Middletown Council Tables Effort to Withdraw From Power Plant Agreement

MIDDLETOWN – Despite council members’ objections to plans to build a new natural gas-fired turbine at a Middletown power plant, efforts to end a tax agreement with the plant’s owner have been put temporarily on hold.

Mayor Ben Florsheim said during the Common Council meeting Monday night that Princeton, New Jersey-based NRG is open to pursuing a “mutual withdrawal or termination” from a tax stabilization agreement for the company’s power plant on the Connecticut River in south Middletown, which the council approved in 2019.

The council voted to table the motion to end the agreement, and to take the measure back up by January 2022.

Florsheim said ending the agreement would cost the city some revenue because NRG is currently paying more than it would if the city were to withdraw from the stabilization agreement. He also said it would be easier to withdraw in the next fiscal year, which begins July 1, for “bookkeeping reasons.”

The tax stabilization agreement locks NRG into an annual $1.78 million property tax payment on the its real and personal property at the power plant site. The company paid about $1.6 million in 2018 and about $1.55 million in 2017, according to Middletown property tax records. 

The $1.78 million payment under the stabilization agreement would likely be less than the company would otherwise have owed if it had begun construction of the new turbine.

The tax agreement includes a clause that allows the city to terminate the agreement if the repowering project was not selected for funding through the ISO-New England forward capacity market auction in February 2021. The project was not selected in the auction.

NRG was counting on the funding from that auction in order to build the new turbine, and Florsheim said there is “no possibility” of the project moving forward until the next forward capacity auction in February 2022.

NRG announced shortly after the results of the auction were released in February that it would be selling 4.8 gigawatts worth of fossil-fuel burning assets, including Middletown and its three other Connecticut plants, to Boston-based ArcLight Capital Partners. Florsheim said that deal won’t close until the fourth quarter of this year.

Councilman Eugene Nocera said that the city should continue discussions with NRG and ArcLight to make sure they understand the council is “looking for a green solution” for the repowering project that Middletown residents and environmental groups have vocally opposed.

“We respect that [the companies] may want to join us on that,” Nocera said.

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