RG&E plant may be up for sale soon

Anybody want to buy an old, defunct coal-fired power plant?

Rochester Gas and Electric Corp. could soon be looking for a new owner for the 58-year-old Russell Station power generating plant, surrounded by Greece residential neighborhoods, parkland and a golf course. Spanish energy giant Iberdrola SA agreed last month that it would cede to state Public Service Commission requirements and sell several RG&E power generating facilities, including Russell Station, if allowed to buy Energy East Corp., which owns both RG&E and New York State Electric & Gas Corp.

If that purchase goes through — an issue in some doubt as Iberdrola is complaining about what it sees as onerous state regulatory hurdles — Iberdrola also would have to shed a power station in Allegany County and small facilities on Buffalo Road and at the Beebee Station at High Falls.

For a decade, the state has had a regulatory policy requiring that utility companies such as RG&E get out of the power generation business and focus on power transmission. The idea is to prevent utility companies from operating their systems in a way that would favor their own power, said David Johnson, an Albany lawyer and outside legal counsel for the Independent Power Producers of New York.

That would leave Iberdrola looking for a buyer interested in a power plant needing substantial work in order to deal with emissions issues. RG&E had planned to spend as much as $500 million over the next five years converting the plant to run on natural gas. Currently three of its four coal-powered generators are off and the fourth is scheduled to be shut down this year.

Despite its age and environmental issues, the plant is not a white elephant. Jeff Mayer, president of Connecticut-based energy broker MXenergy, said that even with such baggage, the plant likely would attract a number of bids from companies in the power-producing business.

But a retooled Russell Station plant won't be producing cheap power, Mayer said.

"Converting this plant from cheap coal to increasingly expensive natural gas is not going to result in lower prices," he said.