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A new LIPA power plant could cost hundreds of millions and impact older plants

An aerial photo of LIPA's Caithness facility in

An aerial photo of LIPA's Caithness facility in Yaphank shows the large rectangular parcel about the same size as the plant directly adjacent to the now operating facility on June 6, 2013. Credit: Doug Kuntz

LIPA's plan for a new 752-megawatt power plant in Yaphank would require substantial upgrades to the regional electric grid to deliver the greater output across Long Island -- work that could cost hundreds of millions of dollars and result in older plants being used less.

Electric grid upgrades would allow the Long Island Power Authority to transmit its power as far west as Nassau County, LIPA said.

The power output by the new plant, called Caithness II, would be "delivered across the electric system, and some displacement of Northport generation can be expected, especially during off-peak periods," LIPA spokesman Michael Deering said.

LIPA, PSEG Long Island and state regulators are still studying the needed upgrades and costs for Caithness II, officials said, and a final decision on the $3 billion-plus project may not come until year's end.

Newsday has previously reported estimates that electric grid and gas transmission upgrades for the Caithness II project could cost at least $300 million each. A LIPA official at a recent committee meeting of the board of directors, without referring specifically to Caithness II, indicated costs could be higher.

"We may need a new generator, and it may cost so much money, but the transmission may cost actually more," Charles Weliky, director of transmission and distribution operations at LIPA, said at the meeting.

Caithness Long Island Energy, the company that will build and own the natural-gas fueled plant, has said in official filings that Caithness II would cost $1.09 billion to build and equip. Newsday has reported the longer-term cost to LIPA ratepayers is expected to exceed $3 billion. The higher cost includes property taxes, financing costs and the plant owner's profit, among other items. Each megawatt can power 800 homes.

But Ross Ain, president of Caithness Long Island Energy, said the plant over its 20-year contract with LIPA would save ratepayers around $1.7 billion because of its more efficient operations.

Caithness outlined the needed upgrades in documents filed earlier this year.

"Some of LIPA's transmission system and associated substations would require replacement, upgrades or additional equipment to enable energy from the proposed power plant to be safely distributed across LIPA's three operational segments," the documents state.

Last week, the Suffolk County Planning Commission gave its nod to the Caithness II plant at a hearing in Riverhead. Residents who opposed it implored the commissioners to reject it.

"This is the wrong site," said Annette Kattau, 71, of Patchogue. "It's the last thing we need in Yaphank."

Commissioners, while expressing concern over the need for the plant, the clear-cutting of trees and the need for a new natural gas line, approved it unanimously.

The plant's energy isn't necessarily needed in Yaphank. The original Caithness plant is a frequently used, 350-megawatt facility that has taken on a greater share of the region's energy production. That's because, while more expensive to lease than older plants, it produces power more efficiently. Caithness II's value would come from moving the energy west.

Without the grid upgrades, "you're limiting the [plant's] impact because you can't move the energy to market," said a person familiar with the LIPA plan, saying it would provide "tremendous benefits" over the long term by eliminating pockets of high use around Long Island that require a nearby, older plant because there are insufficient power cables to feed them remotely.

Huntington Supervisor Frank Petrone, whose town includes the Northport plant, suggested LIPA consider the more "viable solution" of overhauling the Northport plant or building a Caithness II-style plant on the Northport property.

"This option would minimize the transmission issues and preserve the generating facility that has been the workhorse of Long Island's electricity production for decades," he said.

Support for power plants in places such as Northport and Port Jefferson comes largely from the tens of millions of dollars LIPA pays each year in property taxes on the facilities -- taxes LIPA is currently grieving. As plants are used less -- two have been retired in the past several years -- LIPA's case to sharply reduce those taxes grows stronger.

The Caithness II grid upgrade plan would require renovating, expanding or building entirely new substations to accommodate all the new power and "provide optimum power transfer capability to all regions." Most of the new work would be in LIPA's central and eastern regions.

"Some of the projected LIPA system improvements would require connecting selected substations within the three regions to new or upgraded transmission lines capable of transmitting the power safely," the documents state.

LIPA and Caithness officials said the costs are not yet known.

Concerns about Caithness II's potential to idle another Long Island plant has been high on the minds of residents of Port Jefferson, who want LIPA to overhaul a National Grid-owned power station in that village.

Lower-cost operations of the Caithness I plant have led to further declines in the use of the Port Jefferson power plant. Public officials from Sen. Kenneth LaValle (R-Port Jefferson) to Mayor Margot Garant are pushing hard for a new feasibility study to overhaul the plant before Caithness II is built.

Garant said she has seen outside cost estimates for system upgrades of $300 million each for electric and gas transmission lines to the plant. But given the scope of work outlined in the documents, she said, those numbers "could be too low."

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