168-MW cogen in New Jersey to shut in 2018 due to loss of a lease

Bayonne Plant Holding LLC on Nov. 24 asked the Federal Energy Regulatory Commission for a one-time, limited waiver of one of the preliminary procedural notice requirements in Attachment DD to the PJM Interconnection Open Access Transmission Tariff.

it needs a unit-specific exception to the capacity must-offer requirement with respect to the Base Residual Auction (BRA) for the 2018/2019 Delivery Year, scheduled to be held May 11-15, 2015 (the “May 2015 BRA”).

“Specifically, Bayonne requests waiver of the requirement to submit a preliminary exception request to PJM’s Market Monitoring Unit (the ‘MMU’) by September 1, 2014, because that deadline had already passed when the lessor of the site of Bayonne’s generating facility (the ‘Bayonne Facility’) gave notice of its intent not to renew the lease when it expires midway through the 2018/2019 Delivery Year. While Bayonne will still need to demonstrate to PJM that the Bayonne Facility will be ‘physically unable to participate in the relevant Delivery Year,’ the requested waiver will ensure that Bayonne will not be required to offer the facility’s capacity into the May 2015 BRA based solely on its having missed this preliminary procedural deadline.

“Bayonne has been authorized to represent that the MMU does not oppose this request for limited waiver. Bayonne requests that the Commission issue an order granting the requested waiver by February 5, 2015 in order to allow the MMU make its determination on the exception request by February 10, 2015, as required by the Tariff. If the Commission cannot issue an order by this date, Bayonne requests issuance of an order no later than March 5, 2015 in order to allow PJM to issue a final determination by March 7, 2014, as required by the Tariff.”

Bayonne owns and operates the Bayonne Facility, an approximately 168-MW (summer rating) natural gas- and kerosene-fired combined-cycle cogeneration facility in Bayonne, New Jersey, that was completed in 1988. The Bayonne Facility is located on real property leased from Bayonne Industries Inc. and IMTT-Bayonne (together known as the “Lessor”) under a lease agreement dated October 1986 and amended as of December 2003. 

By its terms, the Bayonne Lease expires on Oct. 31, 2018. Bayonne had hoped to renew the lease and to continue operating the Bayonne Facility. To that end, Bayonne had engaged in extensive discussions with the Lessor about renewal of lease. By a letter dated Oct. 16, the Lessor gave notice to Bayonne that it does not intend to renew the Bayonne Lease. On Nov. 17, Bayonne submitted a notice of deactivation to PJM stating its intent to deactivate the Bayonne Plant effective Nov. 1, 2018.

“Without the requested waiver, Bayonne could be required to offer the capacity of the Bayonne Facility into the May 2015 BRA, even though there is currently no reasonable expectation that the facility will be capable of providing capacity during the second half of the 2018/2019 Delivery Year,” the Nov. 24 request to FERC said. “Bayonne missed the September 1, 2014 deadline for submitting a preliminary exception request because renewal of the Bayonne Lease still appeared to be a reasonable possibility until Bayonne received the October 16 Letter a month and a half after that deadline.”

A Bayonne Plant contact is: Debra L. Raggio, Senior Vice President Regulatory & External Affairs Counsel, Topaz Power Management LP, 117 Oronoco Street Alexandria, VA 22314 (703) 778-0841 draggio@tpmlp.com. 

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.