Tuesday, March 10, 2015

Power plant owners at odds over state subsidies

Posted By on Tue, Mar 10, 2015 at 11:43 AM

New York's electricity marketplace is in transition. Some of the old coal plants have gone offline; more wind and solar power has come online; fuel prices and generation costs are fluctuating; and regulators, utilities, and power plant owners are all trying to figure out how to make the whole thing work.

And right now, it's a bit of a fight.

City has written about the Ginna nuclear plant's financial struggles and its request for a state-imposed subsidy to keep running. The plant lost more than $100 million in three years and won't be able to make enough by selling electricity on the state's competitive market, according to its owner, a subsidiary of Exelon.

Ginna's owner threatened to shut the plant down if the state didn't order Rochester Gas and Electric to negotiate a support contract. (State utilities regulators say that Ginna is needed in the short term to ensure a reliable electricity supply.) The agreement between Ginna and RG&E is being reviewed by the state; the contract would mean slightly larger bills for customers, according to filings with the State Public Service Commission.

But some other New York power plant owners, including Entergy and NRG, oppose the agreement, partly for competitive reasons. Ginna should shut down if it isn't economically viable, they say — that way other plants can sell more of their power at appropriate, market-based prices. 

That same argument appears to be the basis of a federal lawsuit that Entergy — the owner of the Indian Point and Fitzpatrick nuclear plants — has filed against the state. An article by Jon Campbell from Gannett's Albany bureau does a good job of breaking down Entergy's claims and how the lawsuit could affect aging power plants in New York.

Entergy's lawsuit centers on two sets of subsidies for a NRG-owned plant in Dunkirk. The plant is powered by coal, but is switching over to natural gas. It's getting $15 million worth of benefits from the New York Power Authority, and National Grid customers will pay the plant $1.7 million a month for the next 10 years, an arrangement ordered by the State Public Service Commission, according to the Gannett article. 

Entergy alleges that by approving those subsidies, the State Public Service Commission is illegally influencing New York's energy markets, the Gannett article says. (It's worth noting that some state officials are trying to force Entergy to shut down the Indian Point reactors.)

And if the lawsuit succeeds, it could jeopardize similar temporary support agreements for Ginna and other New York power plants, the article says.

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