Nuclear subsidy gets new challenge

NJ ratepayer advocate asks Supreme Court to consider decision on $300 million subsidy. Regulators are poised to add more
Credit: (MrTInDC from Flickr; CC BY-NC-ND 2.0)
Salem and Hope Creek nuclear power plants

New Jersey Rate Counsel Director Stefanie Brand is asking the New Jersey Supreme Court to reverse last month’s appellate court decision upholding the award of hundreds of millions in ratepayer subsidies to the state’s nuclear power plants.

In a notice of a petition for certification, the Division of Rate Counsel argued the lower court erred when it upheld the New Jersey Board of Public Utilities’ decision in 2019 to approve $300 million in new surcharges on customers’ gas and electric bills. Without the subsidies, Public Service Enterprise Group, whose subsidiary operates three nuclear units in South Jersey, has threatened to close the plants because they are no longer profitable.

If the high court decides to review the case, it could result in the justices taking up the case at roughly the same time as the BPU, which is scheduled to decide whether the plants — Hope Creek, Salem I and Salem II — qualify for additional subsidies from ratepayers for another three years. The BPU is expected to rule on those applications on April 27. The first subsidy added about $70 a year to what residential customers pay for electricity.

Huge implications for clean-energy goals

Those decisions will have huge implications for the Murphy administration’s plans to achieve its aggressive goals to reduce the carbon pollution contributing to climate change and to transition to 100% clean energy. The nuclear plants represent more than 90% of the carbon-free electricity in New Jersey.

The state’s Energy Master Plan projects at least some of the units will remain in operation by 2050, well after the existing licenses to operate the nuclear plants expire. How much that will cost utility customers is difficult to gauge since the BPU no longer has to award the $300 million lawmakers mandated in the first three years. If the current $300 million range of subsidies continue until mid-century, the cost to ratepayers could approach $10 billion.

In her brief notice of petition for certification to the Supreme Court, Brand argued the lower court’s decision effectively overruled a prior high court ruling that required rates be just and reasonable  even when set by the Legislature.

In the decision upholding BPU’s action, the appellate court said the ruling is supported by the record and consistent with the so-called zero emission certificate’s plain language in the program established by the agency and the legislative intent. ZEC is the jargon used by lawmakers to describe the nuclear subsidies.

PSEG did not respond to comment on the Rate Counsel’s filing.

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READ: Board was right to allow $300M nuclear subsidy, appeals court rules