Judge Allows CPV Valley Energy Center to Operate While Appeal of DEC Ruling is Heard

John Jordan | August 8, 2018

An aerial view of the CPV Valley Energy Center in Wawayanda.

WAWAYNADA, NY—The decision by the New York State Department of Environmental Conservation last week to deny a critical air quality permit had all but shut down operations at the fledgling and controversial CPV Valley Energy Center here until a state judge a day later allowed the plant to continue operations, at least for now.

Knowledgeable sources tell Real Estate In-Depth that Competitive Power Ventures, the owner of the 680-megawatt gas-fired power plant, was surprised by DEC’s denial of a renewal of an air state facility (ASF) permit on Aug. 1 that halts operations at the plant.

The DEC released a statement that noted, “DEC denied this request because the current permit does not meet current ‎regulatory requirements. Specifically, revisions of the applicable regulations now require a Clean Air Act Title V permit to operate this type of facility and this facility has not submitted an application for, nor has been granted, this type of permit.”

The DEC continued, “Facilities of this size and nature must be subject to the most rigorous air pollution controls to ensure the public is protected, and Title V permits provide for greater transparency and community input prior to authorization.

Tom Rumsey a Competitive Power Ventures spokesman, told Real Estate In-Depth, “At each step of the process, we have worked collaboratively with regulators at every level of government. As the Supreme Court-State of New York stated in 2013 when the NYDEC defended our permits in court, the agency acted on a ‘rational basis’ when issuing the facilities permits.”

He continued, “The CPV Valley Energy Center will reduce emissions, lower rates, and help New York State meet its goals for clean energy. We remain committed to operating within all applicable operating permit requirements and look forward to working with the DEC to address any concerns they may have.”

The company did not comment if it would take any legal action in connection with the ASF denial on the company’s $900-million plant.

UPDATE:  State Supreme Court Judge Roger D. McDonough ruled earlier this month that CPV can continue operations while an appeal of the DCE’s ruling is pending. CPV Valley Energy Center sent a request to the DEC asking for an adjudicatory hearing on the denial, charging that it had up to a year after the commencement of operations of the energy plant to file for the Title V permit.

In its Aug. 2 letter to a number of DEC officials, Donald Atwood, asset manager representative for CPV Valley Energy Center, stated that since the DEC denial does not state that the renewal application for the Air State Facility permit was not timely or sufficient, CPV believes that per state regulations,  “the facility may continue to operate under its Air State Facility permit until such time as final agency action is taken on the department’s decision, and all appeals of such decision have been exhausted.”

Much of the controversy that surrounds the project stems from the conviction earlier this year of former Gov. Andrew Cuomo aide Joseph Percoco.

Percoco, a former executive deputy secretary to Gov. Cuomo, was found guilty of soliciting and accepting more than $315,000 in bribes in return for assisting Competitive Power Ventures Inc. of Silver Spring, MD and Syracuse, NY-based real estate developer COR Development in business dealings with New York State. Percoco, 47 of South Salem, was convicted of conspiracy to commit honest services fraud and solicitation of bribes and gratuities.

After an eight-week trial, the jury was deadlocked on corruption charges against former CPV executive Peter Galbraith Kelly Jr. COR executive Steven Aiello was convicted of conspiracy to commit honest services fraud, while another COR executive Joseph Gerardi was acquitted of all charges against him. Kelly in May pled guilty to one count of fraud conspiracy.

The project also suffered a setback earlier this year when it could not come on-line as planned due to delays incurred in completing a 7.8-mile lateral pipeline to the existing Millennium Pipeline.

The corruption issues surrounding the project caused the environmental group Riverkeeper and Orange County Executive Steve Neuhaus back in April to ask DEC to either revoke or at least suspend state permits for the completed CPV Valley Energy Center project.

Both Riverkeeper and Neuhaus supported the DEC’s ASF denial. Richard Webster, legal director of Riverkeeper said, “I applaud Governor Cuomo and DEC Commissioner Basil Seggos for standing up for the health of all New Yorkers, for the integrity of the permit process, and for protecting the environment of New York State and beyond. This is the kind of leadership we need as we combat climate change and convert to clean energy.”

Neuhaus stated, “Orange County appreciates that the state is taking a hard look at CPV and agrees with us that the power plant’s permit should not be renewed. We now need our Congressional officials to make sure that the federal government does not give out the federal permit. The EPA should take note of the corruption surrounding CPV and vigorously review it before even considering any federal permits.”

New York State Senator Terrence Murphy on Aug. 5 called on the New York Independent Systems Operator (ISO) to revise its December 2017 reliability study regarding the replacement of Indian Point in light of the DEC’s denial of the ASF renewal permit.

“NYSEG (New York State Electric & Gas) can barely keep the lights on when the wind blows, but the NYISO has said that their demand forecasts are getting lower,” Sen. Murphy said. “For the people in northern Westchester and the Hudson Valley, demand for reliable electrical service has never been greater. The continued failures of NYSEG further call into question assumptions made by the Indian Point Closure Task Force that our transmission infrastructure is in any shape to provide electricity reliably once the plant closes, which is our only contingency plan after the denial of CPV.”

The NYISO study suggested that the power grid would remain “reliable” if three fossil fuel powerplants, including CPV and Cricket Valley, which is under construction in Dutchess County, were built to replace the nuclear energy at Indian Point, which will be ceasing operations in 2020 and 2021.

“We already had a major problem with our transmission infrastructure in Westchester and the Hudson Valley that both NYSEG and the Public Service Commission have failed to address,” Sen. Murphy said. “Now we are blowing a second hole in our energy plan by eliminating a prime power generator when we cannot even get replacement generation projects approved. The Hudson Valley already sits just below a well-known bottleneck in our transmission grid, and now that we are losing a major generator with no replacement in sight, people cannot be reasonably expected to believe we are prepared to replace Indian Point when the power companies are proving they don’t have the proper staff or training to perform proper tree maintenance, upgrade our transmission capacity or provide regular service.”

John Jordan
Editor, Real Estate In-Depth