It was a fitting setting recently as the man who manages both the Dunkirk and Tonawanda NRG plants provided his perspective on his company's financial difficulties.
Carson Leikam is the manager of both NRG plants and addressed a meeting of the city's Harbor Commission to talk about the plants, the PILOT program and the future of NRG in Dunkirk. He began by telling the board the company's efforts.
"We've been in talks with the county IDA and various political folks and also Sen. Cathy Young's been a big help," Leikam said. "One thing I want to tell everybody, and I talked to our own people about this, I don't want you to get the wrong idea about NRG.
"NRG isn't going to skip out on any obligation that we have. There are some provisions in the PILOT agreement that allows for different amounts of taxes to be paid depending upon the units that are in service, but it doesn't mean we're going to walk away and there's not going to be any taxes paid by NRG. Sen. Schumer talked about closing the plant. It's not our belief that once all is said and done the plant is going to close."
Leikam explained reliability needs brought forth by New York State ISO and National Grid studies show NRG Dunkirk is needed.
"I don't think that when all the studies are done that they're going to say, yeah, go ahead and close this plant," he added. "We're not going to close it. Our intent, and the intent why we filed, is to mothball."
Leikam said NRG is priced out of the market at this point in time.
"What I'm telling you is right now the market price for power won't even pay for the coal it takes to burn to generate that electricity."'
In response to a question about the Dunkirk plants status, Leikam said Unit No. 2 is running.
"We're running one of the smaller units and we've been getting calls for reliability just about every day," he stated. "The economic models say 'you shouldn't be running at all.' There obviously is a reliability need for at least some of the units. The reason we filed the notice is so we can continue the discussions with the grid, the New York State ISO and the Public Service Commission. So we're in discussion with all the people.
"National Grid, being the transmission owner-operator in this part of the state, they have an obligation to make sure the transmission lines and the generation that's in the area is suitable for maintaining the reliability of the grid."
Leikam said NRG was looking to be in Dunkirk for the long term and cited the $200 million plus invested in backend controls.
"But for right now due to the incredibly low price of natural gas, we're just priced out of the market and that's projected to run that way for quite some time," he added, before talking about the mothball process. "There are four generating units in the plant, you do not have to mothball all of them. ... You don't mothball the entire plant. That's why we're looking at the reliability studies."
The NO. 1 and 2 units at Dunkirk provide 115 KV power to the grid while Units 3 and 4 provide 230 KV power to the grid.
Leikam was asked about the effect of the proposed Quebec transmission line.
"It certainly doesn't help us. Any imported power is definitely another source that causes us to be displaced. Same can be said for windpower," he replied. "What's happening across the country is there's being a redistribution of the generation portfolio. Obviously, there's a demand for power and there's multiple ways to supply it. As there's an increase in supply from certain sources somebody else has to lose that share."
In response to a question, Leikam said NRG Dunkirk did not convert its burners to natural gas because it was not a good economic model. He explained it would cost millions per unit and the units would still be less efficient than combined cycle gas generating facilities.
"The best units right now that combine cycle most efficiently, they're not making a lot of money in this market. They're breaking even, maybe making a buck or two," Leikam said. "The problem is for the investment, given the market we're in, your return would be marginal if you've even got the market. It's something we looked at but we can't seem to make that work on a grand scale."
Leikam said a combined cycle plant was tried in Tonawanda but it would have needed a carbon capture and sequestration setup. He added a willow burning project looked at a few years ago did not have a large enough capacity to qualify for grant funding.
In the end Leikam's message was the same as other NRG officials, the Dunkirk facility is in NRG's long-range plans. It's getting to that long-range situation that will be the hard part.
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