By Jason Fordney
Environmental groups last week cheered NRG Energy’s announcement that it will retire three gas-fired plants in Southern California.
But while the company’s GenOn subsidiary has filed paperwork to shut down the units, recent market dynamics could keep them online if they’re required for reliability.
NRG on Feb. 28 alerted the California Public Utilities Commission that it plans to retire Etiwanda Units 3 and 4 on June 1. The company also notified regulators that it will shut down Ormond Beach Units 1 and 2 on Oct. 1 and the Ellwood Generating Station on Jan. 1, 2019.
The Sierra Club and other groups on March 9 said the closure of the plants is part of a trend in the state toward renewable power and energy storage.
But the proposed retirement of gas plants in California is complicated by broader issues playing out in the state’s wholesale electricity.
While other gas-fired plants in the state have filed notices to retire, they have also been identified as necessary to support system reliability and receive reliability-must-run payments from CAISO to remain online. The RMRs are expensive and controversial, facing strong opposition from the CPUC, which recently replaced a series of Calpine RMRs with solicitations to procure energy storage. (See CPUC Retires Diablo Canyon, Replaces Calpine RMRs.)
When asked whether the NRG plants are slated for RMR contracts, company spokesman David Knox told RTO Insider: “We have filed the paperwork to close them. I do not want to speak for the CAISO or CPUC, but [I] am confident that in response to the filings, they will conduct the reviews to determine if they are needed for reliability beyond those dates.”
With no coal plants remaining in California, natural gas has become an increasing target for environmental and other groups opposed to fossil fuel generation. NRG in October 2017 asked the California Energy Commission to suspend its review of the proposed 262-MW Puente plant in Oxnard after two commissioners issued an “unusual” notice recommending denial of the plant. (See NRG Signals Pull-out on Proposed Puente Plant.)
The developments occur within a larger restructuring of NRG, which has undertaken plans to boost its share price. NRG last month announced that it was selling its NRG Yield, South Central Generating, and Boston Energy Trading and Marketing subsidiaries for nearly $2.9 billion and initiating a $1 billion stock buyback program. (See NRG Selling Renewable, Other Assets for 2.8 Billion and NRG Announces $1 Billion Stock Buyback, $70 Million Sale.) The company last year said it would seek to raise $2.5 billion to $4 billion in cash through asset sales.
Also, on March 15, Calpine requested the California Energy Commission suspend its application for the proposed 275-MW Mission Rock Energy Center, a gas-fired/storage facility in Ventura County. The company said that California policies have been in transition since the plant was proposed on Dec. 31, 2015, and that Southern California Edison’s latest request for offers for reliability support in the Moorpark subarea “does not appear to present an opportunity for Mission Rock Energy Center.”