Saying that the money-losing R.E. Ginna nuclear plant needs help to stay open to meet grid reliability needs, R.E. Ginna Nuclear Power Plant LLC (GNPP) on July 11 asked the New York State Public Service Commission to review a proposal for the continued operation of the plant.
GNPP, which is a subsidiary of Constellation Energy Nuclear Group LLC (CENG), owns the Ginna Facility. Prior to its expiration on June 30, 2014, the Ginna Facility was operating under a purchase power agreement (PPA) with Rochester Gas and Electric (RG&E) for a majority of its output. The Ginna Facility is now a fully merchant generator in the wholesale market.
“On a forward-looking basis, CENG management has analyzed the revenues the Ginna Facility would expect to receive for energy and capacity sales in the New York Independent System Operator (‘NYISO’) markets following the PPA’s expiration,” the application noted. “CENG management determined that the expected revenues from the Ginna Facility’s sale of capacity and energy into the NYISO markets will not be sufficient to cover its costs of continued operation, including required new capital investment.”
In January 2014, CENG management representatives met separately with individual New York PSC commissioners, Department of Public Service Staff, RG&E, and the NYISO to discuss the determination that market revenues will be insufficient to cover the facility’s costs in the future and that plant retirement was under consideration. CENG management advised RG&E that, to the extent that it was subsequently determined that the Ginna Facility was needed to support electric system reliability, it was willing to continue the facility’s operations upon negotiation and approval by the board of directors of CENG and by the commission of a Reliability Support Services Agreement (RSSA).
On Feb. 21, GNPP, RG&E, and the NYISO entered into a Reliability Study Agreement to determine the potential reliability impacts of retiring Ginna. On May 12, the NYISO produced the final results of its independent reliability study, confirming the need for Ginna’s continued operation at least through Oct. 1, 2018, to avoid adverse impacts to electric system reliability. RG&E also conducted a local reliability analysis, the results of which are included in the NYISO study, which confirms the need for the Ginna Facility’s continued operation to support local electric reliability in RG&E’s service area.
RG&E made a concurrent filing with the commission recognizing there would be a reliability need in the NYISO control region for the greater Rochester area if the Ginna Facility ceased operations. In the absence of this confirmed reliability need and an acceptable RSSA, and given CENG’s management’s conclusion that projected market revenues are insufficient to support the Ginna Facility’s continued operation, CENG management would recommend to CENG’s board to authorize the Ginna Facility’s retirement as soon as practicable.
Companies need PSC determination about plant’s reliability need
GNPP is requesting that the commission:
- find that Ginna’s continued operation is necessary to assure electric service reliability;
- find that CENG management’s communications with individual commissioners and staff, RG&E, and the NYISO, including, but not limited to, this petition and the attached Reliability Study, constitute full and sufficient notice to the commission to satisfy the advance notice requirements with respect to consideration of retirement generally and the Ginna Facility specifically; and
- direct RG&E and GNPP to negotiate and file an RSSA for the Ginna Facility’s continued operation to support electric system reliability in RG&E’s service territory by Dec. 1, 2014.
The Ginna Facility is a 581-MW single-unit pressurized water reactor located along the south shores of Lake Ontario in Ontario, N.Y., about 20 miles northeast of Rochester, N.Y. In 2004, the Ginna Facility’s license to operate was extended until September 2029.
Following commission approval, CENG, through its subsidiaries, acquired the Ginna Facility from RG&E in June 2004. CENG, a joint venture between Exelon Corp. (NYSE: EXC) and EDF Group, owns 100% percent of GNPP and, in turn, the Ginna Facility. Exelon, through its subsidiaries, owns 50.01% of CENG. EDF, through its subsidiaries, owns 49.99% of CENG.
In recent years, the Ginna Facility’s revenues from the sale of capacity and energy have not been enough to cover the costs of operation, the company said. In the two preceding calendar years (i.e., 2012 and 2013), CENG has sustained cumulative losses at the Ginna Facility of nearly $100m (including the allocation of CENG corporate overhead). Further, in addition to incurring these losses, CENG has not been compensated for any operational risk or an appropriate return on its investment over this period.
The need for the Ginna Facility is partially tied to the in-service date for RG&E’s proposed Rochester Area Reliability Project (RARP). The RARP includes 1.9 miles of new 345-kV transmission line, 23.6 miles of new or rebuilt 115-kV transmission line, a new 345-kV/115 kV substation, and equipment upgrades at several existing substations in Monroe County, and equipment upgrades at two substations in Niagara County. The RARP was proposed, in part, to address a possible long-term outage of the Ginna Facility, which is the largest single source to the Rochester system.
Over the past 10 years, the Ginna Facility has operated at over 95% capacity, and its reliable production has also assisted in offsetting price volatility of other generation sources, the company said. As demonstrated by the recent 2014 winter impacts, the Ginna Facility provides a substantial stabilizing effect against volatile and expensive natural gas prices, particularly in the winter, it added.