BPU Gets Down to Job of Deciding Which Nuclear Plants Will Be Subsidized

Tom Johnson | September 4, 2018 | Energy & Environment
Agency to follow two-step process, creating zero-emission credit program and then determining which applicants qualify for ratepayer subsidies

salem nuclear plant
The state is launching a proceeding to determine whether some of the region’s nuclear power plants need subsidies from New Jersey customers to remain open.

The process, initiated by the New Jersey Board of Public Utilities last week, could decide the fate of the state’s three largest nuclear power plants. Another, Oyster Creek, already is scheduled to close by the end of the year.

By mid-November, the regulatory agency is supposed to adopt a program that would allow eligible nuclear units to apply for up to $300 million annually from ratepayers to keep the facilities economically viable.

Coal and nuclear — NJ and beyond

The issue resonates nationwide as both nuclear and coal units have prematurely closed, mostly because of cheap natural gas. Efforts to prop up those plants are being hotly debated at the national and state levels.

The so-called zero-emission credit program was the most controversial aspect of a three-bill package adopted by the state Legislature this past spring and signed into law by Gov. Phil Murphy. The legislation overhauls the state’s energy policies, putting a premium on curbing pollution contributing to global warming.

The nuclear bill, pushed by the state’s largest energy company, Public Service Enterprise Group, is aimed at propping up uneconomic plants finding it difficult to compete against cheap natural gas. PSEG threatened to close its three units in South Jersey without some incentives.

BPU must make the call

The legislation gave the BPU the task of deciding what plants, if any, deserve ratepayer subsidies. The initial phase of what is set to be a two-step process involves creating a zero-emission credit program for eligible nuclear units to apply for subsidies, followed by a second proceeding to determine what plants are most deserving of help. The exercise is to be done by April 2019.

Any nuclear facility providing power within the PJM Interconnection, the regional grid serving New Jersey and much of the rest of the east, is eligible to receive the credits. PSEG’s CEO, Chairman, and President Ralph Izzo told analysts this summer his company expects to receive up to $200 million under the program.

“Nuclear power is an important piece of the state’s energy puzzle,’’ said BPU President Joseph Fiordaliso in a press release announcing the process. “The board and its staff take seriously the responsibility to analyze nuclear power plant financial information and applications and determine whether the credits are warranted.’’

The process is sure to be controversial. During the legislative debate, critics, including consumer advocates, business interests, and rival power suppliers, argued PSEG and others failed to provide any proof their plants were not economically viable.

Proponents, however, contend nuclear power is by far the largest source of carbon-free energy in New Jersey, producing roughly 40 percent of the state’s electricity and more than 90 percent of its clean energy.