The Sierra Club and Earthjustice filed March 20 comments with New York’s Department of Environmental Conservation (DEC) regarding draft air and water pollution permits that would still allow leeway to burn coal at NRG Energy’s (NYSE: NRG) Dunkirk power plant.
NRG for months has been working with state officials to convert three of the plant’s four units to burning natural gas, with the fourth unit to stay shut. But the environmental groups said the permit applications and draft permits confirm that Gov. Andrew Cuomo’s “bailout” of the plant would enable it to continue burning coal indefinitely.
In December 2013, Cuomo spearheaded a bailout deal that he claimed would convert the economically failing Dunkirk coal plant to gas, even though the switch would cost New York ratepayers several times more than proposed transmission upgrades, the most cost effective solution for ratepayers, the club said. Recently, the New York State Public Service Commission (NYSPSC) approved that deal, which will cost electricity customers over $150 million.
But the environmental groups said that NRG has built into these permits the ability for to burn coal at any time despite the installation of gas infrastructure upgrades. Further, the DEC’s draft permit proposes a limit for NOX that reflects what state law requires for units burning coal rather than natural gas, effectively skirting NRG’s previous pollution reduction promises, they said.
“Governor Cuomo and his Public Service Commission are forcing electricity customers to sink $150 million of their hard earned money to bail out coal plants when New York should be moving away from coal and toward clean, renewable energy. Governor Cuomo and the Department of Environmental Conservation should reject these permit applications because if approved Dunkirk would continue to be able to burn coal 100% of the time” said Lisa Dix, Senior New York Sierra Club Beyond Coal Representative. “NRG should go back to the drawing board right away and draft permit applications that include zero room for burning coal—or give electricity customers back their money.”
Notable is that the deal to save the plant is not based on it remaining a coal plant, but instead is a grid reliability measure and a way to preserve local jobs at and around the re-fueled plant.
“This deal and these permit applications set a harmful precedent for the other failing coal plants across the state, upset New York’s competitive energy market, and put New York families’ health at risk by allowing more ratepayer subsidies for dirty, outdated, and uneconomic plants” said Shannon Fisk, Managing Attorney at Earthjustice, a non-profit environmental law firm. “In order for Governor Cuomo to fulfill his promise to be a climate leader, he needs to transition New York beyond coal, aid communities and workers in this transition, and focus on building a job-creating renewable energy economy.”
Dunkirk can produce a total of 600 MW during maximum production. The station consists of four pulverized coal, dry-bottom, tangential-fired boilers that primarily fire subbituminous coal and fire distillate oil during startup.
Said a February DEC notice about the proposed Air State Facility (ASF) permit for the plant: “The proposed ASF permit is for Boiler 2 (Emission Unit U-00002) and Boilers 3 and 4 (Emission Unit U-00003) to allow for the capability of burning 100% natural gas in each boiler. NOTE: Boiler 1 (Emission Unit U-00001) is currently mothballed and not part of this project. The capabilities of firing coal will remain, with the intent of the units being fired on either coal or natural gas as primary fuels. Coal firing capacities will not change. The ability to start up on natural gas will be added for both coal and natural gas as primary fuels, as well as maintaining the ability to startup with distillate oil for both natural gas and coal as primary fuels. Coal and natural gas are not intended to be fired simultaneously.”
The notice added: “The November 2014 NOx RACT analysis concluded that NOx RACT for burning natural gas in these coal boilers is to use good combustion controls and the existing over fired air systems. The applicant’s vendors have guaranteed a NOx emission rate of 0.12 lb/mmBtu while burning natural gas and is also the NOx RACT limit for the boilers burning coal only.”
The plans for Dunkirk, once to be shut, have gone through changes since 2012
Said NRG about the plant in its Feb. 27 annual Form 10-K report: “On March 14, 2012, Dunkirk Power filed a notice with the NYSPSC of its intent to mothball the Dunkirk Station no later than September 10, 2012. The effects of the mothball on electric system reliability were reviewed by Niagara Mohawk Power Corporation, d/b/a National Grid. As a result of those studies, National Grid determined that the mothball of the Dunkirk Station would have a negative impact on the reliability of the New York transmission system and that portions of the Dunkirk Station may be retained for reliability purposes via a non-market compensation arrangement.
“Additionally, on July 20, 2012, National Grid and Dunkirk Power agreed on the material terms for a bilateral [reliability support services] agreement and submitted those terms to the NYSPSC for rate recovery in National Grid’s rates. On August 16, 2012, the NYSPSC approved terms and on August 27, 2012, Dunkirk Power and National Grid entered into the RSS agreement that began on September 1, 2012, and expired on May 31, 2013.
“In late 2012, National Grid issued a request for proposals with respect to its reliability need in the Dunkirk area for the two years beginning June 1, 2014. Dunkirk Power submitted a proposal and signed a second, two-year, contract on March 4, 2013 pursuant to which one unit (Unit 2) at Dunkirk will continue operating through May 31, 2015. The contract was submitted to the NYSPSC in March 2013 and approved in May 2013.
“On July 12, 2012, Dunkirk Power filed a [reliability must run] agreement with FERC to protect the Company’s interests in the event National Grid and Dunkirk Power could not come to terms on a bilateral agreement for reliability support services. On February 19, 2015, FERC rejected the RMR agreement as unnecessary and clarified in a related docket that it was not intending to review either RSS agreement.
“On February 19, 2015, pursuant to Section 206 of the [Federal Power Act], FERC found NYISO’s tariff to be unjust and unreasonable because it does not contain provisions governing the retention of and compensation to generating units for reliability. FERC ordered NYISO to adopt tariff provisions containing a proposed RMR rate schedule and pro forma RMR agreement within 120 days of the date of the FERC’s order. However, FERC clarified that NYISO’s RMR proposal will not require Dunkirk to enter into new pro forma agreements for the 2012 and 2013 RSS agreements.”
Said NRG in a footnote in the Form 10-K about gas conversions at several coal plants: “NRG intends to add natural gas capabilities at the Avon Lake and New Castle facilities, which projects are expected to be completed by the summer of 2016. NRG also intends to add natural gas capabilities at the Big Cajun II and Dunkirk plants which projects are expected to be completed by the spring of 2015 and the fall of 2015, respectively. NRG intends to add natural gas burning capability to Units 6, 7 and 8 of the Joliet coal facility no later than June 2016.”