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Caithness study: New power plant could save millions

Ross Ain, president of Caithness Long Island Energy,

Ross Ain, president of Caithness Long Island Energy, on top of the Caithness I power plant in Yaphank on Thursday, April 16, 2015. The land behind him in the distance is the proposed site of the Caithness II power plant. Credit: Newsday / Thomas A. Ferrara

Caithness Long Island Energy Thursday released a study contending that a second power plant it hopes to build in Yaphank could save Long Island $192 million in yearly energy costs while reducing reliance on older plants and power from out of state.

Release of the report is the latest move by Caithness to rebut conclusions by PSEG Long Island that no new major power sources are needed until 2024. PSEG's findings last year put the Caithness II plant on hold while PSEG conducts a broader analysis of Long Island's power needs.

Release of the report also comes as the state Department of Public Service Wednesday released a letter to LIPA laying out a plan for the Long Island grid that recommends "innovative" green-energy solutions to offset the need for traditional power infrastructure, among other things. For instance, DPS advised that PSEG issue bid requests to address "high-priority" power deficits in Montauk, Far Rockaway and Glenwood Landing by using alternatives to traditional plants or power lines. LIPA had been eyeing small power plants for those so-called load pockets.

But the Caithness analysis, done by GE Consulting, said that opening a cleaner, more efficient plant would lower wholesale energy costs on Long Island and statewide, while cutting emissions from older plants.

The study found that rather than lead to rate hikes, as PSEG contends, the Caithness II plant's cheaper power would more than offset the plant's long-term capacity costs, leading to a 1 percent reduction in LIPA's 2019 overall costs.

The GE study shows that Caithness II is "even more economic than we had anticipated," Caithness Long Island Energy president Ross Ain said.

At a meeting at the existing Caithness plant in Yaphank Wednesday, he and other Caithness officials criticized PSEG's 2014 analysis as "one-dimensional," saying it excluded cost-savings from the 350-megawatt Caithness I plant, among other things.

Caithness contends Caithness II would reduce tri-state energy imports by around 25 percent -- potentially affecting PSEG plants in those regions.

"There's no question that delaying [Caithness II's] more-efficient clean generation continues Long Island's reliance on imports from Connecticut, New Jersey and upstate New York where PSEG has multiple generating plants that benefit from that continued reliance," Ain said.

PSEG spokesman Jeff Weir countered, "We continue to be surprised by the charge that LIPA purchases power directly from PSEG -- that is simply not true. PSEG Power has no direct contracts to sell power to LIPA."

PSEG does provide 9,853 megawatts to the 183,000 megawatt PJM market from which LIPA does buy energy, Weir said, but PSEG "has no say on to whom that power is delivered."

Before PSEG took over in 2014, LIPA in July 2013 selected Caithness after a two-year bidding process. But LIPA stopped short of signing a contract with Caithness, after revelations in Newsday and elsewhere that LIPA was planning for future energy demand well in excess of state requirements.

Caithness officials noted that LIPA's outlook had been deemed "appropriate" by state agencies, and it took issue with some costs that some say could inflate the plant's overall price tag. The anticipated $1 billion that some say the new plant would require in power-line upgrades could be forestalled, Ain said, noting LIPA had such plans to upgrade the line before Caithness II.

The GE analysis said that opening the Caithness II plant would reduce wholesale energy costs on Long Island and across New York State by $72 million and $122 million, respectively, and reduce average peak-energy prices on Long Island by around 3.4 percent.

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