Group Will Appeal Ruling That Backs N.Y. Nuclear Subsidies

A group representing several energy companies and ratepayers said it would appeal a federal judge's ruling that upholds New York's plan to subsidize nuclear power plants in the state.

U.S. District Judge Valerie Caproni on July 25 in Manhattan ruled that federal law does not preempt the state and its Public Service Commission (PSC) from using a zero-emissions credit (ZEC) program designed to support cleaner energy options in New York. Opponents of the plan say it subsidizes nuclear power at the expense of coal- and natural gas-fired power plants.

The judge dismissed a lawsuit filed by seven plaintiffs, including NRG Energy and Dynegy. A spokesman for New Yorkers for Fair Energy said the ruling would be appealed. The spokesman in a statement after the decision said the PSC "failed ratepayers last year when it instituted a $7.6 billion bailout for uneconomic nuclear plants with almost no public input." The group has said the plan is a "backroom deal struck to save money for an out-of-state company," and said it violates federal laws regulating interstate commerce.

David Gaier, a spokesman for NRG, told POWER on July 26 that "We're disappointed in the decision and we'll be filing an appeal immediately. We'll continue to fight these nuclear bailouts, which cost ratepayers billions, crowd out investments in true renewables, and distort and could eventually destroy the established energy markets."

The 838-MW FitzPatrick nuclear plant in Scriba, N.Y., was slated for closure, but a state program to subsidize nuclear facilities means it will continue to operate. Exelon bought the plant from Entergy in 2016 after New York announced its Clean Energy Standard program that will offer zero-emissions credits to nuclear facilities. Courtesy: Entergy Nuclear

Tuesday's ruling is the second time this month that courts have upheld ZEC programs that would help struggling nuclear power plants. Judge Manish S. Shah of the U.S. District Court for the Northern District of Illinois on July 14 let stand Illinois' ZEC program. The plaintiffs in that case on July 17 appealed the decision to the 7th U.S. Circuit Court of Appeals in Chicago.

Judge Caproni in her ruling said New York's ZEC program was "plainly related to a matter of legitimate state concern," referencing "the production of clean energy, and reduction of emissions from other energy sources."

New York Gov. Andrew Cuomo has supported the ZEC program as part of his Clean Energy Standard (CES) program announced in August 2016. The CES requires that half the state's electricity come from renewable sources by 2030. The governor in a statement after the judge's decision said "At a time when the federal government has abdicated its leadership on climate change, [this ruling] ensures our progress will not be blocked or rolled back by fossil fuel interests and others seeking to maintain the status quo."

Gov. Cuomo has made keeping three nuclear plants in upstate New York in operation a priority of his administration. The plants-R.E. Ginna in Ontario, Nine Mile Point in Scriba and FitzPatrick in Scriba, both near Oswego-have lost millions of dollars in recent years due to power prices that are below the plants' operating costs. FitzPatrick was earmarked for retirement until the PSC approved the CES program. After that decision, owner Entergy agreed to sell the plant to Illinois-based Exelon, which said it would keep the plant operating.

Cuomo has said closing the plants would cost the state jobs, and also would cause power prices to rise.

Exelon issued the following statement after Judge Caproni's ruling:

"The court's decision to dismiss the lawsuit regarding the Zero Emission Credit segment of New York's Clean Energy Standard (CES) is good news for New York's climate efforts and citizens across the state because it preserves the most cost-effective source of carbon abatement available to consumers. The CES employs the same legal policy mechanisms that states have been using for years to support investment in other sources of clean energy, such as wind and solar.

"We are confident that the court's ruling will be respected by state and federal regulators and other policymakers who support the continued operation of the nation's nuclear plants and the clean, resilient and affordable energy they provide. As policymakers work toward reforms that will ensure that electricity markets properly value carbon, these programs serve as an important bridge to a fully market-based solution."

-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)

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