Groups line up to challenge nuclear subsidies

Fight now expanded to include PSEG move to change how it buys electricity
Credit: peretzp via Creative Commons CC BY-SA 2.0
Hope Creek nuclear plant

A diverse group of consumer advocates, business groups and energy suppliers are once again forming a coalition to fight new attempts to have ratepayers pay subsidies to help keep New Jersey’s three nuclear plants operating.

The coalition is comprised of roughly the same organizations that unsuccessfully opposed efforts by Public Service Enterprise Group and Exelon to obtain $300 million in annual subsidies from ratepayers two years ago, an outcome preventing the closing of the facilities.

This time around, however, NJ Ratepayers United as the coalition calls itself, is fighting not only a new application to extend those subsidies for another three years but also unrelated proposals to restructure how the state goes about buying electricity for residents and most businesses.

Getting off the grid

The latter proposals, offered by the companies earlier this year and the subject of a technical conference with state officials Monday, urge the state to withdraw from the regional power grid, PJM Interconnection. Instead, the state would set up its own entity for buying electricity in New Jersey, an option some argued would not undermine the goal of purchasing cleaner energy for customers.

In comments submitted to the state Board of Public Utilities, PSEG argued its proposal to exit PJM could lower costs to consumers by hundreds of millions of dollars a year, while allowing increased purchases of renewable energy. Critics disputed those projections, claiming the proposal could increase costs by $300 million to $700 million a year.

“Exiting our current regional market would create more uncertainty and higher electricity rates at a time when the state’s consumers can ill afford to pay even more,’’ said Evelyn Liebman, AARP New Jersey’s director of advocacy and a member of the coalition.

Extending nuclear subsidies

At the same time, PSEG is pursuing changes in PJM, it also has initiated a proposal to retain for three more years the nuclear subsidies it won from the BPU in 2018. The company insists the parallel efforts are unrelated.

Ralph Izzo, PSEG’s CEO, president and chairman, said on a quarterly earnings call with analysts last month that the nuclear plants are not financially viable without the so-called zero emission credits (ZECs), as the subsidies have been dubbed.

With natural-gas prices dropping dramatically in recent years, wholesale power prices also have declined substantially, creating turmoil in the sector providing electricity to residents and businesses. That turmoil has led to widespread closing of coal-fired power plants and at least a half-dozen nuclear plants across the country.

The BPU is expected to make a decision on whether to withdraw from PJM by the end of the year or early in 2021. The agency is likely to decide whether to give new ratepayer subsidies to the nuclear plants sometime next spring.

Steven Goldenberg, counsel to the New Jersey Large Energy Users Coalition, called the proposal by PSEG to withdraw from PJM a largely untested mechanism, predicated on burdensome and complex rules that would be difficult for the state to enforce.

Risks outweigh benefits

“It also carries huge potential financial risks, including the potential to create opportunities for the exercise of market power by PSEG and Exelon that will further increase energy costs,’’ Goldenberg said. The risks of the proposal greatly exceed the limited benefits the state would receive from adoption of the proposal, he said.

“Our residents deserve more protections and access to affordable energy, not a complicated energy scheme that only benefits corporate profits,’’ said Dena Mottola Jaborka, associate director of New Jersey Citizen Action.

PSEG did not respond to an email seeking comment.

Besides the aforementioned groups, the new coalition includes Americans for Prosperity — New Jersey; Calpine, a major energy supplier; the Chemistry Council of New Jersey; Direct Energy; the Electric Power Supply Association; and NRG Energy.

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