The state’s Board of Public Utilities reluctantly approved a controversial $300 million subsidy for PSEG’s three nuclear power plants—saying legislation Gov. Phil Murphy signed last year gave them little choice but to approve the applications.
The Thursday morning vote followed more than an hour of closed-door discussions and lengthy public comments from the Board of Public Utilities’ five members, who voted 4-1 to approve the subsidies.
“The statute did not give us the freedom to offer a subsidy that we deemed appropriate. It was $4 per megawatt hour or nothing. I would characterize the choices we face as genuinely awful,” said Commissioner Bob Gordon, who ultimately voted in favor of the subsidy.
“We are pleased with the decision to award ZECs to PSEG to help support New Jersey’s primary supply of zero-carbon electricity,” reads a statement from PSEG. “The BPU just saved the people of the state hundreds of millions of dollars in what would have been higher energy costs, thousands of jobs lost and tons of environmentally damaging air emissions.”
Commissioner Upendra Chivukula, also opposed, said the measure would hand down the costs to ratepayers such as businesses and residents since the legislation calls for the subsidies to be financed via a surtax on electric bills, averaging between $30 to $40 more a year for ratepayers.
I would characterize the choices we face as genuinely awful.
– Commissioner Bob Gordon
“I don’t understand the logic of the 120-member Legislature. This state punted the ball to the BPU and the commissioners. I am very sad to see that my colleagues are supporting this action by legislation,” Chivukula added.
Both Chivukula and Gordon are former lawmakers and both Democrats.
Chivukula also questioned the utility’s claims of any financial struggles when PSEG Chief Executive Officer Ralph Izzo makes $12 million annually.
Opponents of the measure called the subsidy – known as zero emissions credits – a “nuclear bailout.” Critics such as the New Jersey Rate Counsel and PJM Independent Monitor argued that the amount PSEG would need to keep its three plants afloat would be much lower than what they were asking for.
“Everybody who was taking a look at this is saying that they are in fact financially viable and they are in fact making money,” said NJ Rate Counsel Director Stefanie Brand.
“There are very much ratepayers who don’t have that extra money right now,” Brand said of the $30 surtax. “And there are certainly larger users for whom it’s a million dollars, not $30 dollars.
“I guess we’ll have to get a court to look at whether or not that was okay,” Brand added.The New Jersey Business and Industry Association was also wary of the subsidies, saying surtax to finance the subsidy would be another cost for businesses.
“NJBIA does support our nuclear power industry, as well as the development of other energy sources – but not at any cost. And the cost to close the plants versus the expense of keeping them open should be fully recognized,” said NJBIA Vice President of Government Affairs Ray Cantor.
Opponents also accused the utility giant of employing hard tactics to bully the BPU into approving the subsidy, such as a closure notice that PSEG sent to the three plants this week.
“This subsidy will determine New Jersey’s energy policy for a generation. We are concerned that it will prevent this state from moving forward with our 100 percent renewable goals by 2050. Because we will have to buy 40 percent from nuclear from now on and the subsidy will take money away from wind and solar,” said New Jersey Sierra Club Director Jeff Tittel in a statement.
“Some people rob you with a gun and others rob you with a pen. That is what just happened today,” Tittel said.
PSEG argued that without the subsidies, it would operate the three plants at a financial loss, meaning the company would have to close all three plants within the next one to three years, and their roughly 1,600 employees would be out of a job.
That would decimate the local economy since PSEG is one of the main employers in Salem County, said Mike Egenton, vice president of government affairs at the New Jersey Chamber of Commerce.
Chamber President, Tom Bracken added, “When you’re talking about clean energy, nuclear and natural gas is needed. If we’re talking about what’s the future of New Jersey’s clean energy needs, we certainly welcome wind and solar, but nuclear and natural gas has to be part of the portfolio.”
“I have no doubt that [PSEG] would carry out their threat. The board is being directed to pay ransom and the hostages are the citizens of New Jersey,” Gordon said.
But BPU Board President Joseph Fiordaliso, who voted for the subsidy, said the board should consider that there are no electricity alternatives to nuclear save for natural gas, which he said would run counter to Murphy’s clean energy goals.
“Right now, nuclear power makes up approximately 32 percent of the state’s clean energy and 90 percent of our clean energy portfolio,” Fiordaliso said.
BPU staffers at the meeting said PSEG demonstrated that the plant-closures would lead to an increase of greenhouse gas emissions – 9.6 percent in New Jersey and 11 percent in the region – but made no recommendations on whether to approve the subsidies.
The staff determined that the plants could stay open for upwards of seven years if they were to be shut down in the near future, given that many employees would be on the payroll to safely dispose of nuclear waste. Those staffers evaluated the application based on the current market condition as is done under BPU regulations, even though PSEG wanted the agency to consider their application based on overhead labor costs and future market volatility.
“The units are financially viable as they stand now,” BPU staff said, adding that the plant’s current financial viability means PSEG should not get the subsidies.
Further, proponents argue, the loss of the three plants would blow a hole in electricity-generation for New Jersey—40 percent of the state’s power coming from the three plants and would have to be made up for by some other means, and quickly.
Senate President Stephen Sweeney, Deputy Assembly Speaker John Burzichelli and Assemblyman Adam Taliaferro, all Democrats from the 3rd District, issued a joint statement praising the BPU for its approval of the plan.
“There is a cost to this plan, but the cost of ignoring the threat and allowing our nuclear plants to close is far worse,” the trio said. “And once they close, they can’t be reopened.”
“We already provide more than $450 million in subsidies to solar power because it is important to our clean energy portfolio,” the lawmakers added. “But expanding solar energy and creating a new offshore wind industry does not mitigate the need for nuclear power.”