Entergy opposes extension of reliability deal for Dunkirk coal plant

Three Entergy Corp. (NYSE: ETR) subsidiaries on May 11 filed comments with the New York State Public Service Commission opposing a request to extend the Reliability Support Services Agreement (RSSA) for the coal-fired Dunkirk power plant of NRG Energy (NYSE: NRG).

Entergy Nuclear FitzPatrick LLC, Entergy Nuclear Operations Inc. and Entergy Nuclear Power Marketing LLC noted that the New York Public Service Commission (NYPSC) is considering a March 2 request filed by Niagara Mohawk Power d/b/a National Grid to extend an existing agreement to procure reliability support services from the generating facility owned by NRG’s Dunkirk Power LLC in Dunkirk, New York.

Dunkirk notified the NYPSC in March 2012 that it intended to mothball the facility by September 2012 because it was not “economic and [is] not expected to be economic.” Initially, two of the Dunkirk units were found needed for reliability and operated under the first Reliability Support Services Agreement (RSSA); the other two Dunkirk units were not needed for reliability and were mothballed. The first RSSA terminated on May 31, 2013. At that time, National Grid determined that it had completed sufficient transmission upgrades to eliminate the reliability need for one of the Dunkirk units. Currently, the fourth unit, Unit 2, is operating under the second RSSA, which will expire on May 31, 2015. The parties selected May 31, 2015, as the RSSA termination date because it corresponded with the date by which “planned system reinforcement projects can be implemented.”

The RSSA request now before the NYPSC seeks to amend the existing RSSA to, among other things: extend the expiration date of the agreement from May 31, 2015, to Dec. 31, 2015; and add a unilateral early termination provision to be triggered if the natural gas addition contemplated in the NYPSC Repowering Proceeding is completed prior to December. Work is ongoing in that “repowering” proceeding to convert the Dunkirk coal plant to firing natural gas. Entergy has also voiced its opposition to that coal-to-gas conversion project.

NYPSC approval of agreements like the RSSA (or of an extension of an existing RSSA) is preempted under the Federal Power Act (FPA), said the Entergy companies. They added: “Specifically, the subsidized operation of any unit at the Facility beginning June 1, 2015 pursuant to a reliability must run services agreement with National Grid would be subject to the approval of the Federal Energy Regulatory Commission (‘FERC’) which has exclusive jurisdiction over such agreements under the Federal Power Act (‘FPA’). Even if the NYPSC had jurisdiction in this area, it should deny the requested extension of the second RSSA because there is no basis under its terms to seek an extension on the grounds asserted in the RSSA Request. Thus, the RSSA must terminate on the current May 31, 2015 expiration date.

“Should National Grid identify a continuing reliability need and deem it necessary to contract for the provision of reliability must run services from a unit at the Facility, Dunkirk must file an agreement regarding the provision of such services for approval with the FERC, which has exclusive jurisdiction over such agreement, and not with NYPSC, which lacks authority to approve such an agreement (or to approve an extension of such an agreement).”

A group of large electricity users calling itself “Multiple Intervenors” said in its own May 11 opposing comments: “The Proposed Extension requests Commission approval of a proposal to revise the Reliability Support Services Agreement (‘RSSA’) executed previously by and between Niagara Mohawk and Dunkirk Power LLC (‘Dunkirk’). The revisions, if approved, would extend the term of the RSSA from May 31, 2015 to December 31, 2015. The Proposed Extension includes only a brief and general explanation of the purported need for an extension. In response to Multiple Intervenors’ discovery demands, however, Niagara Mohawk and Dunkirk reported that completion of both the planned transmission upgrades (being undertaken by Niagara Mohawk) and the refueling project (being undertaken by Dunkirk) have been delayed. The failure of Niagara Mohawk and Dunkirk to complete their respective reliability projects on time apparently is a primary factor underlying the claimed need to extend the term of the RSSA. Multiple Intervenors is deeply troubled by those failures, which could cause customers to incur incremental RSSA-related monthly costs of up to $14.3 million, or 26.9% as compared to the $53.04 million of monthly customer payments currently scheduled under the existing RSSA.”

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.