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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--New Jersey Governor Phil Murphy supported legislation granting nuclear power operators up to $300 million of financial subsidies per year to keep financially struggling nuclear plants open. The state's legislature overwhelmingly passed that bill (S-2313) April 12. But, more than five weeks later, the bill still sits, unsigned, on Gov. Murphy's desk. Why?
The bill was opposed by environmental organizations, consumer groups, competing merchant generators and actor Alec Baldwin. But a potentially more significant reason for Governor Murphy's delay in signing a bill he supported could lie in a provision of the bill that did not limit the financial subsidies to specific nuclear plants in New Jersey.
In its quarterly earnings call on April 30, Public Service Enterprise Group Incorporated (NYSE:PEG) (PSEG) (Newark, New Jersey) Chief Executive Officer Ralph Izzo acknowledged the subsidies in the bill could go to financially ailing nuclear plants in Pennsylvania and, potentially, beyond.
"The bill simply says that New Jersey wants 40% of its power supplied by nuclear energy and it does not limit it geographically," Izzo said, according to a report in RTO Insider. Izzo was responding to a question about whether nuclear plants outside New Jersey could be eligible for the zero emission credits (ZECs) authorized by the legislation.
According to the RTO Insider report, Izzo said the Peach Bottom nuclear plant in Pennsylvania, which is 50% owned by PSEG, could compete for ZECs. So, he added, could two other Pennsylvania nuclear plants: Susquehanna, operated by Talen Energy Corporation (Allentown, Pennsylvania) and Limerick, operated by Exelon Corporation (NYSE:EXC) (Chicago, Illinois). S-2313, which was passed overwhelmingly April 12, was initially drafted to help keep two PSEG nuclear plants--Salem and Hope Creek--open.
For more on the New Jersey pro-nuclear legislation, see March 20, 2018, article - New Jersey Clean Energy Plan Includes Offshore Wind, Nuclear Support and Electricity Storage and September 18, 2017, article - Will Nuclear Nor'easter Roil New Jersey's Electric Market?
While probably not intended by New Jersey lawmakers, it's possible some of the Garden State's financial largesse also could flow to three financially ailing nuclear plants operated by FirstEnergy Corporation (NYSE:FE) (Akron, Ohio). FirstEnergy has failed to win financial support of about $300 million per year from Ohio lawmakers for its Perry and Davis-Besse nuclear plants. For more on FirstEnergy's lengthy but unsuccessful attempts to secure financial aid for its Ohio nuclear plants, see October 4, 2017, article - Electricity Scrum Set to Resume in Ohio Legislature and May 30, 2017, article - Down but Not Out? FirstEnergy Still Seeking $300 Million Per Year in Nuclear Support.
FirstEnergy also was unable to convince Pennsylvania lawmakers to provide financial support to its Beaver Valley nuclear unit. Because it was unable to win financial support for its Perry, Davis-Besse and Beaver Valley plants, the FirstEnergy unit that owns those plants filed for Chapter 11 bankruptcy reorganization March 31. For more on that, see April 6, 2018, article - Investors Yawn after FirstEnergy Unit Files Chapter 11, Plans to Close Four Nuclear Units.
The Davis-Besse plant is located east of Toledo, Ohio, and the Perry plant is located east of Cleveland, Ohio. Both are one-unit plants. The Beaver Valley nuclear complex located west of Pittsburgh, Pennsylvania, is a two-unit facility. The four units have combined generating capacity of about 3,974 megawatts (MW).
Days before it filed for Chapter 11 protection, FirstEnergy Solutions sent a letter to the PJM Interconnection (Valley Forge, Pennsylvania) that said it planned to sell or close Davis-Besse May 31, 2020. The letter also said Perry and Beaver Valley Unit 1 will be sold or closed May 31, 2021, and that Beaver Valley Unit 2 will be sold or shuttered on October 31, 2021.
PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. Among the states where PJM operates are Ohio, Pennsylvania and New Jersey. PJM conducts periodic auctions for power to meet electric demand in the areas it operates. So it's possible that FirstEnergy nuclear units in the Buckeye and Keystone states, as well as the Peach Bottom, Susquehanna and Limerick plants, all located in Pennsylvania, could be eligible for some of the up to $300 million in annual financial support for nuclear plants enacted by the New Jersey legislature.
As of late last week, New Jersey Gov. Murphy had not signed S-2313. According to the RTO Insider report, Murphy has 45 days from the day it was passed (April 12) to either sign the bill into law, veto it, conditionally veto it or not sign it. A conditional veto would send the bill back to the legislature with a list of changes the governor wanted to see made. An outright veto could be overridden by a two-thirds majority in both houses of the legislature, which is feasible given the 29-7 vote for the bill in the state house and the 60-10 vote for it in the state senate. If Murphy does nothing within the 45-day window, the bill becomes law.
The twists and turns of New Jersey's pro-nuclear legislation contrasts with decisions made in other states, including Illinois, New York and Connecticut, to financially support uneconomic nuclear units. For more on that, see December 20, 2016, article - Exelon Wins Financial Aid for Two Uneconomic Nuclear Plants, and August 3, 2016, article - Cash on the Barrel: New York Clean Energy Standard Includes Multibillion-Dollar Support for Nuclear Power's Carbon-Free Generation. After a lengthy fight over the financial health of the Millstone nuclear plant in Connecticut, regulators there allowed the plant to bid in the state's carbon-free power auction. For more on that, see December 26, 2017, article - Connecticut Utility Regulators Assessing Millstone's Profitability.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The bill was opposed by environmental organizations, consumer groups, competing merchant generators and actor Alec Baldwin. But a potentially more significant reason for Governor Murphy's delay in signing a bill he supported could lie in a provision of the bill that did not limit the financial subsidies to specific nuclear plants in New Jersey.
In its quarterly earnings call on April 30, Public Service Enterprise Group Incorporated (NYSE:PEG) (PSEG) (Newark, New Jersey) Chief Executive Officer Ralph Izzo acknowledged the subsidies in the bill could go to financially ailing nuclear plants in Pennsylvania and, potentially, beyond.
"The bill simply says that New Jersey wants 40% of its power supplied by nuclear energy and it does not limit it geographically," Izzo said, according to a report in RTO Insider. Izzo was responding to a question about whether nuclear plants outside New Jersey could be eligible for the zero emission credits (ZECs) authorized by the legislation.
According to the RTO Insider report, Izzo said the Peach Bottom nuclear plant in Pennsylvania, which is 50% owned by PSEG, could compete for ZECs. So, he added, could two other Pennsylvania nuclear plants: Susquehanna, operated by Talen Energy Corporation (Allentown, Pennsylvania) and Limerick, operated by Exelon Corporation (NYSE:EXC) (Chicago, Illinois). S-2313, which was passed overwhelmingly April 12, was initially drafted to help keep two PSEG nuclear plants--Salem and Hope Creek--open.
For more on the New Jersey pro-nuclear legislation, see March 20, 2018, article - New Jersey Clean Energy Plan Includes Offshore Wind, Nuclear Support and Electricity Storage and September 18, 2017, article - Will Nuclear Nor'easter Roil New Jersey's Electric Market?
While probably not intended by New Jersey lawmakers, it's possible some of the Garden State's financial largesse also could flow to three financially ailing nuclear plants operated by FirstEnergy Corporation (NYSE:FE) (Akron, Ohio). FirstEnergy has failed to win financial support of about $300 million per year from Ohio lawmakers for its Perry and Davis-Besse nuclear plants. For more on FirstEnergy's lengthy but unsuccessful attempts to secure financial aid for its Ohio nuclear plants, see October 4, 2017, article - Electricity Scrum Set to Resume in Ohio Legislature and May 30, 2017, article - Down but Not Out? FirstEnergy Still Seeking $300 Million Per Year in Nuclear Support.
FirstEnergy also was unable to convince Pennsylvania lawmakers to provide financial support to its Beaver Valley nuclear unit. Because it was unable to win financial support for its Perry, Davis-Besse and Beaver Valley plants, the FirstEnergy unit that owns those plants filed for Chapter 11 bankruptcy reorganization March 31. For more on that, see April 6, 2018, article - Investors Yawn after FirstEnergy Unit Files Chapter 11, Plans to Close Four Nuclear Units.
The Davis-Besse plant is located east of Toledo, Ohio, and the Perry plant is located east of Cleveland, Ohio. Both are one-unit plants. The Beaver Valley nuclear complex located west of Pittsburgh, Pennsylvania, is a two-unit facility. The four units have combined generating capacity of about 3,974 megawatts (MW).
Days before it filed for Chapter 11 protection, FirstEnergy Solutions sent a letter to the PJM Interconnection (Valley Forge, Pennsylvania) that said it planned to sell or close Davis-Besse May 31, 2020. The letter also said Perry and Beaver Valley Unit 1 will be sold or closed May 31, 2021, and that Beaver Valley Unit 2 will be sold or shuttered on October 31, 2021.
PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. Among the states where PJM operates are Ohio, Pennsylvania and New Jersey. PJM conducts periodic auctions for power to meet electric demand in the areas it operates. So it's possible that FirstEnergy nuclear units in the Buckeye and Keystone states, as well as the Peach Bottom, Susquehanna and Limerick plants, all located in Pennsylvania, could be eligible for some of the up to $300 million in annual financial support for nuclear plants enacted by the New Jersey legislature.
As of late last week, New Jersey Gov. Murphy had not signed S-2313. According to the RTO Insider report, Murphy has 45 days from the day it was passed (April 12) to either sign the bill into law, veto it, conditionally veto it or not sign it. A conditional veto would send the bill back to the legislature with a list of changes the governor wanted to see made. An outright veto could be overridden by a two-thirds majority in both houses of the legislature, which is feasible given the 29-7 vote for the bill in the state house and the 60-10 vote for it in the state senate. If Murphy does nothing within the 45-day window, the bill becomes law.
The twists and turns of New Jersey's pro-nuclear legislation contrasts with decisions made in other states, including Illinois, New York and Connecticut, to financially support uneconomic nuclear units. For more on that, see December 20, 2016, article - Exelon Wins Financial Aid for Two Uneconomic Nuclear Plants, and August 3, 2016, article - Cash on the Barrel: New York Clean Energy Standard Includes Multibillion-Dollar Support for Nuclear Power's Carbon-Free Generation. After a lengthy fight over the financial health of the Millstone nuclear plant in Connecticut, regulators there allowed the plant to bid in the state's carbon-free power auction. For more on that, see December 26, 2017, article - Connecticut Utility Regulators Assessing Millstone's Profitability.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
