Converting the Dunkirk power plant from coal to natural gas would be a big, expensive project, but two reports – funded by two different companies – come to opposite conclusions about whether it would be worth it.
A new report by the company that operates the power lines says it would be more cost-effective to upgrade the lines, rather than the plant.
An earlier study by the company that operates the plant says retooling the plant for cheaper natural gas would save money.
The reports will be considered by the State Public Service Commission, which will have the final say on the matter.
“Our expert differed with their expert on the impact,” said Stephen F. Brady, a spokesman for National Grid, which conducted the latest study advocating upgrades of the transmission system it operates in Western New York.
National Grid’s study, released Monday, said the $506 million project to convert the plant would increase electricity delivery rates by a range of 3 percent to nearly 10 percent and cost upstate consumers far more than a less-expensive alternative to upgrade the power transmission network across Western New York.
The report said spending slightly more than $70 million to upgrade the power transmission system would be a better deal for Western New York consumers than funding the conversion of the Dunkirk power plant from coal to natural gas.
“Repowering at the Dunkirk facility is not in the best interest of customers,” the report said.
Upgrading the transmission network, which is maintained by National Grid, would “address the reliability needs at the lowest cost, least risk to customers and with minimum impact on competitive markets,” the company-backed report concluded.
However, in late March a report by NRG Energy, the plant’s owner, found just the opposite.
That study, produced by a Boston-based energy consultant and commissioned by NRG, said the Dunkirk conversion could reduce wholesale electricity prices in Western New York by as much as 5 percent while also reducing harmful greenhouse gas emissions.
The National Grid report released Monday is the latest step in the evaluation of NRG’s proposal to convert the Dunkirk power plant, which could shut down as early as mid-2015 because low prices for natural gas and an ample supply of power plants across New York have depressed electricity prices and led to steep losses at the facility.
NRG and National Grid signed an agreement in March that will keep one 80-megawatt unit operating at the Dunkirk plant to maintain the reliability of the region’s electricity supply while more extensive studies are done to determine whether the power plant is needed in the long term. A second unit now operating will be shut down after the end of this month, resulting in the loss of about 14 jobs at the plant, which employs 82 people.
The dueling reports now go to the Public Service Commission, whose staff is expected to analyze both documents and make a recommendation about the Dunkirk plant’s future to the full commission.
The National Grid study estimated that it would cost slightly more than $70.5 million in today’s dollars to carry out five transmission-system upgrades that the utility believes are necessary to maintain the reliability of the region’s electricity system should the Dunkirk coal-burning units be shut down. National Grid said the estimated cost of some of those upgrades could end up being anywhere from 50 percent lower to three times higher.
In contrast, building a new 422-megawatt natural gas turbine at the Dunkirk site and converting one of its 75-megawatt units to natural gas would cost customers an estimated $375 million in today’s dollars during its first 10 years of operation. A scaled-back option that would convert three of the Dunkirk plant’s units to natural gas, creating a facility with 455 megawatts of capacity, would cost an estimated $218 million in today’s dollars over that 10-year span, the National Grid report estimated.
Those options would lead to delivery rate increases for residential customers ranging from 3.6 percent for the more- costly repowering option to 1.7 percent for the less-expensive conversion proposal and 0.5 percent for upgrading the transmission system, the report said.
For the largest industrial customers, the rate increases could range from a high of 9.5 percent for the more-costly repowering option to 4.4 percent for the less-expensive conversion and 1.3 percent for the transmission system upgrade.
“It’s too expensive if they’re going to ask our customers to subsidize it,” said Brady, the National Grid spokesman. “We’re not opposed to the repowering. If they can find the investors and compete on the open market without subsidies from National Grid customers, that’s fine.”
David Gaier, an NRG spokesman, said the company still was wading through the 310-page National Grid study and did not expect to have a detailed response Monday. “We definitely want to go through it in detail so we can come back with a thorough response,” he said.
The reports also presented vastly different estimates of the economic impact of the proposals. The NRG study estimated that the more costly repowering option would create 3,000 to 3,500 jobs over a 10-year period, mainly through the reduction of electricity costs that the report anticipated.
The National Grid study, however, estimated that the more costly repowering option would create 248 jobs per year from 2014 to 2017, while the transmission improvements would generate 156 jobs annually during that time. The less costly repowering option would lead to the creation of 132 jobs per year.
Those job gains would be offset by the loss of jobs associated with the higher electricity costs resulting from the conversion, the National Grid study said. The most costly repowering option would lead to the loss of 503 jobs per year from 2015 to 2025, compared with the loss of 296 jobs annually for the less costly repowering proposal and 54 jobs per year for the transmission upgrade.