N.J. Supreme Court rejects nuclear subsidy appeal

The high court, without comment, on July 9 denied certification of an appeal submitted by the New Jersey Division of Rate Counsel, an independent state agency representing consumer interests. The appeal, dated April 19, argued against an appellate court’s decision, rendered the previous month, to uphold the Hope Creek/Salem subsidies, offered in the form of zero emission credits. (ZECs allow nuclear plants to enter capacity auctions at a lower price point in order to compete with historically low natural gas prices and federally subsidized renewable generation.)

The Rate Counsel had appealed the BPU’s decision to the appellate court in May 2019, contending that Public Service Enterprise Group—owner of Hope Creek and co-owner, with Exelon, of Salem—had failed to prove financial need.

“We thought at least we could get a hearing,” said Stefanie Brand, director of the Rate Counsel, in response to the Supreme Court’s ruling. “It is hard to understand why this case is not in the public interest.”

In case you missed it: On April 27, the BPU voted unanimously to extend the ZEC program for an additional three years. PSEG had filed applications to extend the ZECs in October of last year, citing the state’s clean energy policy, the lower cost of ZECs compared with solar and offshore wind subsidies, and the continued deterioration of power markets.

Background: Ralph Izzo, PSEG’s chairman and chief executive officer, told a committee of New Jersey lawmakers in December 2017 that Hope Creek and Salem would be unprofitable within two years. He noted that without financial support from the state, the nuclear plants would have to be retired. Legislation to address the issue was introduced the following March, and in May 2018 S. 2313 was signed into law by Gov. Phil Murphy. S. 2313 directed the BPU to establish a ZEC program—similar to programs implemented in Illinois and New York—with each certificate representing “the fuel diversity, air quality, and other environmental attributes of one megawatt-hour of electricity generated by an eligible nuclear power plant.”

The New Jersey ZECs would be purchased by the state’s public utilities, with costs recovered via a $0.004 per kilowatt-hour tariff applied to the utilities’ retail distribution customers. Most experts predicted a hike of $41 in customers’ annual electric bills. The program was estimated to be worth about $300 million in annual subsidies to PSEG.

Hope Creek is home to a single 1,237-MWe boiling water reactor, while Salem houses two pressurized water reactors, with Unit 1 rated at 1,169 MWe and Unit 2 at 1,181 MWe. The plants are colocated in Hancocks Bridge, N.J. The two facilities produce more than 90 percent of New Jersey’s carbon-free electricity and about 40 percent of its overall power.