NRG to Restore Power Plant in Hudson Capacity Zone

The Federal Energy Regulatory Commission’s creation of a capacity zone to encourage more power generation in the lower Hudson Valley has proven controversial—but despite the opposition, it is already starting to spur more investment.

NRG has decided to bring one of the two units at its Bowline facility back to full strength, a move that the energy company says only became cost-effective when FERC implemented the so-called Lower Hudson Valley Capacity Zone, which went into effect in May.  

The company plans to spend more than $30 million to fully restore its second Bowline unit, and projects that it will be up and running by next summer. NRG has already secured the necessary permits, and is ready to move forward with the project, said Dave Gaier, spokesperson for the company.  

“We are going to go ahead and bring unit 2 to full capacity, back to 567 megawatts, and it’s because the creation of a new Hudson Valley zone produced a zonal price that was really tailored to the needs of the zone where Bowline is,” Gaier said.

Gaier added that price signals that accurately reflect the need for more generating capacity where it is needed “is what gives companies like NRG the ability to invest in generating infrastructure, and that’s what we’ve seen here.”

The FERC capacity zone, which raises electricity prices in the region to incentivize investment, has prompted an outcry from officials in Albany and Washington, D.C. Two local congressmen, Sean Patrick Maloney and Chris Gibson, have called for the zone to be abandoned, and their bipartisan bill to de-fund it passed the House this summer. U.S. Sen. Charles Schumer has also expressed opposition, and the zone has faced challenges in court as well.

“We’re comfortable enough to make the investment, because it makes sense from what a company like ours needs to make a significant investment,” Gaier said when asked about the possibility that the zone might still be rescinded.

The New York Independent System Operator, along with FERC, see the capacity zone as a way to ease transmission bottlenecks and add more supply closer to New York City.

NRG has two similarly sized steam boiler units at Bowline, both fired by natural gas or oil. One of the units suffered serious boiler damage in 2011, and it was scaled back from 567 megawatts to 178 megawatts. The loss of nearly 390 megawatts is more than some power plants produce on their own.

Gaier also noted that the company’s payments in lieu of taxes will increase since they are based on total megawatts.

NRG is planning to officially announce the news at a meeting this week between the Federal Energy Regulatory Commission and the state’s Public Service Commission, the state utility regulator, which is opposed to the capacity zone.