PSEG Files Application for Fourth Facility at Nuclear Site

With the filing of an Early Site Permit, NJ energy giant takes a small first step in what could be
a 13-year, $15 billion journey

Public Service Enterprise Group has invested $100 million exploring the possibility of building a nuclear power plant at the site of its Salem and Hope Creek reactors in Lower Alloways Creek.

But that investment over two-and-a-half years has still not answered a more pressing question: Is it willing to ante up another $10 to $15 billion to build a fourth unit at the remote site on the Delaware River in Salem County. The 740-acre installation already comprises the second largest nuclear generation facility in the country.

Credit: PSEG
PSEG has taken the first step in what could be a very long journey, adding a fourth nuclear reactor to its Salem and Hope Creek facility.
Nonetheless, PSEG Power and PSEG Nuclear, two subsidiaries of the Newark energy giant, today filed an Early Site Permit application with the U.S. Nuclear Regulatory Commission, the first step in the lengthy process to determine if a new plant is viable, company officials said.

“Though this is not a commitment to build, it would determine that the location we have identified for a potential new plant is suitable from a safety, environmental and emergency planning standpoint,” said PSEG Power president Bill Levis in a statement issued by the company.

Making Economic Sense

A more important concern, according to analysts and environmentalists, is whether a new nuclear plant makes economic sense, given the enormous capital costs required to build a new reactor, which has not been done in this country since 1996.

“These projects are not cheap,” said Paul Patterson, an energy analyst who follows Public Service. “I don’t think the company will break ground until they get a lot more clarity on the economics and the regulatory process.”

Dave Pringle, a lobbyist for the New Jersey Environmental Federation, agreed in part. “What kind of federal subsidies does it receive?” he asked. “Because it cannot stand on its two legs without it.”

PSEG’s nuclear power plants—it owns part or all of four units in New Jersey and Pennsylvania—have proven to be cash cows for the company, helping PSEG Power earn a record $1.1 billlion in 2009. Nuclear power provides about 20 percent of the New Jersey’s electricity needs.

Business groups, who have long pressed for more power plants to be built in New Jersey to maintain reliability of the power grid, welcomed the move by PSEG.

“We are very supportive of nuclear power,” said Sara Bluhm, a vice president of the New Jersey Business & Industry Association. “Business needs more power plants to keep the electricity flowing.”

A Long Review

But given the lengthy review process, it will be a long time before any plant is built in Salem County. The ESP application, which comprises more than 4,000 pages, could take two to three years to complete. And it could take as long as 13 years for the plant to come on line if it wins all the approvals, according to Joe Delmar, a spokesman for PSEG Nuclear.

Many other questions need to be answered before that happens. The company has not yet decided which of the new generation of nuclear technologies it will employ, Delmar said. As a result, the application uses a so-called plant parameter envelope for the site, acknowledging a variety of possible plant design could be accommodated at the proposed location. That allows the company to qualify the site for potential development without selecting a specific reactor technology.

The company also has not yet decided whether it will seek a partner to share the risk and profits of building a new unit at the site or whether it might opt to build two units at the location, Delmar said. “It’s too early in the process,” he said.

At a recent energy forum in New Brunswick, however, a top PSEG executive talked about the risks associated with building a new nuclear plant, citing how expensive would be and the potential debt it would entail for the company.

Typically, too, projects with this kind of price tag are not given the green light unless a company building the plant secures some kind of long-term power purchase agreement from local entities to assure the financial community the economics of the project make sense.

Another Uncertainty

The other uncertainity associated with the project involves the new administration’s stance on nuclear. Under the Corzine administration, a draft energy master plan seemed to tilt in favor of building another nuclear unit in the state, but the final plan was much more neutral on the nuclear issue, Pringle noted.

“The first term of the Christie administration will determine if the Governor is pro-nuclear,” said Pringle, whose organization endorsed the Republican in the fall election, “or if nuclear plants have to play on the same playing field as everyone else. If so, it will never be built.

In a press release announcing the application, the company said a new plant would have a major economic impact on Salem County and the entire state of New Jersey. PSEG Nuclear is already Salem County’s largest employer, providing more than 1,500 jobs. According to the Nuclear Energy Institute, a new nuclear plant could generate up to 4,000 jobs during construction and anywhere from 400 to 700 permanent jobs when operational.

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