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Cuomo seeks PSC probe of NRG over Dunkirk power plant shutdown

Gov. Andrew M. Cuomo is asking the state Public Service Commission to investigate NRG Energy and the reasons behind its decision to close the coal-fired power plant it owns in Dunkirk rather than converting it to run on natural gas.

Cuomo has “grave concerns about NRG’s behavior” in the state’s wholesale power market and its impact on the state, the governor said in a letter to PSC Chairwoman Aubrey Zibelman.

NRG announced in March 2012 that it would mothball the Dunkirk plant because it no longer was economically viable, but it agreed to keep operating the facility through 2015 to maintain the reliability of the region’s power grid after receiving more than $110 million in payments from National Grid ratepayers. The plant was mothballed in early January.

NRG planned to convert the Dunkirk plant to run on cheaper natural gas and had received approval from the PSC to proceed with that plan in June 2014. But NRG dropped the repowering project after another energy company filed a lawsuit charging that the state interfered in power markets to keep the Dunkirk plant open.

The lawsuit did not block NRG from proceeding with the repowering project, a Cuomo administration official said.

Cuomo is scheduled to be in Dunkirk on Thursday to announce the state’s plan to spend about $200 million on a new drug manufacturing facility for specialty cancer drug producer Athenex that is expected to employ at least 500 people.

NRG “is very surprised by the Governor’s attack, which directly contradicts the facts,” said David Gaier, a company spokesman. “We stand by everything we’ve done to support the power grid and ratepayers in Western New York.”

“NRG’s Dunkirk facility kept the lights on in Western New York for the past two years, based on a 2012 contract approved by the governor’s own Public Service Commission,” Gaier said. “Over that time our Dunkirk employees delivered near flawless performance – at the price agreed to in advance by the state.”

Entergy Corp., a Louisiana energy company that owns a nuclear plant in Oswego along Lake Ontario, last February filed the lawsuit in federal court in the northern district of New York to halt the Dunkirk repowering.

The lawsuit alleged the PSC usurped the authority of the federal government regarding interstate commerce and the wholesale energy marketplace. Entergy also said the Cuomo deal for Dunkirk’s continued operation was “propped up” by subsidies from the state and $20 million from National Grid customers.

Those subsidies would have artificially suppressed energy prices that, in turn, would have cut revenues to other energy producers, the lawsuit claimed.

Cuomo, in a letter released Wednesday, called on the PSC to investigate “to determine whether the consumers of the State of New York have been defrauded,” while also looking into why the repowering didn’t proceed and how the failure of the project affected New York consumers financially. He also asked the PSC to consider “whether NRG should be allowed to continue to operate as an electric corporation in the state.”