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Covanta extends power contract with LIPA for 5 more years

The operator of four Long Island power plants fueled by municipal and commercial waste has extended its contracts with LIPA for another five years, even as PSEG Long Island and LIPA review energy options amid a downturn in customer use.

The four plants, in the towns of Hempstead, Huntington, Babylon and Islip, provide a combined 119 megawatts of power for the grid. A megawatt powers 800 to 1,000 homes. The contracts were set to expire beginning in August.

Under terms of an agreement with plant owner and operator Covanta Energy, the company has the option to extend the contract at five-year intervals, through 2027.

James Regan, a spokesman for Covanta, said the recent agreement extends the contract for the plants through 2022. The company owns all but the Islip plant, which it operates for the town.

Jeff Weir, a spokesman for PSEG, acknowledged the plants aren’t critical to keeping the lights on but do provide benefits.

“While we don’t need the capacity for reliability, there are economic benefits to having contracts with Covanta, as they help us meet our statewide capacity needs,” he said.

The largest plant, visible from the Meadowbrook Parkway in Westbury, processes about 1 million tons of garbage a year, while the remaining three process about 800,000 tons. The plants make most of their money by charging waste contractors tipping fees for dropping off trash.

“The primary purpose of plants is solid-waste disposal,” Regan said. “Energy is another benefit.”

Last year and in 2015, Covanta spent $232,000 lobbying the State Legislature, Gov. Andrew M. Cuomo’s administration and other agencies, relating to waste-to-energy inclusion in the state’s Clean Energy Standard and Reforming the Energy Vision initiatives, among others. Public Service Commission spokesman James Denn said waste-to-energy plants were not included in the Clean Energy Standard or the state’s Renewable Portfolio Standard.

A 1978 federal law created rules for the adoption of trash-to-energy plants, and the state Public Service Commission subsequently required the former Long Island Lighting Co. to enter into contracts with the plants, according to a 2012 LIPA resolution extending the Covanta contracts. Prices for power from the plants are set annually using LIPA’s average wholesale power costs, within set ranges.

Regan, the Covanta spokesman, declined to discuss contract terms. But the state comptroller’s website lists the contract values for each: The 72-megawatt Hempstead plant has a total contract value of $607 million; the 24-megawatt Huntington plant’s value is $204 million; the 14-megawatt Babylon plant has a value of $114 million; and the 9-megawatt Islip plant’s value is $60 million.

In 2009, the four plants provided about 4 percent of LIPA’s electric supply, or close to 900,000 megawatt hours.

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