Lockport Union-Sun & Journal Online

January 28, 2014

Huntley power plant at risk of shutdown

By Jessica Bagley
Lockport Union-Sun & Journal

Lockport Union-Sun & Journal — TOWN OF TONAWANDA — The Huntley Station power plant is at risk of shutting down due to declining revenues and a shift in the energy market, according to a report released Tuesday.

The study was commissioned by the Clean Air Coalition of Western New York and completed by an Ohio consulting firm, the Institute for Energy Economics and Financial Analysis. Coalition Director Erin Heaney said the group’s request was in response to residents’ concerns about air quality and public health.

Huntley is owned and operated by NRG Energy and is one of the few coal-burning plants left in the state. The plant has been suffering due to the rising cost of coal, low natural gas prices and a stagnant demand for electricity.

The report indicates that the pre-tax earnings generated by the plant have dropped dramatically in recent years, from a range of $56 million to $110 million in the years 2005-2008 to an average of $1 million for 2009-2012. Pre-tax, the plant has operated at a loss for three of the past five years.

The plant has also only been operating at a fraction of its capacity — as low as 19 percent — while other sources of power have accounted for the demand. The conversion of NRG’s coal plant in Dunkirk into a natural gas facility is predicted to exacerbate the problem. 

The plant is also aging and will soon be in need of maintenance upgrades, as the two remaining generating units are 56 and 57 years old and are nearing retirement.

“The bleak financial future for the Huntley plant does not indicate any near-term relief from the economic forces that have made the plant unprofitable in recent years,” Cathy Kunkel, the report’s coauthor and research fellow, said during a news conference Tuesday.

As a result, the plant does not appear to be viable and is at a risk of shutdown, the report states.

NRG spokesman David Gaier would not comment on the report’s analysis or conclusions. He agreed that coal plants are under financial pressure, but questioned the objectivity of the report and said NRG is working to improve Huntley’s stability.

“The IEEFA’s stated mission is to ‘reduce dependence on coal and other non-renewable energy resources’ and this report appears written to support that mission,” he said in an email. “As we’ve said before, NRG continually looks to reduce costs at all its generating assets and make them as competitive as possible. That will continue.”

He also argued that Huntley is one of the cleanest coal-fueled plants in the state and country.

“In 2005 NRG spent about $35 million to convert Huntley to use low-sulfur coal, which produces fewer emissions. In 2009, NRG took a much bigger step, investing $115 million more to install so-called ‘backend’ environmental controls at the plant,” Gaier said.

Despite those improvements, Clean Air Coalition members have ranked Huntley’s air pollution as one of their top concerns, and many local residents said the closure of the plant would represent a positive step in improving their quality of life.

“The burning of coal is terrible for human health and the environment,” Heaney said. “Our members have seen the impacts of the coal plant first hand over the years.”

But Heaney and Clean Air members recognize that the plant’s shutdown would lead to the loss of about 70 jobs — as well as tax money for the town and school district. Although the town receives less from NRG than it did before 2012 due to the implementation of a PILOT program, Huntley is still one of the town’s five biggest taxpayers.

“The biggest challenge would be faced by the Ken-Ton School district. In 2012, the district received $8 million in taxes from Huntley,” Tom Sanzillo, the report’s coauthor and director of finance at the IEEFA, said. “The school district is under considerable financial pressure, and further loss would only compound that problem.”

The IEEFA report recommends that community stakeholders plan for the retirement of the plant and find ways to help protect the workers, town and school district. Heaney said the coalition hopes to lead that effort, and transition assemblies have been planned to share the report and generate ideas on how to move forward — and ensure that the town remains stable.