By William Opalka
New York regulators on Wednesday declined for the third time to renegotiate a contract with a financially troubled biomass generation plant, saying that doing so would threaten the integrity of the state’s renewable energy procurement program.
In 2007, the 51-MW co-firing Niagara Generating Facility (NiGen) in Niagara Falls won a $21.6 million contract to provide up to 180,500 MWh of energy per year from renewable-eligible biomass for 10 years. The contract was awarded under the main tier of New York’s renewable portfolio standard following a competitive bidding process.
Sterling Energy Group, which purchased the NiGen plant in 2013, mothballed it in August 2014, saying the fall in wholesale energy prices had left it unprofitable despite its $11.99/MWh in RPS incentives.
Sterling told the New York Public Service Commission it should be given extra credit for increased clean energy generation because it is now able to generate 80% of its power from wood products, without burning tires, which had previously represented 40% of its fuel. The company said the change increased its RPS-eligible generation and reduced harmful emissions.
The petition had won backing from local elected officials who said the plant’s closing would result in the loss of 100 direct and indirect jobs and more than $10 million in local spending. In its mothballed status, the plant has 26 part-time employees.
But the commission was unmoved, saying that Sterling knew of the plant’s shaky finances when it acquired it (03-E-0188).
“The petitioners have requested that the commission provide additional financial incentives that it has twice denied in the past and the commission does not see any significant material differences in this request that compels the reversal of earlier decisions,” the PSC wrote.
“The contract was awarded under a competitive solicitation at a price chosen by NiGen and for the term of years chosen by NiGen. Adjusting NiGen’s RPS benefits would undermine the competitive nature of the solicitation process established by the commission for the main tier.”
Instead, the commission said Sterling should bid its additional renewable capacity into future main tier solicitations.
The plant is permitted to burn coal, tires and various wood-based fuels, but it only receives RPS incentive payments for the amount of generation produced by agricultural residue, wood and other eligible biomass.