NJ nuke plants get another round of $300M annual subsidies

Regulators were told the trio of carbon-free power generators would close if customers didn’t subsidize them
Credit: peretzp via Creative Commons CC BY-SA 2.0
The Hope Creek nuclear power-generating plant in Salem County.

The state’s three nuclear power plants won a three-year extension of an annual $300-million subsidy from ratepayers in a unanimous decision Tuesday by regulators, mostly devoid of the discord that enveloped the first such award two years ago.

For Public Service Enterprise Group, the operator of the nuclear plants in South Jersey, it marked a significant victory to retain the full subsidies, a pivotal issue in the case before the New Jersey Board of Public Utilities. Unlike the first award, the five commissioners had the opportunity to reduce the subsidies — an option the board’s own consultant suggested, saying the subsidy could be significantly reduced in the current case.

Instead, the commissioners — including at least one of whom who said he would have liked to reduce the cost of the ratepayer subsidies — nonetheless voted to retain the full amount largely based on threats by top PSEG executives to shutter the plants if the company did not obtain the maximum.

The units provide more than 90% of New Jersey’s carbon-free electricity, accounting for 37.5% of the state’s power. The power plants are projected to provide carbon-free power until 2050, when officials have pledged the state will be weaned completely from fossil fuels, according to the state’s Energy Master Plan.

READ: What ratepayers will pay in subsidies for NJ’s nuclear power plants

WATCH: PSEG CEO discusses his vision for the future of energy in NJ

Across the nation, there have been many battles over ratepayers providing subsidies to keep nuclear plants operating. Nuclear is seen as the only traditional source of power producing carbon-free electricity, and not contributing to global warming. With cheap power from natural-gas plants, nuclear plants have become relatively expensive, though.

“Today’s decision prioritizes public health and our environment by ensuring emissions will not go up as a result of losing nuclear power,’’ said BPU President Joseph Fiordaliso. Keeping the plants open will support over 1,000 well-paying jobs, he said.

Dissenting voices

PSEG, the owner of Hope Creek unit, and Exelon Generating LLC, part-owner of Salem I and Salem II, argued financial conditions of the plants had deteriorated since the first award.

Levitan Associates, the BPU’s consultant, agreed to an extent, but still said the agency could reduce the impact on customers by lowering the subsidies.

Others argued likewise, including Division of Rate Counsel Director Stefanie Brand and Steven Goldenberg, an attorney representing large energy users. Brand criticized the BPU “for making no determination of what is a reasonable rate’’ of the subsidy for customers to pay.

“The decision was made based upon an ultimatum. This is ransom,’’ said Brand, who serves as the state’s designated advocate for consumers in actions before the BPU. “The problem with this is, in a ransom, the hostages are usually released. We are still being hold captive.’’

In comments, BPU commissioners argued the subsidies given to the nuclear units are much less than the incentives given to other clean-energy technologies, most notably solar and wind projects. Those costs, however, do not include the $2.9 billion in stranded costs customers were saddled with when the state deregulated the industry in 1999.

Few commissioners talked about the impact on ratepayers, who already face challenges in paying for higher utility bills in the midst of a pandemic that has cratered some economic segments. By BPU’s own projections, customers owe roughly $800 million in back payments to utilities.

But Goldenberg was blunter about the BPU’s decision on the subsidy. “The state got taken. Politics prevailed,’’ he said. “It is a sad day for New Jersey ratepayers.’’

Support from industry and labor

PSEG praised the agency, saying it acted to support the state’s largest supply of carbon-free electricity. “The BPU’s actions today helped the environment, saved jobs and avoided higher energy costs,’’ the company said in a statement.

The decision also won backing from business and labor groups.

“Preserving the state’s nuclear power supply, which has been providing for more than 40 years, is the most cost-effective path to our 100% carbon-free targets,’’ said Tom Bracken, president and CEO of the New Jersey Chamber of Commerce.

For nuclear advocates, that is a good result, one that provides clean baseload power to customers as the state transitions to other clean, but more intermittent resources, like solar and offshore wind.

Critics say, though, the decision could usher in decades or more of ratepayers paying to subsidize unregulated plants they already have paid for twice — through rate regulation and also by footing costs that were left stranded by deregulation that never materialized.

“It seems the Murphy administration wants to see these plants subsidized until 2050,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “There was no discussion about doing a partial subsidy. I got the feeling this is going to be a permanent tax on consumers.’’