariff’s must offer requirement for the May 2014 Auction.

“RC Cape May’s attempt to obtain all necessary approvals and permits including final approval of the construction of the gas pipeline was made in good faith,” the commission ruled on April 30. “The lack of final approval and execution of the Memorandum of Agreement with the Pinelands Commission was beyond RC Cape May’s control. RC Cape May’s request is also limited in scope in that seeks a waiver of section 6.6(g) of Attachment DD to the PJM Tariff for one auction only, and the waiver would be applicable only to RC Cape May. RC Cape May’s request remedies a concrete problem by avoiding the requirement that RC Cape May offer capacity into May 2014 Auction that it cannot reasonably provide, and which PJM cannot rely on for reliability planning purposes. We further find that granting the waiver will have no undesirable consequences for PJM nor any other third parties. Finally, we note that neither PJM, nor any other entity, opposes the requested waiver.”

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.