New York Power Plant Could Go From Coal To Natural Gas

A troubled coal burning power plant in western New York could get a new life as a natural gas burning power plant.   The facility in Dunkirk should be refitted to burn natural gas according to a study commissioned by the plant’s owners, NRG.

According to NRG the conversion, which would cost about a half billion dollars would result in a 5% reduction in western New York electricity rates.  Across the entire state ratepayers could see a 2% reduction in electricity costs as a result of the plant being repurposed. 

According to the report, the switch would reduce the state’s dependence on higher cost electricity and eliminate the need for a proposed $2.2 billion project to import power from Quebec to New York City.

The New York power market is beginning to experience a taste of what Texas has been dealing with for a while.  An oversupply of natural gas has brought about cheap electricity rates making it more difficult for energy producers to make money; especially with coal burning power plants.  The power plant in Dunkirk faces shutdown in 2015 if NRG doesn’t take drastic steps such as the conversion to natural gas.

Once practically the only game in town for electricity, coal is rapidly loosing its position to natural gas.  The EPA has aggressively gone after coal in recent years with new rules that have added substantially to the cost of coal energy.  The combination of free market dynamics and regulatory overhead for coal has shifted the economic equation in favor of natural gas.

The study suggests that New York rate payer will save an estimated $142 million per year as a result of the lower wholesale electricity prices.  If the decision is made to pursue the conversation, it could also mean a jobs boost to the region.  According to the company, such a project would result in about 1,200 new jobs.

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