Old N.Y. power plants returning to service to meet future needs

Oct 3 (Reuters) - Several power companies have told New York's electric grid operator over the past month they want to return old power plants to service in part to meet a potential supply deficit expected near the end of the decade.

The New York Independent System Operator (NYISO) in September said the power system is reliable, but projected a need for additional resources in 2019 due to planned generator retirements and growth in demand.

Over the past month, several generators told the NYISO they would return some units to service. This reversed decisions made years ago when future power prices were expected to remain below levels they have since reached.

Danskammer Energy LLC, a unit of Swiss trading company Mercuria, said it would return the 500-MW Danskammer plant by the end of 2014, refueled to run primarily on natural gas with fuel oil as a backup.

The Danskammer plant, located along the Hudson River about 60 miles north of New York City, shut in November 2012 due to damage from Hurricane Sandy. Units (HKSE: 0405.HK - news) 1 and 2 were primarily fueled by oil, while Units 3 and 4 were primarily fueled by coal.

Danskammer said on its website it will no longer use coal at the plant.

Astoria Generating Co, a unit of privately held Tenaska, of Nebraska, said it is repairing the 180-MW Unit 20 at the Astoria plant in Queens, which the company mothballed in 2012, and plans to return the unit to service in time for the summer of 2015.

Selkirk Cogen Partners, meanwhile, said it was withdrawing its February notice of intention to mothball the 345-MW Selkirk I and II facility located in Bethlehem near Albany.

Binghamton BOP LLC also said it planned to return its 48-MW gas-fired turbine during the fourth quarter of 2014. The unit was retired in 2012. Binghamton BOP is a unit of Wellhead Electric Co Inc.

COAL TO GAS REPOWERING

The New York Public Service Commission in June approved of NRG Energy Inc (NYSE: NRG - news) 's proposal to repower the 445-MW Dunkirk Units 2-4 from coal to gas.

The 75-MW Unit 2 is the only unit operating at Dunkirk under a reliability contract with a unit of National Grid Plc (LSE: NG.L - news) . The unit is still burning coal fuel at this time.

NRG expects to complete the repowering of the three units with gas by the autumn of 2015. The 75-MW Unit 1 meanwhile will remain mothballed.

NRG said it has no plans to burn coal at Dunkirk in the future. However, if needed, it could burn coal but only after a lengthy process that could take months to acquire fuel, train the staff and put the coal handling equipment back in service.

Separately, the NYISO on Oct. 1 issued a request for proposals for solutions to address generation and transmission deficiencies projected over the next decade, according to a newsletter by the American Public Power Association, an industry group representing public power companies. (Reporting by Scott DiSavino)