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New York ISO Says Enough NatGas-Fired Capacity Underway to Replace Nuclear Plant

Three natural gas-fired generation facilities currently under construction in New York and New Jersey are sufficient replacements for the Indian Point nuclear power plant north of New York City in Westchester County that is slated for deactivation beginning in 2020, the New York Independent System Operator (NYISO) said this week.

In an assessment report required by federally regulated tariffs, NYISO said as long as the facilities come online, “there will not be a system reliability need following deactivation” of Indian Point Energy Center’s two units, which combined generate 2,311 MW of electricity for New York City and the broader metropolitan region.

Included in the grid operator’s base case assessment were DCO Energy LLC’s Bayonne Energy Center II, a 120 MW gas- and oil-fired expansion in New Jersey; Competitive Power Ventures Inc.’s (CPV) 680 MW Valley Energy Center underway in Orange County; and Advanced Power AG’s 1,020 MW Cricket Valley Energy Center under construction in nearby Dutchess County. 

The report assessed whether any reliability needs would arise from 2018-2023 as a result of the nuclear units’ deactivation. All of the gas-fired facilities are scheduled to come online by 2020.

Earlier this year, Democratic Gov. Andrew Cuomo announced a settlement with Entergy Corp. to shut down Indian Point, prompting fears of how the power would be replaced and what it could mean for consumer rates. Entergy had battled the state for a decade over renewing reactor licenses.

Cuomo claimed he had long wanted the facilities closed because of their potential threat to the metropolitan region, but Entergy ultimately said it was low-cost natural gas that put pressure on the facility’s ability to compete and led to its decision to close the plant.

Under Cuomo’s Reforming the Energy Vision program, the state is aiming to increase renewable energy generation to 50% by 2030, which has helped stoke debate about how the nuclear plant should be replaced. Cuomo said the state would add more wind and solar power, along with more transmission lines. Environmental groups have pushed energy efficiency, renewables and even a proposal for a 1,000 MW transmission line to carry Quebec hydropower to New York City.

Those choices have left the natural gas industry baffled, given the growing supply of affordable shale gas in the state’s backyard. Under Cuomo, the state has not only banned high-volume hydraulic fracturing, but it has consistently denied regulatory approvals for gas pipelines, tying them up in legal challenges and preventing more natural gas from reaching the state.

Millennium Pipeline Co. LLC began building the Valley Lateral on Dec. 8, which would supply CPV’s facility. New York denied the pipeline’s water quality certification over potential downstream emissions at the power plant, but the Federal Energy Regulatory Commission waived the state’s authority, essentially clearing the way for construction.

CPV said on Thursday NYISO’s report is yet another “indisputable validation” of the state’s need for the Valley Energy Center, adding that the report makes clear that reliability in the Lower Hudson Valley can only be maintained if replacement generation is available there before Indian Point closes.

“In light of this report, we hope the state will carefully consider the value of this project for New York, its energy customers and the environment, and discontinue its opposition to a critical component of our project, the Millennium lateral pipeline,” the company said.

Environmentalists, however, are likely to push back against whatever comes next. Groups across the state recently banded together and launched a campaign to pressure Cuomo to do more about climate change as he enters an election year for his third term. A task force appointed by the governor is also currently at work exploring the impacts of Indian Point’s closure and how best to mitigate them.

For Entergy, the settlement to close the facility marks its exit from the merchant power business. The company has instead chosen to focus on its regulated business. However, deactivating a nuclear plant can take years and include dismantling reactors and a lengthy process of disposing of the spent fuel.

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