The Federal Energy Regulatory Commission on Feb. 19 rejected as moot a complaint over the reliability-must-run status of the Dunkirk coal plant in New York state of Dunkirk Power LLC, which is a unit of NRG Energy (NYSE: NRG).
In July 2012, Dunkirk Power submitted an unexecuted cost-of-service agreement under which Dunkirk proposed to provide Niagara Mohawk Power d/b/a National Grid with reliability must-run (RMR) service from Dunkirk Units 1 and 2 (called the Dunkirk RMR Units), for the period September 2012-May 2013.
In its July 2012 Filing, Dunkirk asserted that its generating facility, located in National Grid’s service territory, was not currently economic to operate, despite significant investment by Dunkirk’s parent company, NRG Energy. Therefore, Dunkirk stated that it sought to cease operation of the facility in September 2012. However, Dunkirk asserted that the New York Independent System Operator (NYISO) and National Grid conducted a series of studies to determine whether deactivation of the facility would create reliability problems on the transmission system. It stated that, as a result of those studies, NRG was informed that there is a reliability need for two of the plant’s four units to stay in service.
This proceeding went through a number of changes in plans, and Dunkirk in the meantime has been working with New York officials to convert the plant’s coal units to run on natural gas. There have also been issues raised in general about RMR agreements offered by NYISO.
There were opponents of RMR status. Like Exelon (NYSE: EXC) argued that Dunkirk’s proposal will have unjust and unreasonable effects on NYISO’s energy and capacity markets. Exelon stated that, if Dunkirk clears energy from uncompetitive resources in the day-ahead energy market, the uncompetitive unit will artificially lower locational prices and simply prolong the need for the RMR unit. Exelon said that a higher clearing price will encourage new market entrants and alleviate the need for Dunkirk’s uneconomic RMR facilities.
Said FERC’s Feb. 19 rejection: “We find that it is not necessary to address the merits of Dunkirk’s July 12, 2012 Filing and will reject the filing on procedural grounds. No service was ever provided under the unexecuted cost-of-service agreement filed with the Commission and the time period covered by the unexecuted agreement has passed. Accordingly, in light of our rejection, we find there is no need to address the comments on Dunkirk’s Filing.”
Notable is that this decision was reached in the context of another FERC order, also issued on Feb. 19, for NYISO to make changes in its RMR program.
A third FERC order on Feb. 19 dismissed a similar RMR case filed by Cayuga Operating Co. LLC related to its coal-fired Cayuga plant in New York. In this case, Cayuga Operating had asked for dismissal of the long-argued matter. Under the unexecuted RMR agreement Cayuga filed in November 2012, Cayuga would have provided New York State Electric & Gas (NYSEG) with RMR service from the Cayuga Generating Station, effective January 2013. This is another plant where the operator is trying to work out a coal-to-gas conversion.