PSEG Nuclear yesterday rebuked opponents of its bid for lucrative subsidies from ratepayers to keep its three nuclear power plants open, vowing to close the units unless each is awarded financial incentives, beginning as soon as this fall.
In a 44-page response filed with the New Jersey Board of Public Utilities, the company said the financial information provided to the agency demonstrated the plants will not cover future costs and risks, and PSEG was thus qualified to receive subsidies of up to $300 million a year.
The filing, in fact, suggests the plants could shut begin shutting down prior to refueling outages as early as this fall for Hope Creek, next spring for Salem II, and in the fall of 2020 for Salem I.
“While the commenters opposing PSEG Nuclear’s application may believe that the company is bluffing, the reality is that after years of analysis, this difficult decision already has been made,’’ the filing said. “Whether the plants continue to operate or retire is now in the hands of the BPU.’’
Whether the subsidies, called zero emission certificates (ZECs), are awarded to the company is to be determined in a proceeding now underway before the BPU and expected to conclude in April.
Plants in trouble across the country
Nuclear plants around the country are in economic distress, largely because they cannot compete with cheap natural gas-fired plants. At least six nuclear units have prematurely closed. Other early retirements have been averted by similar subsidy programs in Illinois and New York.
The New Jersey subsidy is opposed by the New Jersey Division of Rate Counsel, the PJM Providers Group (a coalition of energy suppliers), the PJM Independent Market Monitor and the New Jersey Large Energy Users Coalition.
In general, the opponents argue PSEG has failed to prove its plants are in danger of closing. They claim the company has understated future revenues, overstated risks, and failed to account for pending proposals before the federal government that could make the plants even more profitable.
In response, PSEG accused the intervenors of seeking to reopen debate over issues settled when Gov. Phil Murphy signed a bill last spring that set up a system whereby nuclear units could qualify for subsidies. Among those issues were roughly $2.9 billion in subsidies the plants received when the state broke up electric monopolies 20 years ago.
“The comments of the intervenors and participants do not provide an even plausible basis for the BPU to decide that the plants are ineligible for ZECs,’’ the company said. “In derogation of legislative directives, intervenors and participants suggest that all risks should be ignored and financial projections should be based on highly optimistic and speculative assumptions.’’
PSEG: Opponents use faulty projections
PSEG also accused the critics of making numerous errors and inaccurate assumptions in their comments on the company’s application. Primarily, the intervenors based the plants’ projected revenues by using “peak’’ prices rather than “around-the-clock’’ prices. “This major flaw results in well over $100 million in inflated revenue projections,’’ according to PSEG.
The company also disputed assertions that the plants are unlikely to retire within three years because the units have commitments over that time frame to provide capacity to the power grid. PSEG said those commitments could be accommodated with power from other units.
Finally, the company disputed claims by critics that the subsidy amount would be adjusted by the BPU. Instead, PSEG argued the new law established a charge of $0.004 per kilowatt hour. The law only gives the BPU discretion to change the subsidy in the final year of the first three-year ZEC period, according to the company.