FERC grants waiver related to 2018 shutdown of New Jersey cogen plant

The members of the Federal Energy Regulatory Commission on Jan. 29 granted an approval to Bayonne Plant Holding LLC 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.

The company needed 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,” said the Nov. 24 application. “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 owns and operates the Bayonne Facility, an approximately 168-MW (summer rating) natural gas- and kerosene-fired combined-cycle cogen 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, 2014, the Lessor gave notice to Bayonne that it does not intend to renew the Bayonne Lease. On Nov. 17, 2014, Bayonne submitted a notice of deactivation to PJM stating its intent to deactivate the Bayonne Plant effective Nov. 1, 2018.

Said the Jan. 29 FERC approval order: “We find Bayonne has demonstrated good cause to grant a waiver of the September 1, 2014, deadline in section 6.6(g) of Attachment DD to the PJM Tariff to submit a preliminary exception request for its must-offer requirement for the Bayonne Facility. We conclude that Bayonne’s failure to comply with the September 1, 2014, deadline at issue was in good faith. Bayonne did not want to prematurely submit a preliminary exception request to PJM and the Market Monitor and did not receive notice that the Lessor would not renew the Bayonne Lease until after the deadline had passed. In addition, Bayonne’s request is limited in scope because the waiver only applies to the September 1, 2014, deadline for the May 2015 BRA, and not to any substantive provisions or subsequent deadlines.”

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.