The Long Island Power Authority said Thursday it has reached an agreement with National Grid to shut down antiquated steam-generating power plants at Far Rockaway and Glenwood Landing, allegedly saving ratepayers $76 million through 2015. In justifying the retirement of these plants it is not clear what proportion of the estimated $76 million in savings comes from elimination of capacity payments, operating costs or tax payments. From LILCO’s experience in retiring a unit in Glenwood in the late 70’s and also because equipment will continue to function at the sites, all of the yearly $24 million in tax payments now paid will not be saved. The big question is will LIPA or GRID make the tax payments on the existing gas turbines on each site that will continue to operate and did LIPA reach out to the Nassau County Assessor to determine if any property tax savings would indeed be achieved?
Remediation at both the Glenwood and Far Rockaway sites may be much more of a challenge than GRID and LIPA are assuming. For example, many environmentally abusive operations took place at Glenwood over the years, much of it even before the advent of any environmental regulations. When LILCO demolished the first unit at Glenwood, it found considerable coal residue even though the plant had stopped burning coal many years before. It is expected that National Grid will encounter similar surprises. Who has the liability for this, Grid or LIPA?
Finally, with the retirement of these plants, additional power capacity and transmission will be required to meet reliability standards. Has the cost for this been factored into the estimated $76 million in savings from the retirement or is that just a result of eliminating the current charges under the power supply agreement? Capacity and new transmission would be very expensive and could potentially wipe out any savings from the retirements.
Matt Cordaro Co-Chairman LOSC