By William Opalka
A power plant owner affiliated with The Blackstone Group is asking state and federal regulators for expedited approval to buy two coal-fired power plants in western New York (15-E-0580).
Riesling Power is seeking to buy the 668-MW Somerset facility in Niagara County and the 312-MW Cayuga facility, which is operating under a controversial reliability support services agreement.
Both plants are owned by Upstate New York Power Producers, formed by a group of bondholders that purchased the plants from the bankrupt AES Energy East for $240 million in 2012. The filing asks for approval by the New York Public Service Commission’s Dec. 17 meeting. The buyer said all personnel would remain in place and the plants would continue operating. The purchase price was not disclosed.
“Expedited approval is appropriate here because the proposed transfer does not raise any issues regarding retail energy sales to captive ratepayers or market power concerns in the competitive wholesale markets in New York and is consistent with commission precedent,” the state filing states.
Upstate New York Power, whose largest stockholders are the California Public Employees’ Retirement System (CalPERS), Carlyle Strategic Partners, J.P. Morgan Investment Management and Marathon Asset Management, asked for FERC approval of the deal by Nov. 24 (EC15-214).
Riesling is a wholly owned subsidiary of Bicent Power, which in turn is 95.6%-owned by GSO Capital Partners. GSO represents the credit-oriented business of The Blackstone Group, one of the largest players in the leveraged buyout business. Upstate New York Power had hired Blackstone in 2014 to sell the plants, according to Power Finance and Risk.
Neither Riesling nor Bicent own generation in New York, the filing states.
The Plants
Cayuga, a 60-year-old pulverized coal-fired power plant on the eastern shore of Cayuga Lake in Lansing, N.Y., is operating under a RSSA with New York State Electric and Gas (NYSEG). The plant is also the subject of a PSC proceeding considering whether to repower it from coal to natural gas.
Plant owners had proposed to mothball the facility in early 2013, but NYISO and NYSEG determined the plant was needed for system reliability. A one-year RSSA was ordered by the PSC. With no suitable alternatives identified, the commission approved a second RSSA that expires June 30, 2017.
Upstate New York Power recently filed a revised proposal to convert the plant to natural gas. (See Cayuga Power Plant Repowering Opposed.)
NYSEG, Niagara Mohawk and several stakeholders are promoting the proposed Auburn Transmission Project Phase 2 as an alternative to the Cayuga repowering (13-T-0235). The project has been endorsed by PSC staff.
Somerset, a pulverized coal-fired power plant in Barker, N.Y., on the southern shore of Lake Ontario that began commercial operations in 1984, has been described as too distant from existing natural gas pipelines for a conversion.
The largest taxpayer in its home county, Somerset is a merchant plant selling its output into NYISO.
Energy Highway
When New York Gov. Andrew Cuomo proposed the Energy Highway in 2012 to bring power from generation plants upstate to load centers in and around New York City, Upstate New York Power responded that the plants could play an “important role” for the proposal.
“New York’s energy needs require a diverse blend of fuel-type resources to provide the state’s residents and businesses with a dependable and affordable energy pool,” the company said. “Upstate New York Power Producers looks forward to being a part of the solution.”
It said the two plants are in compliance with the current environmental regulations and “well positioned” to meet future regulations, having invested in technologies including flue gas desulfurization and selective catalytic reduction to reduce sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions.
Last month, the PSC staff took a step toward making the highway a reality, recommending transmission routes that would help move 1,000 MW of upstate generation. (See NYPSC Staff Recommends $1.2B in Transmission Projects.)
Somerset, located in Zone A, is connected to the main 345-kV east/west transmission corridor with NYSEG at the Kintigh Switchyard. Cayuga, in Zone C, connects with NYSEG at the Milliken Switchyard at 115 kV.