A final decision will be made later in Albany on the future of a proposal to repower NRG Energy's Dunkirk plant to a gas-fired facility
If the number of people attending means anything, Monday's hearing at the SUNY Fredonia Williams Center on competing proposals to provide electric system reliability in parts of the Southern Tier would give the nod to NRG's $500 million repowering proposal over National Grid's plan to upgrade its transmission system to meet those reliability needs.
The New York State Public Service Commission held the hearing before a crowd estimated at about 1,600 by SUNY Fredonia officials, while others felt the crowd was closer to 2,500. The PSC hearing was part of a process that began in January to determine which of the proposals it will select.
OBSERVER Photo by Samantha McDonnell
Assemblyman Andy Goodell estimated there were about 2,500 at the Williams Center Monday night for the PSC hearing.
Ths issue came to the forefront in March 2012 when NRG announced it planned to mothball its coal-fired Dunkirk facility because the low price of natural gas made the plant non-competitive. In July 2012, National Grid determined that mothballing of the Dunkirk plant would impact transmission reliability in western New York. At that time Grid entered into a reliability support service agreement with NRG that will expire in 2015.
The PSC members present first heard from representatives of both companies, who presented their cases in an off-the-record session.
Both NRG and National Grid officials presented their proposals and reasoning why their option should be selected.
National Grid official William Malee said their proposal would be less expensive for ratepayers and its proposed transmission upgrades would eliminate the need for an NRG Dunkirk for system reliability needs. NRG officials Jon Baylor and Lee Davis countered, stating that Grid's proposal failed to take into account all the factors the PSC has asked to be included.
During this portion of the session, Assemblyman Andrew Goodell was the first speaker after the company officials concluded. He questioned where the replacement power would come from. Grid's William Malee, the director of transmission commercial services, said under the current system, Grid purchases power from the lowest-cost provider, and that would continue.
Goodell pointed out that Grid's proposed transmission line upgrades in the Falconer area would allow it to import power from Pennsylvania. Malee replied that while the work would provide the capability to use all the power it needed and would get from the Niagara Falls area, the upgrades would also provide capability to import power. Goodell also questioned Grid's, and its consultants, findings as he and Malee went back and forth. Malee admitted new efficient generation usually leads to lower costs.
"The question is, if its subsidized generation, will that impact and ultimately force other generators to retire, which then drives the price back up," Malee stated.
Goodell said it would only be subsidized if the cost quoted by NRG is higher than the cost Grid could buy power for. Malee said that was a fair explanation.
Goodell questioned Grid's environmental analysis, saying a natural gas plant would help. Malee said a new gas plant would have less of a footprint on the environment than a coal plant built in 1950.
Goodell said the environmental footprint of the replacement power compared to the footprint of a repowered plant would be greater.
"Your statement suggests that eliminating the plant would eliminate air pollution and that only would occur if you're buying power that is produced by an even cleaner source of energy. Isn't that correct?" Goodell asked.
Malee agreed that was correct but the transmission upgrade would reduce the environmental impact as well.
A few more speakers were heard in the first session before the PSC began its on-the-record hearing, with state Sen. Catharine Young leading off. Young thanked people for attending and said it was the "proudest moment of my time representing you."
Young ran through the downsides of an NRG closing in Dunkirk, massive tax hikes, cuts in the school system and city work forces, private sector job losses, higher electricity bills and reliance on out-of-state power. She cited possible property tax increases of 47 percent for the school district and 42 percent for city taxes as other areas of concern.
Young stated the NRG project meets Gov. Andrew Cuomo's Energy Highway goals to assure long-term reliability of the electric system is maintained, contributes to an environmentally sustainable future for the state, encourages the development of utility scale renewable generation and creates jobs for New Yorkers. Young said her research has lead to several questions.
She asked why Grid's proposal shouldn't be rejected outright because it hadn't met the PSC's requirement for showing reliability for 10 years or greater and doesn't the Dunkirk proposal match up with the transmission construction upgrades to move power from upstate to downstate.
Young asked how the PSC defines which ratepayers benefit from the project and how the PSC will allocate the costs of the project if the benefits extend across the state. She questioned whether Grid was using a bait and switch tactic with its up-front cost estimate of $66 million for its transmission upgrades, while the cost could actually reach over $150 million with a 20-year cost of nearly $500 million. Another concern was that New York is a member of the Regional Greenhouse Gas Initiative, while Pennsylvania and Ohio, two possible sources for replacement power, are not.
"The NRG plan is the most cost effective for ratepayers, with millions of dollars in private investment and ratepayer benefits exceeding costs by $350 million per year," Young stated. "Repowering Dunkirk will provide clean, reliable, local energy at a guaranteed price, all the while benefiting our local economy and putting our energy future in our own hands. That is the right choice for New York."
Additional comments can be submitted to the PSC through Aug. 16 by referring to case 12-E-0577. Comments may be made online at the PSC website, by mail, or by calling 1-800-336-2120.
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