By William Opalka
The owner of the R.E. Ginna nuclear power plant announced an agreement with Rochester Gas & Electric on Friday that will keep the plant operating for another three and a half years with fixed monthly payments of about $17.5 million.
The New York Public Service Commission in November ordered a reliability support services agreement between the Rochester utility and plant owner Constellation Energy Nuclear Group in an effort to save the 580-MW generator on Lake Ontario. NYISO and RG&E said the plant is needed until at least 2018 to maintain system reliability in western New York.
RG&E estimates an average residential customer using 600 kWh a month will see bills rise about 4.2%, or about $3.89. The exact amount will depend on the monthly output of the plant and changes in wholesale energy and capacity market prices.
RG&E will recover some of its $17.5 million in monthly payments through its share of the plant’s “applicable revenues”: 85% of energy and capacity sales and 100% of ancillary services.
The companies originally faced a Jan. 15 deadline to complete talks for the agreement. Two extensions were granted by the PSC while negotiations continued until Friday. The agreement, which was also filed with the Federal Energy Regulatory Commission, runs from April 1 of this year to Sept. 30, 2018.
“The RSSA will ensure grid reliability in the greater Rochester area while RG&E completes a host of necessary transmission and distribution upgrades,” Exelon said in a statement. “In addition, the agreement protects 700 facility jobs, up to 1,000 skilled contractor jobs and critical tax revenue for Wayne County and the region.”
RG&E CEO Mark Lynch said the company “worked diligently in the best interests of our customers to reach an agreement with Ginna, recognizing the importance of ensuring reliable service on reasonable terms for all parties.”
The agreement is subject to approval by the PSC and FERC.
“The focus of PSC’s in-depth review will be to ensure that the reliability of the electric grid is maintained,” PSC spokesman James Denn said in a statement. “This review will include a significant opportunity for public and stakeholder comment and input.”
RG&E, a subsidiary of Iberdrola USA, has the right to terminate the agreement early with 12 months’ notice. The proposed end date in late 2018 is when a transmission upgrade in western New York is scheduled to go online. That project is intended to provide enough energy into the RG&E service territory without Ginna.
The agreement could be extended for 18 months if RG&E gives notice by Jan. 30, 2017.
Constellation, a unit of Exelon, said the plant has lost $100 million over the past three years and would be mothballed without better financial terms.