Editor’s Note: This is the second of two stories scrutinizing the dueling proposals over the future of the Cayuga power plant.
Wednesday’s story examined why the power plant thinks it should be able to convert its operations to natural gas. The story below looks at why NYSEG opposes that proposal.
For our overview on the topic, see here: “A beginner’s guide to the crucial fight over the Cayuga power plant.”
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Ithaca, N.Y. — You can tell a lot about a writer’s priorities by what he or she chooses to italicize.
By that measure, the New York State Electric and Gas company’s principal argument against converting the Cayuga power plant to natural gas is the following: Doing so will prove more expensive to NYSEG ratepayers in the long-term than the alternative.
The only italicized lines in NYSEG’s 20-page filing earlier this month are not about energy savings, or the future of alternative energy, or carbon emissions and global warming.
They’re about cost: The state, NYSEG notes, wanted a proposal “that meets the reliability, economic development, and environmental benefits identified in the January order, at the least cost to ratepayers.”
This argument is repeatedly emphasized throughout the filing.
“NYSEG cannot agree with Cayuga’s repowering proposal because it would require NYSEG customers to finance the repowering of Cayuga Unit 1 and Cayuga Unit 2 (collectively, the “Cayuga Facility”) at a cost that is millions of dollars more expensive for customers than other available options,” the public utility concludes.
Here are our five main takeaways from NYSEG’s proposal:
1 — One man’s economic stimulus is another’s deficit
One of the key arguments made by the power plant in favor of retrofitting, as detailed in our Wednesday story, was that closing the plant would represent a severe blow to Lansing’s finances.
What’s interesting, then, is that NYSEG doesn’t really deny that point. It just looks at it differently.
The power plant looks at millions in spending as crucial for Lansing’s schools and families. NYSEG looks at the same millions of dollars as public money, a subsidy from the NYSEG ratepayers of the region.
“Cayuga rejected NYSEG’s proposal claiming that NYSEG had failed to recognize all of the ‘societal benefits’ that Cayuga asserted arise from repowering,” NYSEG’s proposal states.
Upgrading the transmission lines at a lower cost will be enough to power the region and be cheaper, NYSEG says. NYSEG questions the “societal and market” benefits cited by the power plant in favor of converting to natural gas.
“…While the magnitude and nature of these alleged “societal and market” indirect benefits remain subject to challenge, the direct costs of repowering the Cayuga Facility remain millions of dollars higher than the transmission alternative for customers,” the proposal states.
2 — Huge risk in the public interest
NYSEG isn’t just concerned with the known costs of repowering the plant for taxpayers. It’s also worried what happens if things go south.
“Beyond the economic costs identified by NYSEG, Cayuga’s repowering proposal would obligate customers to absorb potentially significant construction, operational and reliability risks, each of which has the potential for significant associated costs to customers,” NYSEG’s proposal states.
Beyond concerns over the economic feasibility of the proposal, NYSEG says that there are legitimate concerns about the reliability of the plant’s equipment.
“NYSEG’s customers would bear as a result of relying, for system reliability purposes, on a generating facility (while updated in part) that contains significant components over 50 years old,” the proposal states. “In addition, the Cayuga Facility recently experienced a shutdown of one unit and a fire, which is still under investigation.”
3 — NYSEG: You can do the power plant, just don’t make the public responsible
This is a related, but separate, point — and one we haven’t covered yet.
NYSEG makes clear that it doesn’t really care what the power plant does. NYSEG, it appears, just doesn’t want the ratepayers to be on the hook.
NYSEG directly appeals to the New York State Public Service Commission that will decide whether to accept NYSEG’s proposal or the plant’s:
“The Commission should not lose sight of the fact that customer-subsidized support is not the only method for repowering the Cayuga Facility,” NYSEG writes.
“The Commission has long supported a wholesale generation marketplace that encourages competition and efficient new generation. Cayuga’s owners remain free to pursue repowering the Cayuga Facility without customer subsidies via self-generated funding or by attracting other capital in the marketplace.”
4 — What’s up with the pipeline?
In arguing for what it anticipates will be unanticipated costs with the power plant’s proposal, NYSEG takes aim at the power plant’s plans to build a new natural gas pipeline for the retrofitting process.
On Sept. 27, 2013, Cayuga asked NYSEG to take responsibility “for building a new, approximately 19-mile long, natural gas transmission pipeline,” according to the proposal.
“NYSEG did not agree to assume responsibility for construction and/or ownership of the required new gas pipeline,” NYSEG states.
The power plant is wrong to assume this will be easy to pull off, NYSEG says. Given that NYSEG is itself struggling to build another, unrelated pipeline, it’s hard to dismiss the point outright.
“By its very nature, the siting of a gas line is often an extended regulatory process that requires heavy public involvement and may be subject to frequent delays mandated by opposition and the need to address siting concerns,” NYSEG says.
5 — NYSEG: We represent the free market solution
The fight over the power plant has scrambled simple political characterizations.
Typically, liberals are associated with increased public spending on important public projects. Conservatives are usually assumed to prefer solutions with no government or public tax money.
Here, that’s largely flipped. NYSEG makes this point again and again in its proposal: That not repowering the plant is the true free market solution, because to do otherwise would be an government interference in the free market.
“Having decided in (previous cases) to create a competitive marketplace for generation, the Commission should continue to allow the market to function as designed,” NYSEG states.
“If the market supported repowering, Cayuga would never have sent the notice of mothballing or retirement that triggered the reliability need in the first place. Commission intervention to ‘save’ a generation competitor that is ‘out-of-market’ and requires a multi- million dollar customer subsidy interferes with the basic premise that inefficient generation should be replaced with more efficient generation or enhanced transmission.”