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The State Public Service Commission gave the go-ahead Thursday to the $140 million plan to upgrade a coal-fired power plant in Dunkirk so it has the ability to burn less-expensive – and less-polluting – natural gas.

The project, the result of a deal first announced in December and backed by the Cuomo administration, is a lifeline to a Dunkirk plant that had been threatened with closure by its owner, NRG Energy, in early 2012 because the rising cost of coal made its operations uneconomic.

Supporters of the project said it will replace a higher-polluting coal plant with a more modern facility that emits fewer harmful greenhouse gases and will maintain the reliability of the state’s electric grid. The project also will prevent the plant’s mothballing from causing a gaping hole in Dunkirk’s tax base, which could have reduced revenues for the city by 42 percent and the city’s school district by 30 percent.

“The agreement will result in a cleaner power plant at Dunkirk that will meet reliability needs, reduce costs for consumers, create jobs and stabilize the local property tax base,” said Audrey Zibelman, the PSC’s chairman, in a statement.

State Sen. Catharine Young, R-Olean, who was one of the leaders of the effort to keep the plant open, hailed the PSC’s unanimous vote, which came 11 months after upward of 2,000 people attended a commission hearing on plans to repower the facility.

“It’s a win for consumers and the community,” she said. “It shows if a goal is worth achieving, it is worth fighting for.”

Just one 75-megawatt coal-fired unit currently is operating at the Dunkirk plant. Under the plan, three coal-burning units will be upgraded so they also can burn natural gas. Once the upgrade is completed, the Dunkirk plant will have the capacity to generate 435 megawatts of electricity,

The repowering plan was selected over a competing – and less expensive – plan that would have allowed the Dunkirk plant to close and compensated for its loss by investing $38 million to $76 million in improvements to the region’s power transmission grid.

The PSC’s staff, in an analysis of the project, said the Dunkirk plant upgrades would improve the fuel diversity of the state’s electricity generating plants, while also providing greater flexibility in the operation of the power grid because the facility will continue to have the capacity to burn coal. That flexibility could reduce electricity costs at times when natural gas is in short supply or prices are high, the commission said.

But the continued ability of the Dunkirk plant to run on coal stirred opposition from environmentalists. “Allowing this plant to continue burning coal will only worsen already bad air quality in Western New York,” said Lisa Dix, the senior New York campaign representative for the Sierra Club, which opposed the conversion plan.

David Gaier, an NRG spokesman, noted that the option to burn coal would mostly be a backup.

“While the ability to operate on coal will certainly be maintained, you can’t simply switch from natural gas to coal on a dime,” he said. “Doing that would require several months of planning, the training and hiring of many additional workers as well as the acquisition and stocking of a coal supply.”

“It does, however, make sense to maintain the flexibility to operate on coal, which provides fuel diversity that benefits New York state and supports grid reliability,” he said.

The report also noted that the Dunkirk plant would provide a boost to the Chautauqua County economy, which would have felt “a significant and inordinate negative impact” had the facility shut down. The repowered plant is expected to pay about $8 million a year in property taxes, the PSC said.

email: drobinson@buffnews.com