New York City protests support plan for Ginna nuclear plant

New York City told the New York State Public Service Commission on Aug. 28 that there is a “disturbing trend” lately for operators of endangered power plants to look for support agreements to keep the plants open, something the commission should call a halt to.

The city’s comments were filed in a recent case where the operator of the 581-MW Ginna nuclear plant is looking for a Reliability Support Services Agreement (RSSA) to keep the plant operating for system reliability reasons, since the current power market does not support continued plant operation.

“The City respectfully urges the Commission to not countenance Ginna’s conduct,” said the Aug. 28 comments. “Moreover, the City respectfully urges the Commission to review the reasons why RSSAs are becoming more prevalent and take steps to improve the utilities’ planning for the loss of generating facilities needed for reliability purposes.”

The city said there is a “disturbing trend” developing in this state regarding reliance on RSSAs with generators that would otherwise retire. The commission has already approved two such agreements, for the coal-fired Cayuga and Dunkirk plants, and thisproceeding presents a third for consideration.

“The trade press has observed that other plants may seek similar treatment as well,” said the city. “The City of New York (‘City’) respectfully urges the Commission to step back and consider this matter in a broader context before deciding the pending Petition. The Commission should also take action to avoid the need for RSSAs in the future.”

Investments in transmission facilities have not kept pace with system needs, as discussed in the “New York State Transmission Assessment and Reliability Study: Phase II Study Report” issued by the STARS Technical Working Group in April 2012, the city noted. As a result, the goals established by the commission to let older, non-competitive plants retire are being frustrated and competitive forces are being supplanted by a return to reliance on captive ratepayers.

Between 2005 and 2012, retirement notices for more than two dozen individual units were filed, the city noted. “In each case, the unit was allowed to retire or cease operating as planned. Since 2012, however, at least three units have been identified as presenting reliability problems in the event they retire. As noted above, the first two instances resulted in captive ratepayer support for the ‘merchant’ generators. This case presents the third instance.”

The opportunity to consider alternatives, and whether relief should be provided to the retiring generator, appropriately should arise only when there is an imminent reliability problem related specifically to a generator’s publicly-stated intention to retire, the city said. “Here, there is no evidence that Ginna’s owner has decided to retire the facility. According to the Petition, it is known only that Ginna is losing money and that Ginna’s retirement is under consideration by management of its parent company. Indeed, the Petition acknowledges that Ginna’s management has made no recommendations to the Board of Directors of Ginna’s parent regarding the retirement of the facility.”

Until such time as Ginna’s owner commits to closing Ginna, there is no reason to make any extra-market payments to Ginna, the city claimed. “That is, there is no record evidence before the Commission that but for the RSSA payments, Ginna would close. Inasmuch as the Board of Ginna’s parent has not yet considered, let alone decided, the fate of Ginna, there is no reasonable basis for the Commission to find that the RSSA payments are necessary to keep Ginna open. At some point in the future, the Board may make such a decision, and at that time, the Commission may need to take action. Until those circumstances arise, however, spending captive ratepayer funds based on speculation regarding one possible outcome would be irrational and capricious.”

The state’s utilities should be aware of the increasing potential for facilities to cease operating as they age, and they should be planning for such events, the city added. “The Dunkirk and Cayuga Generating Stations are more than 50 years old, so it should not have been a surprise to National Grid or New York State Electric & Gas Corporation that those old coal plants would be retiring. However, it appears that neither utility was prepared for the closures, resulting in the need for RSSAs. Further, as noted in the Petition, the economic challenges confronting nuclear plants (especially single-unit facilities) is well known, so Rochester Gas & Electric Corporation should have been preparing for the closure of Ginna but apparently has not. The City is most concerned about the potential closures of baseload facilities in New York City, some of which are also more than 50 years old and many of which are more than 40 years old. While some new generating facilities and transmission lines have commenced operations within the last 10 years, it is not clear that RSSAs with the existing generators could be avoided.”

Ginna owner says plant not likely to survive on open market

R.E. Ginna Nuclear Power Plant LLC (GNPP) on July 11 asked the New York 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, Ginna 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.”

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.

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.

Ginna 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.

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.