New York needs resources to keep power grid reliable -study

March 22 Fri Mar 22, 2013 1:22pm EDT

March 22 (Reuters) - The operator of the New York power grid said Friday the state will have enough resources to keep the electric system reliable over the next decade - if several market-based generation and transmission projects continue to move forward.

If those market-based solutions are not developed, the state may need to impose regulatory solutions to meet reliability needs, the New York Independent System Operator (ISO), the grid operator, warned in its 2012 Comprehensive Reliability Plan.

The ISO named several transmission and generation solutions in its plan but said the "only market-based solution capable of fully meeting the 2021-2022 resource adequacy needs" was U.S. power company NRG Energy Inc's proposal to repower its Astoria plant in New York City.

NRG wants to tear down the old gas turbines at the 580-megawatt (MW) Astoria peaking plant and build two 500-MW combined cycle gas plants at the site that could run around the clock.

NRG has said the new plants could cost as much as $1.5 billion and start supplying power within three years. NRG told Reuters its Astoria proposal was due to state regulators by about May 10.

But before repowering Astoria, NRG has said it wants a power purchase agreement with a credit worthy counterparty like an investor-owned utility or the state-owned generating company - the New York Power Authority (NYPA).

The ISO report also pointed to various potential transmission upgrades and another of NRG's repowering proposals.

In addition to Astoria, NRG also wants to repower its 520-MW Dunkirk coal fired plant in upstate New York with a 440-MW combined cycle gas plant for about $500 million. The ISO said the Dunkirk plan could address reliability issues in the area.

NRG is waiting for state regulators to approve a power purchase agreement with a New York unit of National Grid Plc to keep the 75-MW Unit 2 at Dunkirk available through mid 2015. NRG has already mothballed two of the four units at Dunkirk and expects to mothball another unit.

In addition, the ISO said several factors could upset its reliability forecast, including the unexpected retirement of generating units for environmental or other economic reasons and the potential shutdown of the giant Indian Point nuclear plant by the end of 2015 if its reactor licenses are not renewed.

INDIAN POINT CONTINGENCY PLANS

If Indian Point shuts, the ISO said, it would result in immediate reliability violations unless sufficient replacement resources can be put into operation before the retirement.

The state Public Service Commission (PSC) expects to seek up to 1,350 MW of generation or transmission later in March to keep the grid reliable in case Indian Point is closed.

U.S. power company Entergy Corp, which owns Indian Point, wants to keep the plant running for another 20 years after its operating licenses expire in 2013 and 2015.

Indian Point provides about a quarter of New York City's power. It is located about 40 miles north of Manhattan.

Entergy is seeking new licenses from the U.S. Nuclear Regulatory Commission (NRC) and so long as that process is ongoing, the reactors can continue to operate.

The NRC is not expected to decide on the new licenses for Indian Point for at least a couple more years as several parties, including New York Governor Andrew Cuomo and environmental groups, have raised a dozen or so contentions in opposition to the renewal application.

Moreover, the state PSC in April is expected to consider a plan by New York power company Consolidated Edison Inc and NYPA to upgrade a few major transmission lines again in case Indian Point is closed.

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