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NRG to resume Dunkirk, N.Y. power plant conversion from coal to natgas

Nov 21 (Reuters) - NRG Energy Inc (Frankfurt: A0BLR4 - news) said on Monday it intends to resume development work on its plan to refuel the mothballed power plant in Dunkirk, New York from coal to natural gas.

NRG said it would pick up the project so long as other stakeholders were also prepared to move forward now that Entergy Corp and others sought to dismiss their lawsuit challenging the state Public Service Commission's (NYPSC) approval of a contract between Dunkirk and National Grid Plc (LSE: NG.L - news) .

"The court will need to act to permanently dismiss the lawsuit. Once that happens, NRG will re-engage key project stakeholders," NRG spokesman David Gaier said.

Those stakeholders include the NYPSC, National Grid, National Fuel Gas Co, and others.

"Assuming they confirm their previous commitments to the project, which we believe they will and which are critical to the project's development, NRG can move forward," Gaier added.

Construction on the three out of the four units that NRG plans to convert to gas, totaling 435 megawatts, would take about two years once required permits and approvals are in place, he said.

UK energy company National Grid owns the local distribution company in upstate New York that agreed to buy power from Dunkirk. National Fuel Gas would build the pipeline to the plant.

The lawsuit against the NYPSC alleged, among other things, that the deal between Dunkirk and National Grid would have artificially suppressed prices in the state's wholesale power market, which is overseen by federal energy regulators. That would have hurt the revenue of other power producers, like Entergy.

Entergy, of New Orleans, owns the Indian Point and FitzPatrick nuclear power plants in New York state.

The NYPSC last week approved Entergy's plan to sell the FitzPatrick reactor to Exelon Corp.

Exelon, which already operates the Nine Mile and Ginna nuclear power plants in New York, agreed to buy FitzPatrick after the NYPSC approved a plan that would provide billions of dollars in subsidies to upstate nuclear reactors.

However, NRG and other power producers have challenged that nuclear subsidy in a federal lawsuit. (Reporting by Scott DiSavino)