Coalition Dismisses PSEG’s Threat to Close Nuclear Units as a ‘Scare Tactic’
New group of businesses, consumer advocates, and environmentalists says company must open its books and prove they're losing money on nuclear
A coalition opposed to handing out ratepayer-funded subsidies to Public Service Enterprise Group for its three nuclear power plants yesterday accused the company of using scare tactics — threatening to close the units — to increase its profits.
In what is shaping up to be a bruising battle in the coming months, the coalition, made up of businesses, consumer advocates, and environmentalists, argued the financial incentives sought by the company would boost New Jersey’s already high energy costs.
“PSEG is pursuing a bailout simply because it is not earning enough from its nuclear fleet,’’ said Steven Goldenberg, a lawyer representing the New Jersey Large Energy Users Coalition, part of the New Jersey Coalition Against Nuclear Taxes. He speculated the subsidies could range up to $400 million a year.
The emerging fight, similar to debates occurring nationwide, centers on the changing market conditions in the energy sector that have left nuclear power plants unable to compete with cheap natural-gas units, which have now become the dominant source in providing electricity.
Looking for lucrative subsidies
The trend has shuttered a half-dozen nuclear units across the nation, and led owners of other plants to press state, regional, and federal officials for lucrative subsidies — PSEG included. In New York and, such efforts have succeeded; in other states, like Connecticut, they have stalled.
Here in New Jersey, PSEG has been lobbying state policymakers quietly for more than a year over the issue, although no specific legislation has emerged. Without the subsidies, the company said it may, a prospect it says would lead to higher prices for customers, and hobble the state’s efforts to curb greenhouse-gas emissions.
But coalition members countered that the company has failed to prove its plants are not making money and needs to open its books, before any subsidies or other incentives are given to them.
‘A scare tactic’
“Absent any real financial data, it’s a scare tactic,’’ said Dennis Hart, executive director of the Chemistry Industry Council of New Jersey. “This bailout will cause businesses to cut expenses, and possibly lay off employees.’’
Michael Jennings, a spokesman for PSEG, said the company has been transparent, noting it acknowledges the plants are profitable now but that is because the power was presold at a time when prices were higher than current market prices.
“As those contracts expire over the next couple of years, the plants will cease being profitable unless market prices rebound,’’ Jennings said.
The coalition also questioned whether the company would close the units, as it has repeatedly threatened. They noted that the units are obligated to provide power for the next three years under a contract with PJM Interconnection, the operator of the regional power grid.
In stating their case against any subsidies, the coalition members also cited recent history when PSEG secured $3 billion in payouts over more than a decade from ratepayers to cover so-called stranded costs when the state deregulated the electricity market. At the time, PSEG claimed its plants would be unable to compete in the new marketplace, but, in fact, thethe company’s earnings because of then high natural gas prices.
Those stranded costs only disappeared last year, said Goldenberg, who added that the new subsidies — dubbed zero-emission credits — have the potential to be a cash cow for PSEG.
Others are worried the subsidies would hinder the state’s efforts to promote renewable energy and other sources of clean energy.
“Our concern is New Jersey in providing a nuclear bailout, it is going to crowd out funding for other areas, like energy efficiency,’’ said Doug O’Malley, director of Environment New Jersey.