Public Service Enterprise Group told state officials it will close its three nuclear units in South Jersey if it does not retain a lucrative annual ratepayer subsidy it has received from utility customers over the past three years.
In a more than six hour-hearing Monday before the New Jersey Board of Public Utilities, the company argued energy prices have dropped so much that the $300 million subsidy approved in 2018 by the agency no longer covers the full cost of the plants, which provide more than 90% of the carbon-free electricity in the state.
The issue is once again before the BPU as the company seeks to retain the $300 million subsidy paid by its customers for another three years. As in the past, the threat of closure of the plants loomed large, a decision that could jeopardize the Murphy administration’s aggressive clean-energy goals, a concern expressed by commissioners.
BPU President Joseph Fiordaliso repeatedly raised the issue. “The bottom line, in your opinion, is, if PSEG does not get the maximum amount, will you close the plants?’’ he asked Daniel Cregg, executive vice president and CFO of PSEG.
“The answer is yes,’’ said Cregg, who earlier told the commissioners that the market is sending signals to the company that the plants are no longer profitable. Even if the company retains the so-called $10 per megawatt hour zero-emission certificate (ZEC), the company would expect to lose money operating the units, Cregg said.
Disputing the PSEG case
Those assessments were disputed by others. Joseph Bowring, head of the Independent Market Monitor, which oversees competitive operations for the regional power grid, PJM Interconnection, said the subsidy was not necessary.
Andrea Crane, president of the Columbia Group, a consulting firm retained by the New Jersey Division of Rate Counsel, agreed, saying PSEG failed to justify its need for the subsidy. “There are serious flaws in the numbers they provided to justify the subsidy,’’ Crane said.
Fiordaliso, however, noted he does not know if PSEG will close the plants if it is denied the subsidy. He asked Crane, “Are you willing to roll the dice?’’ Crane replied she would do so. She also noted PSEG has given no pledges to keep the nuclear units open even if they retain the full subsidy. “There is no guarantee the plants will stay open,’’ she said.
Unlike during the first hearings on the subsidy three years ago, a consultant hired by the BPU found the plants are no longer profitable, a reversal of its stance before the original subsidy was approved. Levitan and Associates, however, suggested the subsidy could be reduced, an option not available then. In the first ZEC proceeding, the board had to either approve the full subsidy or reject it.
At times, the latest hearing got heated. When Fiordaliso noted the obligation of the board to deal with climate change to protect the next generation, Rate Counsel Director Stefanie Brand objected.
“This is supposed to be an evidentiary hearing,’’ she said. “I would ask to stick to the evidence.’’
PSEG plant costs, revenues
Despite the occasional fireworks, the actual details on what kind of costs and revenues PSEG incurs from the operation of the plants were not disclosed during the hearing. Instead, when commissioners asked questions about confidential financial information, the public hearing ended, and commissioners and others met in a closed session that lasted more than a half-hour.
At least seven nuclear power plants have closed prematurely across the country in the past few years, largely because they could not compete with cheaper natural gas units that have driven down prices consumers pay for electricity.
The board concluded the evidentiary hearing yesterday. It is expected to make a decision on the PSEG application on April 27.