New York PSC opts for grid project instead of Cayuga coal-to-gas conversion

The New York State Public Service Commission on Feb. 23 rejected a proposal that would have New York Electric & Gas (NYSEG) customers pay to refuel the coal-fired Cayuga power plant with natural gas.

The commission also approved the construction of an electric transmission line in place of the Cayuga conversion, and it separately authorized the sale of the Cayuga and Somerset coal facilities to a new owner.

The commission found that NYSEG’s proposed transmission projects in Cayuga and Onondaga counties were necessary to ensure the reliable operation of the power grid. The commission further determined that refueling the 312-MW Cayuga plant would not satisfy these reliability requirements, and consequently the $23.3m transmission project should go forward.

The commission further found the $102m price tag associated with Cayuga refueling was much higher than the potential benefits. Thus, even if the plant could address the local grid reliability concerns, it would be unfair to NYSEG customers to pay for the higher-priced refueling solution.

“We are very cognizant of the potential local economic effects of retiring power plants,” said Commission Chair Audrey Zibelman. “However, in this instance, the power plant itself does not solve our reliability concerns. Moreover, when we considered the combined lack of benefit to the power grid with the significantly higher costs of the refueling option, we determined it would simply be unfair to ask NYSEG consumers to shoulder both the transmission and refueling expense."

The commission said the company worked collaboratively with the Department of Public Service Staff and other interested parties for a year and a half to find the best path for the transmission line. Signatories of the transmission proposal included the applicant utilities, three state agencies — the Department of Public Service, the Department of Environmental Conservation, and the Department of Agriculture and Markets — the Sierra Club, and a citizens group, Ratepayers and Community Intervenors. The selected route minimizes potential adverse environmental impacts, including impacts to local farmers.

The transmission project would generally follow existing rights-of-way from NYSEG’s State Street substation in the City of Auburn in Cayuga County, to National Grid’s Elbridge substation in the Town of Elbridge in Onondaga County.

While denying the request for refueling, the commission separately authorized Upstate New York Power Producers Inc.’s request to sell two coal-fired power plants, including the Cayuga facility and the 668-MW Somerset facility to Riesling Power LLC, an independent power producer. Riesling is a wholly-owned subsidiary of the Maryland-based Bicent Power LLC, which directly or indirectly owns and operates approximately 487 MW of gas- and coal-fired generation in four states. The new owner does not currently own or operate any generating facilities in New York State, and has advised that all plant-level personnel at the Somerset and Cayuga facilities will remain in place after the sale.

Notable is that no surviving coal plant in New York has much time to live, at least as a coal-fired operation, considering Gov. Andrew Cuomo’s recent declaration that the state needs to exit coal-fired power by 2020.

FERC on Jan. 13 had approved a September 2015 application from Upstate New York Power Producers Inc. for authorization for the transaction in which Riesling Power LLC will acquire both Cayuga and Somerset.

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.