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NRG ready to revive Dunkirk power plant project

The mothballed power plant in Dunkirk could have a chance of reopening.

NRG Energy, the plant's owner, said it is prepared to revive its scuttled plan to convert the coal-burning power plant to run on natural gas after one of its competitors, Entergy Corp., dropped a lawsuit that had blocked the project and led to the facility's mothballing earlier this year.

"We're prepared to move forward," said David Gaier, an NRG spokesman. "As soon as it's practical, we plan to resume our planning and development work on the Dunkirk project."

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, creating a massive hole in Dunkirk's tax base.

"It is the news that Dunkirk has been praying for," said state Sen. Cathy Young, R-Olean, who has been one of the leaders of efforts to keep the power plant open.

Gaier said NRG is willing to move forward with its conversion plans, provided that other companies and agencies that were involved in the project still are interested in making the same commitments that they were before it was put on hold. National Fuel Gas Co., for instance, was preparing to build a pipeline to carry natural gas to the plant. The state Public Service Commission also must back the project.

"As the natural gas utility serving Dunkirk for more than a century, National Fuel has always had a strong interest in providing service to NRG's Dunkirk plant.  We believe that natural gas is the best possible option for this project," said Karen Merkel, a spokeswoman for the Amherst energy company.

"The lawsuit has held up progress for three years, but now the clouds have lifted. The contract still is in place, and there should be no impediments," Young said.

But a study last year raised questions about whether the conversion project was needed. A report by the New York Independent System Operator, which manages the state's power grid, done in conjunction with National Grid, concluded that the Dunkirk plant could be closed without harming the reliability of electric service to the region’s businesses, homes and other customers.

Supporters of the conversion project said that study was flawed, because it assumed that the power from the Dunkirk plant would be replaced by electricity imported from a coal-fired power plant in Pennsylvania, negating the environmental benefits from a conversion to less-polluting natural gas.

Entergy, 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 state Public Service Commission 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.

The Public Service Commission last week approved the sale of the FitzPatrick nuclear power plant in Oswego from Entergy to Exelon Corp. in a deal that also includes subsidies to the new owner that could be worth as much as $7.6 billion over 12 years. Entergy had threatened to close the nuclear power plant unless it found a buyer.

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