New Jersey Legislature Backs Nuclear Subsidies
New Jersey's Assembly and Senate in separate actions on April 12 passed bills to ensure continued operation of PSEG's Salem and Hope Creek nuclear power plants.
Lawmakers also passed bills to modify the state's renewable portfolio standards and for support of a pilot offshore wind farm.
Legislation (S-2313/A-3724) directing the Board of Public Utilities (BPU) to establish a zero emission certificate (ZEC) program for the state's nuclear power plants cleared the state Senate 29-7 and the Assembly 60-10, with one abstention. Gov. Phil Murphy (D) now has purview to make the controversial bill a law.
Nearly 40% of all power generated in New Jersey comes from its three nuclear power plants: the 2.3-GW Salem and 1.2-GW Hope Creek nuclear generating stations, which are owned by PSEG; and the 636-MW Oyster Creek plant, owned by Exelon Generation. Exelon in February said it would shutter the Oyster Creek plant in October 2018-more than a year before it is required to close the single-unit reactor as part of an agreement with the state of New Jersey-to allow the company to better manage resources in a market environment where fuel and maintenance costs are rising amid historically low power prices.
The news was welcomed by the nuclear industry. Maria Korsnick, Nuclear Energy Institute (NEI) president and CEO, in an address to Wall Street analysts on April 12, outlined a number of challenges the industry is facing as wholesale prices have fallen as a result of cheap natural gas and a proliferation of gas and renewable power as demand remains stagnant. Nuclear plants that operate in competitive wholesale markets "are obviously under significant economic stress," she said.
However, Korsnick added that states seem aware of nuclear power's benefits, noting that "more than a hundred" nuclear-related bills were introduced in state houses last year. "Like New York, Illinois and Connecticut before them, the state's leaders have made a wise investment in New Jersey's clean energy future. Policymakers in Ohio and Pennsylvania now must follow suit and act expeditiously to preserve nuclear plants in their states," she said in a statement on April 12.
PSEG spokesman Michael Jennings told POWER on April 13 that the measure is imperative for the state's energy security and its environmental goals. "Collectively, the benefits of preserving nuclear far outweigh the costs by 6-to-1. In the end, this wasn't about PSEG, but rather what is best for New Jersey," he said.
"If New Jersey were to lose half its supply, electricity prices would jump-economists estimate by $400 million a year. Air pollution would greatly increase, including 14 million additional tons of carbon a year. There would also be significant economic effects," he said. "The loss of our nuclear plants would put our 1,600 nuclear plant employees out of work - with a cascading effect that would cost New Jersey 5,800 jobs statewide. And the state's economy would take an $800 million-a-year hit."
But for the New Jersey Coalition for Fair Energy, a group which includes Calpine, Dynegy, NRG Energy, and the Electric Power Supply Association, the vote was "disappointing and disconcerting."
The independent power producers have legally challenged nuclear subsidies implemented in New York and Illinois in the Second and Seventh U.S. Courts of Appeal, arguing they interfere with the Federal Energy Regulatory Commission's jurisdiction over wholesale electric rates and unlawfully interfere with interstate commerce.
"What lawmakers have agreed to is not necessary financial assistance," the coalition said on April 12. "It is a massive corporate bailout, paid for by a tax hike on ratepayers, simply to pad the bottom line of plants which are demonstrably profitable."
The coalition also said, however, that while the outcome was a setback, "it is not the end of this issue-and we will continue to reiterate the facts about PSEG's nuclear plants. We urge Governor Murphy to recall those facts, and do what's best for New Jersey ratepayers by vetoing this unnecessary energy tax."
-Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)
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