By Scott DiSavino
(Reuters) - New York utility regulators on Thursday approved a proposal to seek 1,350 megawatts (MW) of generation or transmission later in March to keep the power grid reliable in case Entergy Corp's Indian Point nuclear power plant is closed.
The New York Public Service Commission (PSC) staff said that if the 2,037-MW plant shuts in 2015 when its last reactor operating license expires, the additional power would be needed by the summer of 2016.
One megawatt can power about 1,000 homes.
The PSC said it was not taking a position on whether Indian Point, which produces about a quarter of the power used in New York City, should shut down.
New York Governor Andrew Cuomo wants the two reactors at Indian Point to shut when their operating licenses expire in 2013 and 2015 in part because the plant is within the heavily populated New York metropolitan area, which is home to about 20 million people.
The U.S. Nuclear Regulatory Commission (NRC), which regulates the country's nuclear power plants, has said Indian Point is safe.
Entergy is seeking new 20-year operating licenses from the NRC for the Indian Point reactors.
The NRC is not expected to decide on the license renewals for at least a few years, in part because it will take the agency a lot of time to hear arguments by mostly environmental groups and the state against the plant's continued operation.
"No one can predict how this will transpire," PSC Chairman Garry Brown said during the meeting, noting, "If Indian Point is closed in 2015, we will have reliability concerns."
The proposal the commissioners approved included a so-called "halting mechanism" that will allow the commission to stop or delay a project if Indian Point continues to operate and the additional power is no longer needed.
In the wake of Hurricane Sandy, which left millions of New Yorkers without power, the PSC in November ordered New York power company Consolidated Edison Inc to work with the state-owned New York Power Authority (NYPA) to develop contingency plans in case the Indian Point nuclear plant shuts.
Con Edison and NYPA filed their plan with the PSC in early February. The plan recommended that Con Edison and NYPA upgrade three transmission lines and the need for 1,450 MW of generation or transmission resources. The PSC on Thursday took up the need for the generation or transmission resources.
Con Edison said the transmission projects would cost about $500 million.
The PSC staff determined that 100 MW of resources could come from energy efficiency efforts and therefore reduced the amount of generation or transmission needed to 1,350 MW from Con Edison and NYPA's proposed 1,450 MW.
If the request for proposals to supply the 1,350 MW of generation or transmission goes forward in March, the PSC staff said bids could be due in May, allowing the staff to make final recommendations to the commissioners by about September.
Several energy companies have already proposed power plants and transmission lines that could partially replace Indian Point, including units of NRG Energy Inc, Brookfield Asset Management Inc, BP Plc, Calpine Corp and Iberdrola SA.
Entergy has criticized the plan, saying the alternatives would not replace the economic value of Indian Point or the air quality benefits it provides.
"Rather than asking New York customers to pay hundreds of millions of dollars for a contingency plan that might not be needed, New York could support the license renewal effort for Indian Point now pending at the NRC to help ensure that this safe, clean, and reliable resource remains part of New York's energy portfolio," said Entergy spokesman Jim Steets.
Separately, the PSC staff said they expected to return to the commissioners in April with a recommendation on Con Edison and NYPA's proposal to upgrade the three transmission lines, which are located in the Ramapo area just north of New Jersey, on Staten Island and in upstate New York.
(Reporting By Scott DiSavino, additional reporting by Eileen O'Grady; Editing by Maureen Bavdek, Bernard Orr and Andrew Hay)