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Cuomo's deal with Dunkirk power plant unlawfully costs National Grid ratepayers $20M per year, lawsuit claims
SCRIBA, N.Y. - Owners of the struggling FitzPatrick nuclear plant are suing New York utility regulators over a deal announced last year by Gov. Andrew Cuomo that requires National Grid customers to subsidize a Western New York power plant.
Payments of $20.4 million a year from National Grid ratepayers to help renovate and support the Dunkirk power plant near Buffalo are both "unlawful" and "discriminatory,'' according to a lawsuit filed Friday in federal court by Entergy Corp., the owner of FitzPatrick.
Cuomo announced in December 2013 that NRG Energy, owner of the failing Dunkirk coal-fired power plant, would negotiate a deal with National Grid to renovate Dunkirk to run on natural gas. The deal was hailed by Western New York politicians as a "Christmas miracle'' that would preserve jobs and tax payments linked to the power plant.
But Entergy's lawsuit cites analyses by National Grid that said repowering Dunkirk would be more costly and risky than upgrading transmission lines to compensate for Dunkirk's closure.
Four months before Cuomo announced the plan to renovate Dunkirk, National Grid issued a report concluding that it "would cost National Grid customers three to seven times more per year than the transmission solutions,'' according to Entergy's court documents.
The state Public Service Commission approved an agreement in June 2013 under which Upstate customers of National Grid will pay $20.4 million a year for 10 years to NRG Energy to subsidized Dunkirk. If Dunkirk's revenues from selling its power capacity exceed a certain threshold, the plant returns some money to the utility.
Entergy argues that the subsidy to Dunkirk will artificially suppress power prices in Western New York, costing other power plants an estimated $841 million. "In the long term, some generators may be forced to leave the market,'' Entergy stated in its complaint.
Entergy also has opposed a request for subsidy payments by the owners of Ginna nuclear power plant near Rochester. The PSC recently ordered Rochester Gas & Electric to negotiate payments designed to keep the struggling nuclear plant in operation. The commission has not yet ruled on the proposed agreement.
James Denn, speaking for the PSC, today said the commissioners had not yet been served with the lawsuit. But he said the commission makes decisions in the public interest, whereas Entergy filed its lawsuit to protect its own interest.
"It is important to note the PSC's concern is to make sure the utility's action are in the best interest of New York consumers to provide reliable and cost-effective service,'' he said in an email. "Entergy's concern is to focus on the potential reduction of its profits.''
Entergy officials in September 2013 called the FitzPatrick nuclear plant a "challenged facility.'' The company said FitzPatrick faces financial pressures because regional power prices are depressed by low-cost natural gas and because transmission constraints prevent the facility from selling power in higher priced markets.