The two companies competing to build a new natural gas pipeline to supply the upgraded power plant in Dunkirk have agreed to back the proposal by National Fuel Gas Co. to build a shorter pipeline that requires fewer regulatory approvals.
National Fuel and NRG Energy, the two companies that had been competing to build the pipeline, reached a tentative agreement earlier this week on a settlement that would allow National Fuel to build a 9.3-mile pipeline that would supply the Dunkirk power plant – owned by NRG – with the natural gas that it will need to operate after work is completed to convert it from burning coal.
The agreement likely will speed up the approval process for the pipeline, which needs to be completed in order for the power plant to begin running on natural gas, said David Gaier, an NRG spokesman.
The approval process could be accelerated because National Fuel’s proposal requires a less rigorous regulatory review because it would run for less than 10 miles. In comparison, NRG’s proposal faced a more extensive regulatory examination because its proposed route would have run for 11.3 miles.
The National Fuel proposal calls for a $34.5 million pipeline that would run for 9.3 miles and connect with the Tennessee Gas Pipeline near Skinner Road in the Town of Arkwright. National Fuel would operate the 16-inch pipeline once it is completed. In contrast, the NRG pipeline would have run for 11.3 miles and connected with the Tennessee Gas Pipeline in the Town of Pomfret. NRG has not disclosed the cost of its proposed pipeline.
“They came back with a proposal that was the best reasonable cost and still accomplishes what we need,” Gaier said.
With the tentative agreement in place, NRG asked the state Public Service Commission to cancel hearings that had been scheduled for this week on the NRG pipeline proposal. National Fuel and NRG still must negotiate a contract for the pipeline to serve the Dunkirk power plant.
“We intend to work closely with National Fuel to move the National Fuel application and the National Fuel route forward,” Gaier said.
National Fuel officials had stressed that their project, because it would run for less than 10 miles and is subject to less severe regulatory oversight, would be on a much faster track for approval than the NRG plan, even though NRG had a significant head start in preparing the required documentation for its route.
“We are pleased,” said Karen L. Merkel, a National Fuel spokeswoman. “National Fuel has held long-standing interest in providing natural gas service to the Dunkirk Generating Station.”
NRG wants the pipeline to be in service by September, although that timetable could be moved back depending on how quickly National Fuel receives the approvals it needs from regulators and when it is able to begin construction. The state Public Service Commission, which had requested additional information from National Fuel, did not consider the Amherst-based energy company’s application to build the pipeline to be complete until the day before Christmas.
The pipeline is needed because of plans to convert the Dunkirk plant from coal to natural gas and avert a threatened shutdown of a facility that NRG said was no longer economically competitive because of rising coal prices.
Under the $140 million conversion 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, creating the need for a new pipeline to supply the generating station with its new source of fuel.