In a reprise of a debate from three years ago over lucrative subsidies to keep New Jersey’s three nuclear power plants from closing, backers and critics squared off over whether to keep charging ratepayers for the $300 million annual payments.
In two virtual public hearings Monday, the two sides once again portrayed the financial viability of the PSEG Nuclear units in starkly contrasting terms. PSEG executives argued the plants are in worse fiscal shape than they were in 2018 when a divided Board of Public Utilities voted to award the initial subsidies to avert their closing.
Unlike the last go-around, however, the board-hired consultant, Levitan Associates, determined the three units are no longer profitable, a reversal of its position in 2018. But prominent opponents of the subsidies, including New Jersey’s Division of Rate Counsel and the independent market monitor for PJM, the regional power grid, say the company failed to demonstrate it needs the financial incentives.
Nuclear power plants across the country are finding it difficult to compete with cheaper natural gas, forcing the closing of seven nuclear units in the past few years with as many as a dozen at risk of doing so, according to William Healey, of the New Jersey Alliance For Action.
Joseph Accardo, vice president and deputy general counsel of PSEG, noted New Jersey already has determined it needs the nuclear units if it is going to meet the state’s aggressive clean-energy goals. The units provide roughly 40% of the state’s electricity and 90% of its carbon-free power.
If the plants are retired, New Jersey residents would pay billions of dollars more for their electricity, most of which would come from dirtier gas plants, he said. The existing $300 million subsidies need to be retained in full, Accardo said.
In testimony submitted by Rate Counsel director Stefanie Brand, two consultants the office hired found, however, the company, along with Exelon Generation LLC, a part owner of two of the units, failed to demonstrate they were eligible for the subsidies. Instead, they found the applicants overstated the costs for keeping the plants running and understated the revenue the facilities earn from providing energy and additional capacity to the grid when necessary.
A time of economic hardship for so many
‘Combined, their testimonies demonstrate that the board should not renew the subsidies for these profitable unregulated plants,’’ Brand said, who added ratepayers ought not have to absorb these costs at a time when the coronavirus pandemic has brought economic hardship to many.
“Now is not the time to transfer wealth from average citizens to wealthy shareholders,’’ she said. Still, recognizing the board might decide otherwise, any subsidies that might be given to the companies should be substantially lower than the original subsidies.
A lengthy list of labor advocates, environmental consultants and business lobbyists strongly backed continued subsidies, citing the nuclear plants’ wide-ranging positive economic impact in New Jersey, the 4,500 jobs provided by the facilities and their importance to achieving the Murphy administration’s clean-energy goals.
“They can’t survive without state support,’’ said Thomas Bracken, president and CEO of the New Jersey State Chamber of Commerce.
Without nuclear energy, New Jersey isn’t going to meet the goal of the state’s Energy Master Plan to have 50% clean energy by 2030 and 100% clean energy by mid-century, according to Eric Ford, executive director of the New Jersey Energy Coalition. In both instances, nuclear is considered as clean energy because of its zero carbon emissions. “We need nuclear now more than ever,’’ he said.
Steve Goldenberg, an attorney for the New Jersey Large Energy Users, argued PSEG is trying to shift market risks onto ratepayers, a move that tries to restructure the bargain that was struck during the debate over deregulation more than two decades ago. To win approval for deregulation, the company agreed that ratepayers would no longer have any burden for those risks, he said.
The case now proceeds to evidentiary hearings overseen by BPU President Joseph Fiordaliso where attorneys for each side have an opportunity to cross-examine witnesses on both sides of the issue. Much of the financial information in the company’s application is redacted and not available to the public.
A final decision is expected to be made in April.