New York state’s proposed credits for zero-emission nuclear power plants could stave off the scheduled or threatened closure of three facilities upstate, energy providers said this week.
Exelon had said in recent months its R.E. Ginna Nuclear Power Plant and Nine Mile Point Nuclear Station would eventually close without state incentives, while Entergy had announced that the James A. FitzPatrick Nuclear Power Plant would be shuttered no later than next year. As of this week, Exelon is in talks to buy (and continue operating) the FitzPatrick facility and is considering funneling hundreds of millions of dollars into its current sites.
This comes less than a week after the New York Public Service Commission (PSC) released the staff proposal for the three plants to in 2017 begin receiving $17.48 per megawatt hour of zero-emissions power produced. The zero-emissions credit is intended to ensure the sites are not replaced with emissions-producing power plants, with the credit amount recalculated every two years.
“If the program is approved, we will immediately reinvest approximately $200 million in the plants in the spring and continue to operate. If the program is not approved, we need to go in a different direction,” Joseph Dominguez, Exelon executive vice president for governmental and regulatory affairs and public policy, said in a company press release Wednesday.
The PSC proposal, released for public comment on July 8, is part of Gov. Andrew Cuomo’s planned Clean Energy Standard, which calls for half of all state power to by 2030 be produced via renewable sources. Cuomo has highlighted the need to keep New York’s nuclear plants operating during this transition. Total costs during the first two years of credit payments are estimated at $965 million, compared to $5 billion in projected economic and environmental benefits provided by carbon reductions, supply cost savings, and property tax benefits from keeping the plants operating, the PSC document says.
Not everyone has been as pleased with the nuclear component of the energy plan. The anti-nuclear Alliance for a Green Economy (AGREE) put together a coalition of more than 100 organizations and businesses that on June 30 called for Cuomo not to pay “nuclear bailouts,” rejecting the idea that atomic energy is clean power and warning of the dangers of sustaining plants that are so close to Lake Ontario, a critical source of drinking water for the United States and Canada.
AGREE, in a July 11 letter to Secretary to the Public Service Commission Kathleen Burgess, said staff estimates for the zero-emissions credit program had previously ranged from $59 million to $658 million over the initial seven years. Changing the approach to figuring the cost of the zero-emissions credits spiked the expense significantly, potentially for a total of roughly $7.6 billion over the program’s life cycle, the organization’s program director, Jessica Azulay, said in a telephone interview.
In the same letter, AGREE objected to the July 18 deadline for public comment on the staff proposal, saying the situation demands a State Administrative Procedures Act notice alerting stakeholders to the plan and an accompanying 45-day public comment period to allow time for a full analysis. “We need more than 10 days to be able to do that,” she said.
A number of other groups, including New York City and Environmental Advocates of New York, filed letters in support of AGREE’s request. Constellation Energy Nuclear Group, an Exelon subsidiary, appeared to be the lone dissenter, saying it needs to know by September whether there is cause to keep Ginna and Nine Mile Point open.
In a notice Friday, Burgess extended the public comment period to July 22 “for the fair, orderly and efficient conduct of these proceedings.”
The commission earlier in the week rejected the $7 million cost figure for the credit program. Wholesale energy prices are expected to rise going forward, meaning lower credits for emissions-free power generation, according to a PSC official. Without nuclear power facilities, consumers would also face higher costs due to even higher wholesale energy prices. Azulay countered that rising wholesale prices cannot be taken for granted.
The PSC official declined to provide more details about the plan, referring questions back to the proposal document.
Nuclear power providers in New York state and across the nation have said their plants are losing large amounts of money in the face of low natural gas prices, an unfavorable market, and other challenges. A number of plants have closed or been announced for shutdown in recent years.
Upstate nuclear power plants should provide 27.6 megawatts per hour of zero-emissions power annually, the PSC staff report says. Should they close, they would almost certainly be replaced by power plants that spew out emissions including a projected extra 31 million metric tons of carbon dioxide over the coming two years. “This amount of CO2 emissions has an estimated societal cost of approximately $1.4 billion,” the report says, also noting the 2,600 jobs and property taxes provided by the facilities.
Credits would be available to facilities that by “public necessity” must remain operational to preserve their zero-emission environmental benefits or otherwise aid the electric grid, customers, and the environment. Public necessity would be determined by the Public Service Commission based on criteria including public interest; the plant’s historic contribution to the state’s clean energy resource mix; and the degree to which revenue would not provide sufficient compensation to keep the site open and providing an environmental benefit.
The PSC proposal says staff believes that FitzPatrick, Ginna, and Nine Mile Point all meet the public necessity criteria. That leaves out just Entergy’s Indian Point Energy Center, which is closer to New York City and has been targeted for closure by Cuomo.
Entergy announced FitzPatrick’s imminent shutdown last year, and had until this week dismissed all proposals to keep the facility open. Spokeswoman Tammy Holden said as late as Monday that Entergy was reviewing the staff proposal and planned to submit comments to the commission by the July 18 deadline. The company announced the talks with Exelon on Wednesday, saying it hoped to wrap up a deal by mid-August. Should that fail to materialize, Entergy said it would move forward with closing FitzPatrick.
The initial zero-emission credit amount would cover only the first of six contract periods, from April 1, 2017, to March 31, 2019. Credits would be recalculated for each subsequent tranche, to March 31, 2029.
The credits would be provided to the plants and purchased by “load serving entities,” which include municipal electric systems and electric cooperatives that provide energy to retail customers. Total purchases per site would max out at the megawatt hour “amount that represents the verifiable historic contribution the facility has made to the clean energy resource mix consumed by retail consumers in New York State,” the report says. It adds that “Cost recovery from ratepayers shall be incorporated into the commodity charges on customer bills.”
