Caithness says its gas project needed, despite the opinion of PSEG Long Island

The findings of a study from General Electric Energy Consulting released April 17 by the project developer calls into question PSEG Long Island‘s decision to postpone construction of the Caithness Long Island II power plant.

The study finds that Caithness II, previously selected by the Long Island Power Authority (LIPA), would from day one produce significant cost savings on Long Island and in New York State, offer significant environmental benefits, reduce the need for more expensive imported power from New Jersey and Connecticut, and would be a highly reliable and flexible power generation source. PSEG Long Island has since taken over much of the functions of the state-controlled LIPA.

General Electric analyzed Caithness II using the industry-leading GE MAPS (Multi Area Production Simulation) software application to estimate the Long Island, New York State and regional electricity cost impacts, environmental impacts, and system impacts of the 750-MW natural gas-fired plant.

The report concluded that due to its high efficiency, Caithness II is expected to save Long Island an average of $192 million annually or over a billion dollars in wholesale energy costs over the first six full years of operation under the Caithness proposal that LIPA previously selected in its 2010 Request for Proposals. This savings is significantly more than the fixed costs LIPA would pay Caithness II under that proposal. Therefore, Caithness II provides immediate net cost savings to ratepayers. Ratepayer savings will be approximately 1% of current bills.

GE’s analysis concluded that Caithness II is expected to benefit the environment because:

  • Annual NOx emissions from electric power generation are estimated to decrease by about 23% on Long Island and 8% in New York State.
  • Annual SOx emissions from power plants are estimated to decrease by about 37% on Long Island and 22% in New York State.
  • Emissions of CO2 from power generation are estimated to go down one million tons per year in the Northeast.

The report shows that the electricity generated by Caithness II is estimated to displace energy generated by higher cost and less efficient generating units on Long Island, in New Jersey and Connecticut and that imports of electricity from New Jersey and Connecticut are estimated to be reduced by an average of 25%.

“The GE report confirms the significant economic and environmental benefits of this plant to our region, and we urge LIPA and PSEG-LI to move it forward expeditiously,” said Ross D. Ain, President of Caithness Long Island LLC. “From saving ratepayers money, to helping clean the air we breathe, to providing jobs and tax revenues to Long Island, by producing less expensive electricity here rather than importing electricity from New Jersey and Connecticut, this study clearly shows that Caithness II is the right solution for Long Island. Caithness, not Long Island ratepayers, will bear all the risks of construction, completion, and operating and maintenance costs over the life of the plant.” 

Caithness II is a 750-MW, natural gas-fired power plant that will employ efficient combined-cycle, air-cooled technology. The Caithness II project was selected by LIPA in 2013 as part of a competitive bid process because it will provide the best value to Long Island ratepayers and the environment. It has many of the required environmental and municipal approvals to begin construction. PSEG-LI has since recommended that the project be put on hold.

Project development company Caithness Long Island II LLC, is a subsidiary of Caithness Energy LLC, a privately-held, New York-based independent power producer.

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.