By William Opalka
NRG Energy asked FERC last week to approve a revised reliability-must-run contract for its Huntley Power Station. The company said that it may only need to continue operating one of the two units at the 380-MW plant in Tonawanda, N.Y., to ensure grid reliability.
The company asked the commission to revise the cost-of-service agreement it filed Oct. 14, when it was anticipated it might need to keep both of its units running for up to four years until National Grid can complete transmission upgrades needed to address voltage issues.
Last week’s filing said only one unit would be required and for as little as four months beyond its scheduled March 1 retirement (ER16-81).
NRG announced in August it would close the coal-fired units outside Buffalo on March 1.
Each of Huntley’s units has a capacity of 190 MW. Under the NRG plan, Unit 67 would close on March 1, and Unit 68 would run for another four months. NRG said NYISO has agreed to this timeline. If the system operator determines a reliability need, it can unilaterally keep the plant in service for up to another three months, or until Sept. 30.
“NRG is ready to engage with the NYISO, National Grid and the [New York Public Service Commission] to establish certainty around a reliability agreement for Huntley as necessary if National Grid’s transmission upgrades are delayed,” NRG spokesman David Gaier said.
Under the proposed agreement, Huntley would be paid about $8 million per month: $3.56 million for one-twelfth of its annual fixed revenue requirement of $42.7 million, plus $4.46 million in monthly adjustments.
NRG said the plant has become uneconomic in NYISO’s energy and capacity markets due to cheap natural gas.
For the 12 months ending July 31, 2015, the plant had a gross margin — total revenues minus variable costs — of only $16.4 million compared with a cost of service of $90.3 million, according to the company. “In fact, the $16.4 million was sufficient to cover a mere 31% of the facility’s fixed operation and maintenance expenses, let alone any other component of the cost of service,” NRG wrote.
In studies released at the end of October, NYISO and National Grid said the plant, along with a second stressed NRG facility in Dunkirk, could be closed on schedule if transmission upgrades were completed on time. (See NYISO: Two NRG Plants Can Close as Scheduled.)