The future of nuclear power in New Jersey will begin taking shape in the next few months as the state begins debating a controversial plan to subsidize plants to avert their closing.
The agency that will oversee the effort plans to begin public hearings on a proposal to have utility customers pay up to $300 million a year to prop up the three plants in South Jersey, and possibly other units in neighboring Pennsylvania.
The hearings set to begin early in October come as the nation’s oldest nuclear plant, the Oyster Creek unit in Lacey Township, is scheduled to close tomorrow — the latest in a series of nuclear facilities that have closed prematurely in the past few years.
The proposal to subsidize nuclear power is being taken up by the New Jersey Board of Public Utilities in the wake of the passage this spring of a bill to have ratepayers pay more for power from the plants, a measure pushed by Public Service Enterprise Group, the operator of the South Jersey nuclear units.
In response, after long debate in the Legislature, Gov. Phil Murphy signed a bill to prop up the plants with ratepayer surcharges if the BPU determined those plants might close without financial incentives.
Trouble competing with natural gas
At least six nuclear-power plants have closed prematurely because they have had trouble competing with cheap natural gas, a trend that has led other states (Illinois and New York) to adopt subsidies to back continued operation of nuclear.
But opponents of the New Jersey bill argued that PSEG and its proponents had failed to demonstrate the nuclear units were unprofitable. In addition, they argued the subsidies directed to nuclear units would divert scarce resources from planned investments in other sources of clean energy, like renewables, and energy efficiency.
Those issues likely will resurface in three public hearings scheduled by the BPU to begin October 4 at the Hackensack administration building of Bergen County freeholders at 4 p.m.
In the hearings, the state agency is seeking input on a variety of topics to guide whether to grant the subsidies — dubbed zero-emission credits in the jargon common to energy regulation — to plants that apply.
PSEG is looking forward to the hearings, hopeful of obtaining up to $200 million of the subsidies that BPU is expected to decide on by next April.
It produces half the state’s electricity
“The ZEC program is a sensible solution that will preserve the viability of nuclear energy and the benefits it provides New Jersey, while at the same time ensuring consumers are protected,’’ said Michael Jennings, a spokesman for PSEG.
Nuclear energy currently produces about half of the state’s electricity and more than 90 percent of the state’s carbon-free generation, according to Jennings.
“If New Jersey were to lose half of its electricity supply, electricity prices would jump — economists estimate by an additional $400 million per year,’’ Jennings said.
Under the legislation, the state is required to determine what nuclear plants are eligible to receive the subsidies and rank them in order of priority. In addition, any party seeking to participate in the proceeding must apply by October 23 to participate.
That provision is important because it is unclear whether the Division of Rate Counsel, which typically represents ratepayers in utility cases, will be allowed to participate in the nuclear proceeding.
One issue on which the board is seeking more clarity is whether out-of-state nuclear plants ought to qualify for the subsidies. In one question for stakeholders, the BPU asks what factor should a unit’s physical location (in-state, out-of-state) play in the awarding of incentives.