Niagara Mohawk Power d/b/a National Grid on March 2 filed for approval at the New York State Public Service Commission for an extended Reliability Support Services Agreement that would keep capacity at the Dunkirk coal plant of NRG Energy (NYSE: NRG) in operation while a coal-to-gas conversion project is performed.
This request seeks approval of a seven-month extension (to Dec. 31, 2015) of the March 2013 Reliability Support Services Agreement (RSSA) between NRG’s Dunkirk Power LLC and National Grid. The 2013 RSSA was approved by the New York PSC in May 2013. Under Section 2.3 of the 2013 RSSA, National Grid has the option to seek a necessary extension of the agreement if it determines an extension is necessary to address transmission system reliability needs that will continue beyond May 31, 2015.
In March 2012, NRG Energy filed notice with the commission of its intent to mothball all four units at the Dunkirk station no later than September 2012. Based on studies available at the time of the notice, National Grid determined that the proposed mothballing would have significant impacts to transmission system reliability in western New York. Additional system studies performed by the company concluded that two Dunkirk units were needed for an interim period, leading to the 2013 RSSA.
In the event the natural gas conversion approved by the PSC is completed and the commencement date under that contract occurs prior to Dec. 31, 2015, National Grid could, in its sole discretion, terminate the RSSA prior to Dec, 31, 2015.
Dunkirk Power/NRG said in a March 2 support letter filed with the commission that they have been advised by National Grid that absent extension of the 2013 RSSA, the transmission system in the area would not satisfy reliability requirements, putting service to customers at risk. They noted their agreement with National Grid for the natural gas addition on Dunkirk Units 2, 3 and 4.
“Dunkirk is working diligently to complete the natural gas addition at those units,” wrote Dunkirk/NRG. “Indeed, Dunkirk is nearing a critical milestone with respect to gas supply in that Dunkirk has agreed in principle to accept the bid pricing provided by National Fuels related to gas pipeline construction and ownership. At the end of the term of the RSSA Necessary Extension on December 31, 2015, if the natural gas addition is not complete on Units 3 and 4, and assuming (i) all critical milestones, such as a final agreement with National Fuels, have been reached, (ii) the delay in completing the work on Units 3 and 4, despite Dunkirk’s commercial good faith efforts, is of a de minimis duration, Dunkirk will keep Unit 2 available but will retain the ability to request an approved maintenance outage to complete the gas addition on Unit 2 in accordance with the normal NYISO outage scheduling process. Dunkirk does not expect to keep Unit 2 available in advance of the natural gas addition for that unit beyond the first quarter of 2016.”
Dunkirk owns and operates a coal-fired station in Dunkirk, New York, made up of a (nameplate) 100-MW Unit 1, a 100-MW Unit 2, a 217.6-MW Unit 3, and a 217.6-MW Unit 4, and is a generation-owning entity that sells its energy, capacity and ancillary services in the New York ISO-administered wholesale power market.