Upstate power producers oppose Dunkirk plant conversion - The Buffalo News

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Upstate power producers oppose Dunkirk plant conversion

A group of upstate independent power producers, including the owners of four plants in Western New York, are opposing proposals to convert coal-fired power plants in Dunkirk and Tompkins County to natural gas and warning that they could cause their plants to close.

The independent power producers operate 13 natural gas plants across upstate New York, but they are operating at only about 20 percent of their capacity because of low electricity prices, said Thomas Gesicki, the general manager of Lockport Energy Associates, which operates a 225-megawatt power plant that also supplies steam to the General Motors parts plant in Lockport.

“Currently, there are 2,000 megawatts of excess capacity” at the 13 upstate power plants, including Indeck Energy Services’ plants in the Town of Tonawanda and Olean, he said. “There’s no logic in adding another 400 megawatts to 500 megawatts of capacity.”

Rather than converting the Dunkirk and Lansing plants to natural gas, the power producers said, they support a National Grid proposal to upgrade the region’s power transmission system.

“The assertion that the Indeck and Lockport plants are somehow threatened by a repowered Dunkirk plant simply isn’t credible,” said David Gaier, a spokesman for NRG Energy, which owns the Dunkirk plant. “It’s important to remember that those plants were online when NRG’s Dunkirk station was at its full capacity, and our proposal would actually bring back fewer megawatts than were online before.”

NRG has proposed a $506 million plan to convert the coal-fired power plant to natural gas, arguing that it would lead to lower power costs for ratepayers, be better for the environment and give a big boost to the Chautauqua County economy. Without the upgrade, the Dunkirk plant would shut down.

National Grid countered with its own study that recommended spending $63 million on five transmission system upgrade projects that the utility said would maintain the reliability of the region’s power grid even without the Dunkirk plant’s electricity. National Grid’s study said NRG’s plan would raise rates for customers, while its plan also would increase costs for ratepayers, but by far less.

The state Public Service Commission also is considering a similar $370 million proposal by another company, Upstate New York Power Producers, to convert its Cayuga Generating Station in the Town of Lansing from coal to natural gas.

Gesicki argued that the 20-year power purchase contracts that are essential to financing the conversion projects will saddle consumers with above-market electricity costs, while leading to job losses and lower tax payments in other communities as the independent power producers’ plants are pushed to the brink of shutdown.

“Any job creation there would be offset by job losses in other communities,” he said.

Gaier disagreed. “Based on both NRG’s and National Grid’s detailed market studies, it’s a reasonable conclusion that a repowered Dunkirk will actually reduce the wholesale cost of electricity in New York State,” he said.

Stephen F. Brady, a National Grid spokesman, disputed that, noting that only one of the scenarios studied by the electric utility showed the potential for lower rates.

“Over 20 years, National Grid customers would pay nearly $2 billion more under NRG’s preferred repowering proposal than they would pay for the transmission upgrades,” he said.

The power producer group includes Indeck, which runs five plants with a combined capacity of 365 megawatts in the Town of Tonawanda, Olean, Oswego, Silver Springs and Corinth; Lakeside Energy, which runs plants in Syracuse and Beaver Falls with a combined capacity of 204 megawatts; and Alliance Energy Group, which owns plants in Batavia, Hillburn, Ogdensburg, Middletown, Massena and Sherrill with a combined capacity of 351 megawatts.


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