Friday, September 28, 2012

Hess wins key air permit for gas power plant in Newark

Hess Corp logo 

New Jersey environmental regulators have approved a key air pollution control permit
that will enable the Hess Corp. to build a 655-megawatt, natural gas-fired power plant
in Newark, NJ’s Ironbound section.

Construction is targeted to begin before the end of the year, following a 45-day EPA
air operating permit review.

Opposed by environmental groups

In May, the city’s planning board voted 7-1 to approve construction of the facility over
the objections of some neighbors and environmental groups like the Sierra Club who
argued  that the Ironbound already had more than its share of industrial facilities.

"You’re taking a community that has had more impact of pollution than almost any
other place in the United States and now you’re going to put up a power plant," Sierra
Club director Jeff Tittel said. "Instead of helping a community overcome its industrial
past and move forward, you’re throwing it backward."  

But Adam Zipkin, Newark’s deputy mayor of economic development, said that the city’s independent experts had "scrutinized the potential impact of this proposed plant on
Newark’s air quality"  and found the project “ is
likely to result in a net improvement to air quality by allowing the more polluting generators in our area — the coal and peaker plants — to run less often." 

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Questions about impact on taxpayers

reports that “Under New Jersey’s Long-Term Capacity Agreement pilot program, or LCAPP, the Hess plant is one of three natural gas-fueled projects
eligible for payments from the state to make up the difference between price guarantees offered by the Board of Public Utilities and what utilities will pay the firms for electricity generation.

The price guarantees are meant to be incentives for the companies that build new power plants in the state, helping to lower electricity rates for residents. But critics of LCAPP are taking aim at the newly released Board of Public Utility contracts.

"It skews the marketplace significantly and will have lasting implications for decades," said Glen Thomas, president of PJM Power Providers Group. The organization aims to promote competitive wholesale electricity markets in the served PJM Interconnection Inc.'s 13-state regional power grid.

In 2015, when a 15-year contract with CPV would begin, the state would pay the company nearly $30 million as a result of the subsidy program. That could potentially pave the way for more payments in subsequent years, as long as the market price for capacity stays below the state's price guarantees.

For Hess, which has a contract starting in 2016, the first payout could be around $12 million, according to calculations based on data provided by the BPU. In the cases of both generators, Thomas said, "New Jersey ratepayers are now on the hook for the next 15 years to be paying what's likely to be a very substantial premium." 

Job creation and economic benefits to Newark

The plant is expected to bring 400 new jobs during the three years of construction and 26 when it becomes operative, according to John Schultz, vice president of Energy Operations for Hess.

Hess promises to pay the city about $100 million over the next 30 years.

The Star-Ledger reports that the first $25 million will come right away in easements, environmental programs, a boiler replacement program and rehabilitation of the Ironbound Stadium.  The rest will come in payments in lieu of taxes — $2.6 million a year over the course of 30 years.

The $750 million plant would be erected near Newark Bay on a site, near a police firing range and the Essex County Correctional Facility, where Hess currently has maintains storage tanks. The property is a mile from the nearest private residence. 

Related stories

Newark power plant secures environmental approval
If Newark gets new power plant, do residents get shaft?

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