As Decision on Nuclear Subsidies Nears, Where Is Consultant’s Report?

Tom Johnson | April 16, 2019 | Energy & Environment
Consumer, environmental, and industry groups want to know why an independent report commissioned by the BPU has yet to be seen by the public

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With a decision seemingly imminent, several groups yesterday urged a consultant’s report be made public on whether three nuclear plants in South Jersey ought to be given up to $300 million in annual ratepayer subsidies.

In letters to the governor and state Board of Public Utilities, consumer, environmental, and industry organizations questioned why an independent report commissioned by the agency has yet to be seen by the public — even though a decision on PSEG Power’s application for subsidies could be made as early as Thursday.

Without the lucrative subsidies — dubbed zero emission certificates (ZECs) in energy jargon — PSEG has threatened to close the plants, which supply roughly 40 percent of power in New Jersey and 90 percent of the state’s carbon-free electricity.

The decision about subsidizing nuclear has been a bitterly divisive issue in the state, and elsewhere, for the past few years, as cheap natural gas has eroded the profitability of both coal and nuclear power plants. Six nuclear plants across the country have closed prematurely.

Yesterday, the U.S. Supreme Court rejected a challenge to similar subsidies to avert nuclear plant closures in Illinois and New York. The decision may increase the significance of what the BPU decides this week, according to opponents.

Is PSEG nuclear in the black?

In New Jersey, the groups want more transparency. They contend they are not against nuclear power, nor do they want to see the plants closed. They only question whether PSEG has proved its plants are no longer economical.

“We believe the plants are highly profitable, are projected to be in the future, and that no subsidy can be reasonably justified except as a windfall handout to PSEG, that will have the primary effect of benefitting its stockholders,’’ a letter to the BPU argued.

The letter was signed by AARP of New Jersey, New Jersey Main Street Alliance, Chemistry Industry Council of New Jersey, PJM Power Providers Group (a trade group representing power suppliers), Environment New Jersey, New Jersey Petroleum Council, and New Jersey Large Energy Users Coalition (a group of large-scale manufacturers).

Paper chase

The argument the plants are still profitable is echoed in independent reports from the only two organizations (besides the BPU and its consultant) that have actually seen the company’s financial information — otherwise redacted in voluminous reports submitted by PSEG.

Those reports, submitted by the New Jersey Rate Counsel and Independent Market Monitor for PJM, the operator of the regional power grid, found the plants are profitable, fully able to cover their costs and risks, and do not qualify for the subsidy.

In their letter to Gov. Phil Murphy, the critics of the subsidy argued the public deserves to see the state-commissioned Levitan report, its evaluations and conclusions before the board acts “if the promise you made when you signed the ZEC legislation into law to have the BPU conduct an open, transparent evaluation process is to have meaning.’’

When questioned via email and phone about the report, the BPU indicated the release of the Levitan report must be authorized by a board vote.

It also noted, “The agenda for Thursday’s board meeting is not yet public, therefore it is premature to confirm that any particular item will be scheduled for consideration.”

In a response to questions about the consultants’ report, a spokesperson for PSEG said its applications demonstrated unequivocally that all three of its plants meet the requirements of the ZEC law.

Put up or shut up

“We are not aware that there is a Levitan report, what it may include, or how it may be considered by the BPU,’’ said Marijke Shugrue, a PSEG spokesperson. “And as we have previously announced, if we don’t get the ZECs for all three plants we will shut them down. The cost of New Jersey losing nuclear would be six times the cost of preserving it — including the electric, environmental and economic costs.’’

Meanwhile, the Supreme Court’s ruling yesterday may have signaled expected court challenges to awarding subsidies may not be successful.

“If anyone was thinking the courts will provide relief, that door was closed today,’’ said Glen Thomas, president of the PJM Providers Group, which opposes the subsidies as an unwarranted intrusion into the competitive marketplace, one that PSEG lobbied heavily to establish in the state in 1999.

For business lobbyists, the impact could resonate through the economy — given that New Jersey has the highest electric rates in the PJM, a territory stretching from the Eastern Seaboard to Illinois, according to Jim Benton, executive director of the New Jersey Petroleum Council.

“If this subsidy goes through, we will see companies paying $1 million more on their electric bills,’’ said Dennis Hart, executive director of the Chemistry Industry Council of New Jersey.