By William Opalka
FERC on Wednesday approved the sale of two upstate New York power plants, the same day Gov. Andrew Cuomo vowed the generators would “transition” away from coal or be closed by 2020.
The commission approved the sale by Upstate New York Power Producers of the 312-MW Cayuga plant outside Ithaca and the 668-MW Somerset facility in Niagara County to Blackstone Group unit Riesling Power “as consistent with the public interest” (EC15-214).
With the Dec. 31 mothballing of NRG Energy’s Dunkirk plant and the 380-MW Huntley Power Station in Tonawanda expected to close at the end of March, Cayuga and Somerset will be the last two coal-fired plants in New York.
Their continued operation runs headlong into Cuomo’s clean energy agenda, which calls for the state to obtain 50% of its energy from renewable resources by 2030.
Cuomo repeated that pledge in his annual State of the State address Wednesday. “We will eliminate all use of coal in New York state by 2020. We will help the few remaining coal plants transition, but we must clean our air and protect our health and that must be our first priority,” Cuomo said.
According to the governor’s office, coal accounts for 4% of electricity generation in New York, a number sure to drop even more absent Dunkirk and Huntley.
A group of bondholders formed Upstate New York Power Producers to purchase Cayuga and Somerset from the bankrupt AES Energy East for $240 million in 2012. No price was disclosed when the sale to Riesling was announced in September. (See Blackstone Seeks Two Coal-fired Plants in New York.)
Cayuga is operating under a controversial reliability support services agreement that runs until June 30, 2017. It also has a proposal before the New York Public Service Commission to repower to natural gas with ratepayer assistance paid over the next 10 years. (See Cayuga Power Plant Repowering Opposed.)
The Sierra Club, which opposes the above-market payments, asked FERC to compel Riesling to provide information regarding the Cayuga plant’s future.
FERC ruled those questions outside the scope of the proceeding and said the sale “will not have an adverse effect on rates.”
No plans about the future of the Somerset plant have been made public. “There are a number of announced initiatives on the future of energy markets in the state of New York. The details on how they will be achieved while maintaining a reliable electric system in the state at a fair economic price will highlight the importance of these assets to the system,” Riesling spokesman Michael Enright said Monday. “We look forward to reviewing the details of the governor’s plan and will, upon approval of the sale by the PSC, seek to promptly engage in constructive dialogue with major stakeholders to create a path forward.”
That path, according to a briefing book released in conjunction with Cuomo’s budget, includes a directive to state regulators to work with NYISO to “develop a regulatory framework that will ensure system reliability while facilitating repowering to cleaner fuel or closure.”
In reaction to the budget and in anticipation of pending action before the New York Public Service Commission promoting clean energy development, an organization representing power generators again emphasized a market-based approach.
Gavin Donohue, CEO of the Independent Power Producers of New York, said “generators that are able to meet their emissions requirements and perform economically should be allowed to operate in the state.
“State strategies that pick winners and losers are especially redundant in light of record low fuel and wholesale market prices that are currently driving uneconomic facilities to retire,” he continued. “Just this past December, New York saw the lowest wholesale price of energy since the market was created, and those prices are being reflected in consumers’ energy bills and generators’ decisions to invest in new resources.”