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NRG drops plans to reopen dormant power plant in Dunkirk

The hopes of repowering the mothballed power plant in Dunkirk are dead.

The power plant's owner, NRG Energy, said Wednesday it has decided not to pursue a plan it first floated in November 2016 to repower the Dunkirk plant and convert it to run on natural gas, rather than coal.

NRG dropped that plan because it potentially could cost nearly $114 million to reconnect the power plant to the state's electric grid and meet current reliability standards, said David Gaier, a company spokesman. And even if NRG agreed to go through with the upgrades, they may not be completed until 2024, further delaying the project.

"This financial uncertainty, along with a significant schedule delay, rendered the project unworkable," Gaier said.

State Sen. Catharine Young, R-Olean, blasted NRG's decision.

"NRG has stuck a dagger in the heart of our community," Young said. “By making this decision at this juncture, it is apparent that NRG has been disingenuous about their intentions. They bailed out before they had all of the information. They have a lot of excuses, but those ring hollow and the onus rests squarely on them."

NRG said in November 2016 that it was prepared to revive its scuttled plan to convert the coal-burning power plant to run on natural gas. But because the plant had been mothballed more than three years ago, its interconnection rights to tie the plant into the state's power grid had expired, according to officials at the New York Independent System Operator, which manages the state's electricity grid.

NRG ready to revive Dunkirk power plant project

As a result, NRG would have had to pay anywhere from $5 million to $45 million in interconnection fees, according to ISO estimates. Beyond that, because the plant's original interconnection rights had expired, NRG would have had to pay additional costs to bring those connections up to current reliability standards, further adding to the project's costs.

NRG officials have said they believe the total interconnection costs could top $100 million.

Young countered that the costs could be considerably lower.

"NRG is saying that the interconnect fee will exceed $100 million, when they know that is the worst-case scenario," Young said.  "NRG lost their interconnection rights because they failed to renew them, consciously letting them expire, and that’s why they would have to go through the interconnection process at this point."

Gaier said the interconnection rights expired because of the uncertainty created by a lawsuit that previously had been filed by Entergy, a Louisiana energy company that owns a nuclear plant in Oswego along Lake Ontario, seeking 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 Gov. Andrew M. Cuomo's interim deal for Dunkirk’s continued operation was “propped up” by subsidies from the state and $20 million from National Grid customers. When Entergy dropped the lawsuit, NRG began to consider the Dunkirk repowering project again, Gaier said.

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 2016, creating a massive hole in Dunkirk's tax base.

"It is disappointing for our members that were flush with hope for continued employment when the governor made his repowering announcement over four years ago," said Philip Wilcox, the business representative for Local 97 of the International Brotherhood of Electrical Workers union.

A 2015 study raised questions about whether the conversion project was needed. A report by the New York Independent System Operator, 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.

Study puts Huntley and Dunkirk power plants in doubt

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.

"We're also worried about loss of New York's energy independence as we import more and more power for New York's electric needs," Wilcox said.

Supporters of the conversion project also said the shutdown of the coal-fired Dunkirk plant, along with the Huntley Station in the Town of Tonawanda, had reduced the power generating capacity in Western New York and made the region more dependent on electricity imported from Pennsylvania and Ontario. That has made the region more prone to electricity price spikes during times of peak demand, such as during the heat wave in late May, driving up power costs for local businesses and residents.

"The exit of NRG leaves Western New York without an operating base load power plant, which does not bode well for our economic future, especially in manufacturing. The huge spikes in power costs during our most recent heat wave shows that not having in-state power generation has a terribly negative impact on consumers,” Young said.

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