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Is Showdown in Offing over Nuclear Subsidies in New Jersey?

Foes worry that those in favor of scheme will try to push a bill through in lame-duck session

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In what is likely to be the opening salvo of a nasty legislative battle, lawmakers will convene early next week to discuss how to prevent the state’s nuclear plants from shutting down prematurely.

The bigger and unanswered question is whether they also are planning to act on a yet-to-be-introduced bill that some say could provide up to billions of dollars in ratepayer subsidies to the Public Service Enterprise Group over the next decade.

The Senate Environment and Energy Committee and Assembly Telecommunications and Utilities Committee plan to hold a rare joint session Monday on economic challenges facing nuclear power plants, an issue that is splintering the energy sector not only here but in Washington D.C. and elsewhere.

News of the joint hearing yesterday jolted a coalition opposed to efforts to prop up nuclear units. They fear the proceedings may foreshadow a legislative initiative to award lucrative financial incentives to PSEG and Exelon, (a co-owner of two of the plants) during the lame-duck session, which ends early in January.

“We’ve seen this special-interest strategy before on bad bills,’’ said Jeff Tittel, director of the New Jersey Sierra Club, an opponent of subsidies to nuclear plants. “It’s how a bad bill gets passed in a lame-duck session.’’

Addressing subsidies

Assemblyman Wayne DeAngelo (D-Mercer), the chairman of the Assembly committee, however, discounted that scenario, at least for now. “At this point in time, I don’t have a bill,’’ he said, although conceding the issue of subsidies would likely be addressed during the hearing.

Sen. Bob Smith (D-Middlesex), the chairman of the Senate panel, did not return a call seeking comment. In the past he has been guarded about the subject, saying only the issue is being studied.

A quick fix is still possible, if the political will is there. After today’s session, the Legislature only has seven scheduled days in the current term. Foes, however, say the issue is too important to be tackled in a lame-duck session, although it would not be the first time for it to happen.

“I haven’t seen a bill of this magnitude go through this quickly in this kind of time period,’’ said James Benton, the longtime executive director of the New Jersey Petroleum Council. “There’s a lot of information that we don’t have at this point.’’

A look at the books?

To opponents, that includes a more informed look at the actual finances of the nuclear plants operated by PSEG, which even the company concedes are profitable today. Given economic trends in the energy sector, however, they could no longer be cash-flow-positive in the near future, according to the company.

In a statement, PSEG said it looked forward to a thorough and thoughtful consideration of nuclear power’s role in New Jersey.

“The current market structure does not recognize the resiliency and environmental benefits that nuclear provides,’’ said Michael Jennings, a spokesman. “Those benefits are substantial and losing nuclear would have significant consequences for the state.’’

Jennings added the company believes it will ultimately cost consumers less to preserve nuclear than replace it. The three plants provide electricity to 3.8 million homes in New Jersey.

New Jersey would not be the first state to financially back nuclear power plants. Both New York and Illinois have approved ratepayer subsidies to keep nuclear units operating in those states. In the former, the subsidies amount to nearly $1 billion over two years.

The Trump bailout

Meanwhile, the Trump administration is pushing a plan to bail out coal and nuclear units before the Federal Energy Regulatory Commission, which is supposed to act on the proposal within two weeks. PJM Interconnection also recently proposed a plan to prop up power prices in the regional electric grid serving more than 60 million people.

For more than a year, PSEG has been lobbying policymakers, legislators, and others for financial help to keep its three nuclear plants in South Jersey afloat. The company’s executives say the units, which provide nearly half of the electricity in the state, are important as a carbon-free source of power as well as crucial to ensuring reliability of the grid.

The economic challenges confronting both coal and nuclear are being driven by cheap natural-gas supplies, which have made it difficult for the other fuels to compete with gas.

Critics say the issue has too many implications for the energy sector to decide what needs to be done so quickly.

‘’With the incoming Murphy administration, the future of the nuclear industry should be part of a broader energy planning process — and New Jersey ratepayers shouldn’t get stuck with a bailout in the final weeks of the Christie era,’’ said Doug O’Malley, director of Environment New Jersey.

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