August 31, 2014

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Avon Lake mayor says Genon will stay open

AVON LAKE — The Genon power plant, scheduled to close in April 2015 and take its tax dollars with it, will remain open albeit in a reduced role for the power grid.

Avon Lake Mayor Greg Zilka on Monday said NRG Energy, which acquired the plant earlier this year, will keep the plant open, and it will make it worth the while to do so by adding a natural gas component to the coal-fired plant. Genon had announced the plant’s closing in February 2012, saying it would be forced to spend hundreds of millions of dollars to comply with stricter federal EPA regulations.

The apparent reversal of the plant’s fate was made during an early morning online press conference by NRG.

“Our current projections show that the addition of natural gas fueling capability will allow the (Avon Lake) station to meet upcoming strict environmental regulations and continue economic operations,” NRG regional spokesman David Gaier said in an email.

The project will be dependent on various regulatory approvals, with the main one being an updated air permit from the Ohio Environmental Protection Agency, Gaier said. The work is expected to be done in May 2016 pending such approvals.

In the meantime, NRG will seek an extension from the Ohio EPA to permit it to operate the plant on coal from approximately April 2015 to May 2016, Gaier said.

The project is expected to create an estimated 50 to 100 temporary construction jobs that would last from six to nine months.

The change is expected to lead to a reduction in manpower at the plant from the current 75 employees to 35 to 40, according to Gaier.

“This is big news for us although we’re taking a cautiously optimistic approach to it,” Zilka said. “There’s a lot that has to happen before this becomes a reality but we’re definitely hoping that it does.”

NRG is terming the change “a gas addition, not a gas conversion,” Gaier said.

But the switch will require new gas lines to be run below ground between the Lake Road facility and the source of, or a connecting point to, an existing supply of natural gas.

“We’re not sure where that supply will come from at this point, but NRG apparently feels converting the current boilers to natural gas is a relatively easy thing to do,” Zilka said.

“It’s my understanding it would serve as more of a backup or support plant instead of a trunk (or main) plant,” Zilka said. “That in itself suggests property and utility tax revenues will be less than in the past, but it’s certainly better than closing it down.”

The statement issued by Gaier said NRG would work to obtain “appropriate reductions in future property taxes to coincide with the diminished plant operating profile of shifting to a peaker plant.”

A peaker plant is one that generates more electricity on days when more power is needed, such as extremely hot days that would put greater demands on generation of electricity to run air conditioning.

NRG Energy merged with Genon Energy Inc. in December in a $1.7 billion stock deal that created the nation’s biggest independent power producer.

Both corporations are based in Houston, Texas.

“NRG has a history of investing in solar and wind energy,” Zilka said. “They seem to be a bit more progressive in that regard.”

Zilka said word that the plant would remain was a surprise — albeit a welcome one. There’s no truth, he said, to rumors he heard around town that the city had known some time ago about the decision.

“There are already rumors out there that we knew this was going to happen and the plant would stay open and we kept our mouths shut about it to help the (school) levy pass,” Zilka said. “We had no idea this was going to happen.”

Avon Lake voters approved a hefty 8.28-mill, 10-year emergency operating levy in May that forestalled elimination of art, music and physical education classes, and fewer textbook purchases.

The levy was deemed critical in light of the loss of roughly $7 million in tax payments to the schools resulting from devaluation of residential and business property. Of that amount, approximately half came from a $3.5 million devaluation of the Genon plant.

Avon Lake Schools Superintendent Robert Scott could not be reached for comment Monday.

Contact Steve Fogarty at 329-7146 or sfogarty@chroniclet.com.