Revised Nuclear Subsidy Bill Appears Back on Legislative Track

Revamped legislation includes some modest clean-energy programs, but locks Division of Rate Counsel out of decision if subsidy is needed

Senate President Steve Sweeney
A bill to provide subsidies to New Jersey’s nuclear power plants appeared to get back on legislative track yesterday with the addition of some modest clean-energy initiatives, the latest maneuver aimed at bolstering its prospects.

In a marathon day for legislation that has endured its share of rocky moments over the past several weeks, a revamped bill (S-877) was unveiled to a roomful of lobbyists, energy executives, labor officials, and environmentalists nearly three-and-a-half hours after a committee hearing on it had been scheduled.

Last minute revisions, accomplished privately elsewhere, accounted for the delay.

When finished, a three-hour hearing before the Senate Environment and Energy Committee followed, as opponents tried to articulate concerns about the measure, having received the 50-page bill minutes before the hearing begun.

Business as unusual

Recognizing the unusual circumstances surrounding its release, Sen. Bob Smith, the Democratic chairman of the committee, announced lawmakers would not vote on the bill, but instead have it referred to the Senate Budget Committee for a vote on February 5.

“This is not how we normally do things,” said Senate President Stephen Sweeney, the bill’s sponsor in what perhaps was the understatement of the day. “Nuclear is extremely important.”

So important, Sweeney, in a move that surprised many, revived a bill that had died in the lame-duck legislative session only a few weeks ago. The subsidies, ranging up to a possible $300 million a year from ratepayers, had been sought by PSEG, the owner of three nuclear units in South Jersey for more than a year.

No financial evidence

Without the fiscal help, PSEG has threatened to close the plants, which the company says could turn unprofitable in two years. So far, the company has provided no financial information to back up its claim.

The prospect that the Newark company could reap subsidies from electric customers has galvanized an unusual coalition of business groups, consumer advocates, clean-energy advocates, and others to band together against the measure. The cost to the typical residential customer amounts to $41 a year, but could run in the hundreds of thousands of dollars more for businesses that use a great deal of energy.

Critics argue the company has not proved its plants are in financial distress, and question the effectiveness of the process laid out in the bill, which assigns the state Board of Public Utilities oversight on whether the company, and Exelon, a part-owner, deserve the subsidies.

Sweeney to the defense

Sweeney defended the process, repeatedly arguing there is no guarantee the company will receive any subsidy. The bill also was modified to ensure the BPU receives any financial information it seeks from PSEG, although there are strict confidentiality provisions limiting access to the data.

More problematic to critics is the fact that the bill bars New Jersey’s Division of Rate Counsel from participating in the proceeding to determine whether ratepayers need to ante up the subsidy.

“From all indications, these plants are profitable,” said Stefanie Brand, director of the division. “We have to be included in this inquiry or it’s a sham.”

Smith argued the division only is authorized to participate in proceedings involving regulated companies. PSEG Power, the subsidiary that operates the power plants, is an unregulated unit of PSEG since the state deregulated the energy sector.

Others greeted that argument incredulously. “They are coming with their hands out to the ratepayer,” said Steven Goldenberg, an attorney representing large energy users. “That gives us a seat at the table.”

Adding renewables to the mix

In an effort to address concerns by Gov. Phil Murphy, the committee incorporated some initiatives to promote energy efficiency, offshore wind, and solar energy into the bill.

But some environmentalists said the measures do not go far enough in advancing the state’s clean-energy agenda.

“There is nothing in here on energy efficiency and renewable energy that is not already policy of the state,” said Jeff Tittel, director of the New Jersey Sierra Club. “The whole thing is a green scam to justify a massive nuclear subsidy.”

Calls for rigorous independent review

Mary Barber, director of New Jersey clean energy for the Environmental Defense Fund, also said the state should ensure a more rigorous independent review before it hands out subsidies – dubbed-zero emission credits – to the company.

“As it stands, it doesn’t put us on a path to transition to a clean-energy economy and replacement of these aging nuclear plants,” Barber said.

Some business lobbyists, however, were relieved the committee did not set overly aggressive new targets for solar energy and offshore wind, which they fear would boost already steep energy bills in the state.

Cost increases uncertain

It is uncertain how much, if at all, the revamped bill will increase costs to ratepayers. Brand promised an economic analysis of the bill, hopefully completed before the next hearing. Sweeney conceded it could have an impact. “Everyone wants a clean environment. The environment has a cost.”

The bill includes provisions requiring the state to provide financial assistance to businesses engaged in manufacturing supplies for the offshore-wind industry and job training programs for those to work in the sector. But it stopped short of endorsing any expansion of the 1,100 megawatts of offshore wind now mandated by state law, which is far less than the 3,500 megawatts promised by Murphy during his gubernatorial campaign.

The bill also incorporates legislation – vetoed by former Gov. Chris Christie earlier this month – that provides a fix for New Jersey’s solar sector by accelerating the state’s mandates to rely on solar energy. Brand argued the provisions could increase ratepayer subsidies to promote solar projects, a point disputed by Smith.

Finally, the bill requires the BPU to adopt an energy-efficiency portfolio standard, which would require utilities to step up efforts to reduce energy use by their customers. The provision was originally included in the 1999 deregulation law, but never acted on by the regulatory agency.

Typically, there are upfront costs associated with investments in energy-saving projects, but in the long run, consumers benefit by lowering their monthly bills.