Wednesday, April 26, 2017

NYISO, PSC: No Worries on Replacing Indian Point Capacity

By Michael Kuser and Rich Heidorn Jr.

NYISO CEO Brad Jones and Public Service Commission Chair Audrey Zibelman told New York legislators they are not concerned about replacing the capacity of the 2,069-MW Indian Point nuclear plant, saying energy efficiency, transmission upgrades and the ISO’s wholesale market will ensure reliability.

NYISO psc indian point nuclear plant capacity

Jones | © RTO Insider

Jones said that the grid operator has many options and “plenty of time” to resolve any reliability issues arising from closing the plant. In an aside, he also said the ISO is considering requiring new gas-fired generation to have dual-fuel capability.

NYISO has yet to receive a formal notice of deactivation of Indian Point, which would trigger a 90-day assessment period, but Jones told legislators during an eight-hour hearing Feb. 28 that he expects one will be filed in the coming months.

Joint Hearing

The State Assembly’s Committee on Energy held a joint hearing with the State Senate’s Committee on Energy and Telecommunications on the plant, located on the Hudson River 30 miles north of New York City. Plant owner Entergy and Gov. Andrew Cuomo announced an agreement in January to shut down Unit 2 in 2020 and Unit 3 in 2021. Unit 1 ceased operations in 1974. (See Entergy to Shut Down Indian Point by 2021.)

NYISO psc indian point nuclear plant capacity

Left to right: Sen. Griffo, Rep. Paulin and Rep. Palmesano | New York State Committee on Energy & Telecommunications

Assembly committee Chair Amy Paulin (D) asked how the ISO evaluates the reliability effect of a facility going offline. Jones said that several factors influence the assessment process, mainly the fast-changing power system itself.

“Literally, the system is changing as much as it ever has in the past,” Jones said. “For example, we have new transmission, some that is under construction, as well as transmission that is in the process.”

Jones cited proposed upgrades to relieve congestion in Western New York and the AC Transmission initiative to increase the Upstate New York/Southeast New York transfer capacity by 1,000 MW. (See NYPSC Staff Recommends $1.2B in Transmission Projects.)

He also noted increased energy efficiency and production from rooftop solar panels as well as “load shifting” by some market participants.

Senate Committee Chair Joseph A. Griffo (R) asked Jones whether the state’s goal of having renewables provide 50% of its electricity by 2030 was realistic. Jones said the goal was “ambitious, but achievable.”

Dual-fuel Requirement Coming?

Paulin asked the CEO to pinpoint the possible outcomes of a reliability assessment on Indian Point’s closure. Jones said that in the event of a reliability concern, the ISO would first approach the market to find solutions. If the market failed to find a solution, the next step would be to look for a regulatory fix.

NYISO psc indian point nuclear plant capacity

Zibelman and Richard Kauffman, Chairman, Energy and Finance for New York testify before the joint committee | New York State Committee on Energy & Telecommunications

“Now, one of the options for the replacement of Indian Point would be to have additional gas units that come online to replace that,” Jones said. “There are a variety of different scenarios that I think are feasible. If the replacement generation does come from natural gas, we have been concerned at the NYISO, as we rely more upon natural gas, about the reliability of the supply of the gas itself. And so we’ve begun to look at … whether we should and could require generators throughout New York to have a dual-fuel supply.”

Planning Since 2011

Zibelman | New York State Committee on Energy & Telecommunications

Zibelman said the state has been planning for Indian Point’s closure since at least 2011, citing the AC Transmission project, which should begin construction in 2019 and be operational by summer 2022. She said new or mothballed generators will enter the ISO market if needed.

“New York has had a really good history of power plants getting built in response to market” demand, she said, citing the 6,000 MW of new plants added since the NYISO markets began.

“I’m not concerned about the replacement power. We have a robust market. There’s a lot of capital. People are very interested” in building new plants, she continued. “That plus the work we’re doing on energy efficiency and demand response and the transmission — all of those in combination is what makes me extremely comfortable that we’re not going to have a scarcity issue.”

She noted that New York’s wholesale power prices declined by 25% between 2012 and 2016, thanks largely to cheap natural gas. Over the same period, energy efficiency has caused the ISO to reduce its 2021 peak load forecast by almost 7% to 33,555 MW. Thus, she said, the plant’s closure should have a “negligible or no adverse” impact on consumers’ bills.

“Since prevailing wholesale prices are now lower than the cost of existing nuclear generation, it is anticipated that any new replacement power in the long run will be cheaper than continuing to buy power from Indian Point,” she said.

Worries over Economic Impact

Twomey | New York State Committee on Energy & Telecommunications

Also testifying was T. Michael Twomey, vice president of external affairs for Entergy’s wholesale power business, who was questioned about the company’s decommissioning plans and its offer to relocate laid off plant workers.

Much of the hearing was focused on the economic impact of the plant’s closure, primarily the loss of the plant’s property tax revenues and its 1,050 jobs.

On the morning of the hearing, Cuomo announced the formation of a task force to ease the impact on the community. “The task force will partner with local governments to address employment and property tax impacts, develop new economic opportunities” and retrain the work force, the governor’s office said in a news release. “The task force will also monitor compliance with the closure agreement, coordinate ongoing safety inspections and review reliability and environmental concerns, among other issues.”

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