New York this week handed lucrative subsidies to the nuclear industry to keep a trio of power plants upstate afloat, but New Jersey is unlikely to follow suit anytime soon.
Subsidies, which in this case amount to $965 million over two years paid by electric customers, are also being sought in other states across the nation as the costs of operating nuclear units have made it difficult to compete economically with cheaper gas-fired plants.
The New York system may serve a model for others wrestling with the question. Between 10 to15 nuclear power plants are at risk of closing in the near future and another half dozen already have closed, according to energy executives.
It is an issue Public Service Enterprise Group, the owner of three nuclear plants in south Jersey, is trying to raise, but it faces a bigger hurdle in getting policy makers’ attention.
PSEG CEO and president Ralph Izzo acknowledged as much during an earning call with analysts last week. For one thing, PSEG’s plants are profitable, unlike their counterparts in New York and other states, Izzo conceded. “It does impair our ability to have the same level of interest and participation in the discussion,’’ he said, when asked about prospects for similar incentives in New Jersey.
Still, the company is “engaging policymakers’’ in early conversations about what the incentives could look like, Izzo noted. Those discussions presumably continued yesterday afternoon when he toured the PSEG plants with U.S. Sen. Cory Booker (D) and Senate President Stephen Sweeney (D-Gloucester).
Nuclear power delivers roughly half of the electricity customers need in New Jersey. It is a carbon-free way of generating power, a big benefit in a state with a commitment to reducing greenhouse gas emissions by 80 percent by 2050. From that perspective, nuclear power ‘’is not getting the credit it deserves,’’ Izzo said. While Izzo talked about “leveling’’ the playing field, there is no specific regulatory or legislative proposal to funnel financial incentives to New Jersey plants.
The New York Public Service Commission voted unanimously Monday to approve the subsidies for its nuclear plants in upstate New York as part of a new clean energy program that requires 50 percent of the state’s electricity to come from renewable energy by 2030, including nuclear power.
“We’re encouraged by New York’s action,’’ said Michael Jennings, a spokesman for PSEG. “It recognizes the value of the economic, reliable, carbon-free energy provided by its nuclear plants, as well as the importance of the fuel diversity to its state.’’
In New Jersey, any effort to subsidize nuclear power plants is likely to be an uphill fight, according to some. “What happens in New York shouldn’t influence New Jersey,’’ said Doug O’Malley, director of Environment New Jersey, while noting PSEG’s plants are profitable. “The nuclear industry shouldn’t put its hand out for public dollars when there’s not a need.’’
Others were more adamant. Steven Goldenberg, an energy lawyer, said the nuclear plants owned by PSEG have been paid off several times already. He argued that happened when they were regulated by the state; when the company was given $3 billion in ‘’non-existent’’ stranded costs; and when they enjoyed artificially high prices of electricity set by expensive natural gas. “The solution is at a national level; you need to set a price for carbon,’’ Goldenberg said.
Izzo made the same point in June at a NJ Spotlight Roundtable on achieving a carbon-free future. “If the federal government had done its job, we wouldn’t be having this discussion,’’ he said at the time.
New York established its subsidies, dubbed zero-emission credits, through the regulatory process. In other states, legislation is required to enact similar incentives, a more onerous process, according to Paul Patterson, an energy analyst.