Thursday, October 22, 2015

Ginna and RG&E submit revised agreement

Posted By on Thu, Oct 22, 2015 at 1:38 PM

Rochester Gas and Electric and the Ginna nuclear plant have proposed some new terms for an agreement to temporarily prop up the struggling power plant. The amendments, which were submitted to the state's utility regulator yesterday, would shorten the length of the proposed agreement and reduce its cost to RG&E customers.

Ginna has been operating in the red for the past few years, with more than $100 million in losses. And last year, its long-term electricity sales contract with RG&E expired, leaving plant officials to question the operation's viability. They said that without a new, temporary contract with RG&E — a reliability support services agreement, in industry lingo — they'd recommend shutting down the plant.

The state Public Service Commission ruled that shuttering Ginna could create electricity supply disruptions and it ordered RG&E to negotiate an support services agreement with the plant's operator. Under the original terms, RG&E would have paid Ginna $17.5 million a month to keep cranking out electricity, but it would get a substantial portion of the payment back as a rebate, depending on how much electricity Ginna sold into the state's power market, and the rate that the power plant received for those sales. So ultimately, RG&E would be paying Ginna far less than $17.5 million a month.

Yesterday's amendments make some substantial changes. The original contract would have been in effect through September 2018, but under the new terms it'd end on March 31, 2017. RG&E would pay Ginna $15.4 million a month and would still get a rebate from the plant's electricity sales. But the utility would also use some of its accumulated credits to offset any obligation to Ginna over $2.25 million.

RG&E would conduct a new study to see if the transmission project it's proposed as a long-term alternative to Ginna's electricity will meet reliability needs. And at the end of this month, it'll solicit bids for projects to replace the Ginna supply. Ginna can bid in that process, but if RG&E doesn't select its supply proposal, the power plant can begin the retirement process within 75 days.

Alliance for a Green Economy and Citizens’ Environmental Coalition oppose the agreement. They say that RG&E customers shouldn't have to bail out a struggling nuclear power plant. But in a statement released yesterday, they said that the new terms are a better deal for customers than the original ones. The agreement would be shorter, customers would see a smaller rate hike, and the proposed reliability study is better designed than the one used to justify the support agreement, they said.

While no decision has been made to close Ginna, the groups said in the statement that state leaders need to to get a commitment from Ginna's owner, Exelon, that it'll begin an "immediate, careful, and thorough decommissioning process" when the plant is shut down. Such a commitment would guarantee jobs for a large number of Ginna employees, they said, and would ensure that the owners don't mothball the site to avoid cleanup.

The amended agreement needs to be approved by the state Public Service Commission as well as the Federal Energy Regulatory Commission, which oversees US energy markets.

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