Cayuga Operating argues at New York PSC for latest coal plant repowering plan

Cayuga Operating, which has a coal-fired power plant, on Sept. 18 filed further arguments with the New York State Public Service Commission in a long-running docket where the commission is looking at whether plant repowering options offered by Cayuga Operating, or a plant retirement with compensating grid upgrades by New York State Electric and Gas, is the best way to go for ratepayers.

Cayuga noted that in its Aug. 24 comments in this case, it estimated the net benefits of repowering to be $67 million. This $67 million figure was based, in part, on savings that New York State Electric and Gas (NYSEG) would realize by avoiding certain monthly payments to Cayuga pursuant to a reliability support services agreement (RSSA) between the two parties under which Cayuga would continue to operate the Cayuga generating facility and provide reliability support services to NYSEG.

Upon further review, Cayuga said it determined that it understated the amount of RSSA savings and hereby submits a revised chart. It noted that NYSEG’s grid fix project’s in-service date would not occur before April 2018. Cayuga’s current RSSA with NYSEG expires in June 2017. Cayuga said this means that presumably NYSEG would have no recourse but to extend the existing RSSA with Cayuga or enter into another from July 2017 through at least April 2018. Cayuga said it, on the other hand, anticipates completing repowering by June 2017.

“As a result of this earlier solution, NYSEG could avoid RSSA payments for the period July 2017 through at least April 2018,” said Cayuga. “RSSA savings during this period would total almost $30 million, assuming the payments remained substantially similar to those in RSSA2. Although these savings were identified in the August 24th Comments, this amount was not carried over to the chart on page 22 in which Cayuga calculated the net benefits of repowering using present values numbers. After subtracting payments made by Cayuga to NYSEG for capacity revenue, the net present value RSSA savings are $16 million.”

In March 2013, Cayuga submitted an initial repowering bid/proposal that detailed four repowering options with various configurations and technologies, all meeting or exceeding the identified reliability need of 300 MW.

  • The first option included repowering the existing coal boilers to use natural gas. Under this option, NYSEG would have paid Cayuga an average of $40.5 million per year for 20 years as part of a traditional capacity and energy power purchase agreement (PPA) structure. NYSEG would have borne the market risk if the price paid to Cayuga for electricity and capacity under the proposed PPA exceeded market prices.
  • The second option included the installation of three new simple-cycle gas peaking units.
  • The third option included repowering one of the existing coal boilers to use natural gas, while adding a heat recovery boiler and combining a new gas turbine with the existing steam turbine to make it a “hybrid” combined cycle gas turbine (CCGT).
  • The fourth option included two new 163 MW CCGT units.

Following extensive back and forth in this case, on Feb. 6 of this year, Cayuga filed its “Revised Repowering Proposal.” Cayuga’s Revised Repowering Proposal offers repowering Units 1 and 2 of the Cayuga Facility (each 150 MW net coal-fired boilers) to burn natural gas. After the repowering is complete, Units 1 and 2 will remain capable of generating approximately 300 MW in total. Notably, Unit 1 will retain its existing capabilities and will employ a highly-flexible design, such that the fuel source can be switched back and forth between natural gas and coal within 24 hours and, in most cases, while the unit is operating. This responsive dual-fuel capability provides significant reliability benefits during times when natural gas supplies are severely limited, which have been occurring at greater frequency in the past few years. Cayuga said it anticipates that repowering can be completed and commercial operation commenced on or about June 30, 2017.

Said the Sept. 18 brief: “The Revised Repowering Proposal is in the public interest and consistent with State’s codified policy on electric generation repowering (Part Y Legislation), the Blueprint, the Commission’s Repowering Order, and the Commission’s order approving the repowering of the Dunkirk Facility. Specifically, repowering the Cayuga Facility will satisfy the identified reliability needs in the area, enabling NYSEG to meet its obligation of providing reliable electric service in its service territory.”

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.