(Adds details of approval)
June 12 (Reuters) - The New York Public Service Commission approved on Thursday NRG Energy Inc's plan to refuel the 435-megawatt Dunkirk coal-fired power plant in New York with natural gas, the state utility regulator said.
The PSC said the project is expected to reduce emissions, "improve the reliability of the electric system and provide economic benefits to Western New York."
Under the $140 million agreement between NRG and a U.S. unit of UK power company National Grid Plc, the repowered facility will operate for 10 years. It is expected to enter service in the autumn of 2015.
The PSC said it will allow National Grid to recover the costs of its agreement with Dunkirk.
NRG will refuel three coal units at Dunkirk to generate up to 435 MW. At present, only one 75-MW unit is operating on coal, the PSC said.
One megawatt can power about 1,000 homes in New York.
The PSC said in a news release that Dunkirk, once repowered, will still be able to burn coal as a backup fuel in case gas is in short supply, which sometimes happens on the coldest winter days when utilities use most of the gas supplies to heat homes and businesses.
NRG said in early 2012 it wanted to mothball Dunkirk, which is more than 50 years old, because it was no longer economical to operate.
National Grid, however, said idling the plant would result in significant harm to transmission system reliability in western New York.
The PSC said the refueling plan will create about 50 construction jobs, preserve permanent jobs at the site, and restore tax payments to the Dunkirk community to their previous level of about $8 million annually.
(Reporting by Scott DiSavino in New York; editing by Franklin Paul and Matthew Lewis)