Utilities Submit Proposals for Nuclear Subsidies

While some residential customers may end up paying $30 more annually, large energy users may see their bills rise by $1 million a year

salem nuclear power plant
It will be months before the state decides whether customers need to subsidize nuclear power, but New Jersey’s four electric utilities are already proposing how they will recover those costs.

In filings with the Board of Public Utilities, each of the utilities submitted tariffs disclosing how they will recoup the cost of buying Zero Emission Certificates (ZECs), the potential $300 million annual subsidy aimed at propping up the state’s supply of nuclear power.

The proposals are the latest in a series of filings that could boost bills to customers by billions of dollars if approved by the regulatory agency, most stemming from two bills signed into law this spring that will transform energy policy in New Jersey.

PSEG threatened to shut down units in South Jersey

The most contentious bill involved proposed subsidies to avert the closing of the three remaining nuclear power plants in New Jersey. Without financial incentives, Public Service Enterprise Group threatened to shut down the units it operates in South Jersey.

The company and advocates of the subsidies argued they are justified to preserve fuel diversity among power generators, as well as for their benefits in improving air quality and combating climate change.

In public hearings to begin tomorrow in Hackensack, the BPU will begin a two-step process of determining what nuclear plants, if any, will be awarded the subsidies. The initial proceeding is to establish the ZEC program to apply for subsidies; the second, to decide whether any plants deserve the incentives. A final decision is expected next April.

Meanwhile, each of the four utilities will hold public hearings beginning on October 17 on the proposed tariffs they have submitted. Under an order issued by the board, the utilities were required to submit the proposed tariffs by September 20.

Is it a done deal?

“It gives the appearance of being a fait accompli,’’ said Doug O’Malley, director of Environment New Jersey, part of a coalition that opposed the nuclear bill. “The ZEC tariffs give the appearance that it is a done deal.’’

The board must still approve the tariffs, as well as any application by a nuclear-plant owner for the subsidy.

The proposed surcharge is established by the bill signed by Gov. Phil Murphy, but the tariffs submitted to the BPU vary on how much customers will pay depending on what customer class they’re in.

For example, Public Service Electric & Gas projects a typical residential customer (using 7,200 kilowatts on an annual basis) will pay $30.72 more per year, or a 2.49 percent increase. That is in line with what the company projected during earlier debate on the nuclear bill.

Large manufacturers and other companies using a lot of electricity will see their bills rise by 4.46 percent, according to PSE&G’s tariff.

Stefanie Brand: ‘It all adds up’

“The numbers appear small, but in fact they are quite large,’’ said Steve Goldenberg, an attorney representing large energy users. When you multiply the change by a whole lot of kilowatt hours, you derive a very large number.’’

The annual costs for some large energy users will exceed $1 million, Goldenberg said. “The lowest I’ve heard is $300,000.’’

Others worry the potential subsidies, when added to other costs that are pending before the BPU, or recently approved, will be a huge hit to ratepayers.

“It all adds up,’’ said Stefanie Brand, director of the Division of Rate Counsel. PSE&G has more than $10 billion in proposed rate increases pending before the BPU, if a recent $1.9 billion gas modernization program is included, Brand said.

Those cases include $2.5 billion to improve the resilience of its electric and gas distribution system; a $4 billion clean-energy initiative filed last Friday, and the proposed nuclear subsidy.

“The fact is there is no way to spend $10 billion and not have it be very expensive to ratepayers,’’ Brand said.

PSEG officials argue the investments are aligned with the Murphy administration’s clean-energy goals and are timely — given the historic low natural gas prices that have customers paying less than they were 10 years ago.

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