June 16, 2008

Jamestown Coal Plant Gets Leg Up on Huntley

By David Robinson

When Gov. David A. Paterson threw the state's backing behind an advanced coal power plant project last week, where he made the announcement was almost as significant as what he said.

The governor gave the state's blessing -- and a pledge for almost $7 million -- to a smaller, demonstration-sized project in Jamestown.

He was decidedly non-committal on a much bigger advanced coal power plant at the Huntley Station in the Town of Tonawanda that's coming up against a key deadline at the end of this month.

"They're separate projects, and they'll be evaluated separately," Paterson said.

It's been almost 18 months since NRG Energy was declared the winner in the lame duck Pataki administration's competition to build an advanced coal plant in the state. Yet the $1.6 billion Town of Tonawanda project still faces major hurdles about how affordable its electricity can be and whether its less-polluting technology actually can perform as advertised on such a large scale.

"We still have to accumulate a little more information from them," Paterson said, adding that discussions continue between state and NRG officials.

That's different from Paterson's take on the proposed Jamestown plant, whose 50-megawatt capacity is less than a 10th of the size of the 680-megawatt Huntley project. "What we have to determine is if the proposals they have come up with are really clean," Paterson said. "We have done that in this case."

The state funding will mainly support the engineering work needed to develop a proposal that its backers plan to make for federal funding through the U.S. Department of Energy later this year or early next year.

The Jamestown plant needs that federal funding to go forward. Plus, an economical way has to be developed to permanently store deep underground the carbon dioxide that is captured from the power plant, which is no small task.

"I'm one who had to be dragged along," Paterson said, noting that he's instinctively leery of projects that involve the storage of hazardous substances. "We think the technology will work."

Environmentalists aren't keen on either the Jamestown or Huntley projects, because they're skeptical of the technology and generally would prefer to see more investment in conservation and renewable energy, such as wind power.

"There's clearly a lot of political support for the [Jamestown] proposal, even if there's not a lot of scientific support," said Blair Horner, the legislative director for the New York Public Interest Research Group.

Officials familiar with both advanced coal plant proposals said the Jamestown project had the advantage of being a smaller demonstration project, requiring less money while still allowing the state to do its part to advance a potentially important new source of electricity.

"It's affordable because of its size, but it's big enough to be meaningful," said Charles McConnell, a Praxair vice president who has been working on the Jamestown project.

Huntley supporters aren't giving up, either. "I don't necessarily take it as a sign it reflects negatively" on the Huntley proposal, said Robert Dimmig, the executive director of the Town of Tonawanda Development Corp.

But the Huntley project still needs to close a price gap that NRG officials have pegged at more than $400 million, through additional aid, cost cuts, lower-cost financing through the New York Power Authority or extending the term of the proposed power purchase agreement with the power authority from 20 years to 30. The issue needs to be resolved by July, barring an extension.

"We're still working with NYPA to close that financial gap," said Lori Neuman, an NRG spokeswoman.

e-mail: [email protected]

Originally published by NEWS BUSINESS REPORTER.

(c) 2008 Buffalo News. Provided by ProQuest Information and Learning. All rights Reserved.