Andrew Bennett sees NRG Energy’s plan to convert its Dunkirk power plant from coal to natural gas as a big boost for the Chautauqua County economy.
“This update would be a boon not only to our community, but to the entire state,” Bennett told the state Public Service Commission, which will decide in a matter of months whether to support NRG’s $506 million plan to convert the plant and keep it operating, or allow it to shut down in favor of a less costly proposal to upgrade the area’s power transmission system.
“I am hopeful that the PSC analysis will take into consideration the broader economic benefits this plan would provide our ailing region as a significant factor in their final determination,” Bennett said.
Lucy Warmbrodt, on the other hand, is no fan of the Dunkirk power plant and would shed no tears if it went dark.
“As someone who was raised here and lives in the shadow of the plant, I am absolutely against any future projects that would keep this plant operating,” she told the PSC. “This plant has been a polluter since the day it was built, and although natural gas is cleaner than coal, the continued use of fossil fuel burning plants is not forward thinking enough.”
The fate of the Dunkirk plant has generated a wide-ranging debate that has attracted some strange bedfellows, with vastly different views on the best way to maintain the reliability of the Western New York power grid as Dunkirk’s uneconomical coal-fired units are phased out.
The Business Council of New York State, in the most surprising pairing, joined forces with seven environmental groups to oppose NRG’s plan to convert the plant to natural gas, instead urging the PSC to promote energy efficiency, renewable power sources and the expansion of demand response programs that pay big electricity users to shut down during times of peak demand.
If those steps aren’t enough to ensure reliable power supplies, the groups said they supported National Grid’s $63 million plan for five transmission system upgrades that the utility said would maintain reliability without the Dunkirk plant’s power.
“Requiring ratepayers to help finance the expensive repowering of these plants in a location where the market has clearly indicated they are no longer needed nor economic – at a likely cost in the hundreds of millions of dollars – will simply perpetuate the status quo and will not help New York move forward toward a cleaner, more reliable energy future,” the groups told the PSC.
That prompted a pointed response from state Sens. George Maziarz, R-Newfane, Catharine Young, R-Olean, and Michael Nozzolio, R-Fayette, who blasted the Business Council for working with “left-wing New York City environmental interests to kill middle-class jobs in the power generation industry.” Nozzolio’s district includes the former AES Cayuga coal-fired power plant in the Town of Lansing that is trying to ward off a shutdown through a natural gas conversion that would cost $60 million to $370 million, depending on its scope.
The Cayuga plant is owned by the same company – Upstate New York Power Producers – that purchased the former AES Somerset coal-fired plant out of bankruptcy last year. The Somerset plant is not currently operating because of the high price of coal compared with other fuel sources, most notably natural gas, and the added environmental costs that come with burning coal.
“The Business Council’s assessment was premature, without factual basis or adequate research, and heavily weighted toward the special interests of private utility companies that have vested financial stakes in killing these projects,” the senators wrote.
Supporters of the Dunkirk plant’s conversion tout its economic benefits to Chautauqua County, including hundreds of construction jobs and the survival of the 82 jobs that remain at its already scaled-back operations. An NRG Energy study said the plant could create 3,000 to 3,500 jobs over a 10-year period, mainly through an anticipated reduction of wholesale electricity costs in Western New York of as much as 5 percent.
Gary J. Cerne, the Dunkirk City School District superintendent, says the shutdown of the power plant would have painful implications for the city’s schools, which get $4.1 million a year – or nearly 10 percent of the district’s total revenues – from the generating station. Without those revenues, the district would face unpleasant alternatives ranging from a tax increase of up to 42 percent to the elimination of as many as 58 teaching positions.
But a later study by National Grid, which operates the electricity transmission system in the Dunkirk area, said it would be much cheaper – and better for customers in the long run – to let the Dunkirk plant shut down and invest in about $63 million in upgrades to the region’s power grid.
The National Grid study also forecast far smaller job gains than NRG did, and it predicted that, rather that lowering electricity costs, power prices would rise under all of the options under consideration, although the increase would be smallest with the transmission system upgrades, ranging from 0.5 percent for residential customers with the power grid improvements to 3.6 percent for the most costly natural gas conversion proposal.
Not surprisingly, each side has pointed out weaknesses and omissions in the other’s study. National Grid said NRG’s study understated the overall costs to customers because it did not consider how the converted plant, with a ratepayer-subsidized power purchase agreement through the utility, could lead to the shutdown of other power plants and discourage future investment in efficient electricity sources. National Grid’s study also contends that much of the power from the repowered Dunkirk plant would flow to customers outside New York.
NRG countered that the cost of National Grid’s transmission system upgrades could end up costing anywhere from half as much to three times more than their initial estimate, leaving local ratepayers at significant risk. “If they get into it, and they end up spending $150 million to $180 million, the ratepayers are on the hook for it,” said Jon Baylor, NRG’s senior director of development.
NRG also touts its repowering as 30-year solution to reliability concerns, while the transmission upgrades proposed by National Grid would only address anticipated reliability issues through 2021.
The issue now is in the hands of the PSC’s staff, which is analyzing the reports and will make a recommendation to the full commission. A PSC spokesman said there is no timetable for the commission to make a decision.
In the meantime, the lobbying continues.