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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The nuclear power industry recently won a key battle, lost one and is still fighting a third, where the prospects appear favorable.
The win: In April, New Jersey utility regulators voted 4-1 to grant $300 million per year in financial subsidies to two nuclear power plants: PSEG Hope Creek Nuclear Generating Station, which is owned by a unit of Public Service Enterprise Group Incorporated (NYSE:PEG) (Newark, New Jersey); and Salem Nuclear Power Station, which is jointly owned by Public Service Enterprise Group and Exelon Corporation (NYSE:EXC) (Chicago, Illinois).
The loss: Exelon began closing its Three Mile Island Nuclear Generating Station in Pennsylvania on June 1, after the state's legislature refused to provide financial aid to the unprofitable plant. The plant will be closed later this year, possibly in September. In what one wag described as a virtual "Frankenstein Meets the Mummy, 2019," politically powerful Exelon was outlasted by Pennsylvania's more-powerful natural gas industry, who opposed providing subsidies to technologies that would compete with gas-fired power.
Still in play: After years of consideration, Ohio's House of Representatives approved a bill awarding the owner of two nuclear plants in the state up to about $190 million a year in financial aid. A unit of FirstEnergy Corporation (NYSR:FE) (Akron, Ohio) owns the Perry Nuclear Generating Station and the Davis-Besse Nuclear Power Station, but FirstEnergy is abandoning the merchant power business, so it is unclear who will own the two nuclear plants. The bill, House Bill 6, still must be considered by the state Senate, which has a Republican majority. The state's Republican governor, Mike DeWine, has indicated he supports the bill.
In New Jersey, the nuclear battle focused on carbon-free power, not bailing out unprofitable plants. PSEG didn't contend Hope Creek and Salem weren't profitable; rather, they pointed out that they produced about 90% of the carbon-free power in a state trying to shrink its carbon footprint.
On April 18, the New Jersey Board of Public Utilities (BPU) (Trenton, New Jersey) voted 4-1 to approve subsidies of about $300 million a year for three years to the owners of New Jersey's nuclear power plants. Three separate analyses had found the plants to be profitable and in no danger of closing. Earlier, the state legislature approved a $300 million bailout bill. The BPU's choices were to accept the bill or reject it, with no opportunity to change it.
"In my view, the board is being directed to pay a ransom,'' BPU Commissioner Bob Gordon said, according to a report in New Jersey Spotlight. "We're here today because these plants are not losing money, but because they are not profitable enough." He voted for the subsidies, which took effect immediately.
PSEG saw things differently. In a statement after the BPU vote, the company said it was pleased the state is backing the plants, which provide about 32% of the state's electricity and 90% of its carbon-free power.
"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 emissions," the company said. It argued that replacing the lost power from the nuclear units would have cost as much as $400 million.
Just days before the BPU vote, PSEG Nuclear notified grid operator PJM Interconnection and the Federal Energy Regulatory Commission (FERC) that the plants would be closed if they did not receive the $300 million per year in subsidies. In its filings, the PSEG unit said "if the ZECs (zero energy credits) are awarded to all three plants, the retirement submittals would be unnecessary.''
Roughly 125 miles away, in Harrisburg, Pennsylvania, after Keystone State legislators indicated they would not be advancing either of two bills to award Exelon a subsidy to keep financially ailing Three Mile Island (TMI) Unit 1 open, Exelon on June 1 began preparations to shut the unit. Exelon had said it needed to decide the unit's fate by June 1, since it needed to order nuclear fuel if the unit was to continue operating.
"Today is a difficult day for our employees, who were hopeful that state policymakers would support valuing carbon-free nuclear energy the same way they value other forms of clean energy in time to save TMI (Unit 1) from a premature closure," Bryan Hanson, Exelon senior vice president and chief nuclear officer, said in a May 8 statement.
Exelon had been saying the plant was not economic for years. In its statement acknowledging it was unlikely to win passage of a financial support package, Exelon said it would begin to shut down the unit starting June 1. The Three Mile Island nuclear power plant was the site of the United States' worst commercial nuclear power accident in 1979, when the core of Unit 2 partially melted down.
Exelon had been successful at securing financial support in other states, namely Illinois and New York, to keep financially challenged nuclear plants in those state operating. 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. But in Pennsylvania, Exelon was opposed by the state's powerful Oil & Gas lobby, which was joined by consumer advocates and industrial gas users in opposing the measure Exelon sought.
In Ohio, FirstEnergy finally made some progress in its years-long effort to win financial support for its unprofitable nuclear plants, Davis-Besse Nuclear Power Station and Perry Nuclear Generating Station. On May 29, the state House voted 53-43 to pass House Bill 6, which would award about $190 million in annual subsidies to the two nuclear plants. A companion bill was introduced in the state Senate a day after the House passed its version. A vote could come in the coming days. The governor has indicated he supports the measure.
In a shift from earlier unsuccessful efforts, the bill was broadened to include subsidies for coal-fired power plants and cutting state aid for renewable energy and energy efficiency. For more on FirstEnergy's earlier efforts to win support for financial support for nuclear, see October 4, 2017, article - Electricity Scrum Set to Resume in Ohio Legislature and May 17, 2017, article - Down but Not Out? FirstEnergy Still Seeking $300 Million Per Year in Nuclear Support.
Ohio House Bill 6 would add a $1 monthly charge to residential customers' bills starting in 2021 that would bolster the economics of the state's two nuclear plants. Commercial and industrial customers would pay much higher monthly fees, ranging from $15 to $2,500.
HB 6 also would extend a $2.50-per-month charge through 2030 for Ohio Valley Electric Corporation to support coal plants owned by a consortium of utilities. Finally, the bill would eliminate the state's renewable portfolio standard (RPS) and its energy efficiency mandates, removing about $4.60 per month from residential customers' monthly bills. The bill would eliminate Ohio's renewable portfolio standard requiring 12.5% of all electricity to come from renewable sources by 2027. That RPS was enacted in 2008.
Renewable power and energy efficiency supporters, among others, cried "foul" and pointed out that the state's increased energy-efficiency standards have lowered Ohio electric bills by a cumulative $5.1 billion between 2009 and 2017, according to filings by the Midwest Energy Efficiency Alliance (Chicago, Illinois). Energy efficiency also helps to slow the growth of electricity demand, which reduces the need to build new power plants.
"No analysis can reach the conclusion that reducing efficiency results in lower bills or cleaner air," said Rob Kelter, senior attorney for the Environmental Law and Policy Center (Chicago, Illinois), who testified before an Ohio House panel early last month. Critics from the left and the right also lambasted the bill as bad public policy.
Those seeking subsidies for uneconomic nuclear and coal plants, which include the Trump administration, have claimed premature closure of those baseload plants would hurt electric reliability and grid resilience. But regional grid operators, including those at PJM Interconnection, have told Ohio lawmakers and the news media that taking the Ohio nuclear plants offline is not expected to adversely impact the reliability of the transmission system. For more on this, see June 12, 2018, article - Industry Split on Trump's Plan to Rescue Uneconomic Coal and Nuclear Plants.
"Efforts to subsidize less-competitive plants will result in higher power prices for Ohioans," said a PJM official. "Such actions have the potential to roll back the progress and stability that the markets have facilitated. Such actions could prevent the building of more efficient and cost-effective plants, including cleaner technologies like solar and wind."
And, in an unrelated matter, the Pilgrim Nuclear Power Station in Plymouth, Massachusetts, produced its last kilowatt-hour of electricity on May 31. Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) several years ago announced plans to retire the 47-year-old plant. The closing leaves Seabrook in New Hampshire and Millstone in Connecticut as New England's only still-operating commercial nuclear plants.
The loss of Pilgrim's 680 megawatts of generation capacity likely won't affect electric reliability in the region, said officials with grid operator ISO-New England. They said three new gas- and oil-fired power plants are expected to be online this summer. Several small solar facilities and a new windfarm also will help offset the loss of Pilgrim. But the loss of carbon-free generation could complicate the state's requirement to shrink its carbon footprint.
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 win: In April, New Jersey utility regulators voted 4-1 to grant $300 million per year in financial subsidies to two nuclear power plants: PSEG Hope Creek Nuclear Generating Station, which is owned by a unit of Public Service Enterprise Group Incorporated (NYSE:PEG) (Newark, New Jersey); and Salem Nuclear Power Station, which is jointly owned by Public Service Enterprise Group and Exelon Corporation (NYSE:EXC) (Chicago, Illinois).
The loss: Exelon began closing its Three Mile Island Nuclear Generating Station in Pennsylvania on June 1, after the state's legislature refused to provide financial aid to the unprofitable plant. The plant will be closed later this year, possibly in September. In what one wag described as a virtual "Frankenstein Meets the Mummy, 2019," politically powerful Exelon was outlasted by Pennsylvania's more-powerful natural gas industry, who opposed providing subsidies to technologies that would compete with gas-fired power.
Still in play: After years of consideration, Ohio's House of Representatives approved a bill awarding the owner of two nuclear plants in the state up to about $190 million a year in financial aid. A unit of FirstEnergy Corporation (NYSR:FE) (Akron, Ohio) owns the Perry Nuclear Generating Station and the Davis-Besse Nuclear Power Station, but FirstEnergy is abandoning the merchant power business, so it is unclear who will own the two nuclear plants. The bill, House Bill 6, still must be considered by the state Senate, which has a Republican majority. The state's Republican governor, Mike DeWine, has indicated he supports the bill.
In New Jersey, the nuclear battle focused on carbon-free power, not bailing out unprofitable plants. PSEG didn't contend Hope Creek and Salem weren't profitable; rather, they pointed out that they produced about 90% of the carbon-free power in a state trying to shrink its carbon footprint.
On April 18, the New Jersey Board of Public Utilities (BPU) (Trenton, New Jersey) voted 4-1 to approve subsidies of about $300 million a year for three years to the owners of New Jersey's nuclear power plants. Three separate analyses had found the plants to be profitable and in no danger of closing. Earlier, the state legislature approved a $300 million bailout bill. The BPU's choices were to accept the bill or reject it, with no opportunity to change it.
"In my view, the board is being directed to pay a ransom,'' BPU Commissioner Bob Gordon said, according to a report in New Jersey Spotlight. "We're here today because these plants are not losing money, but because they are not profitable enough." He voted for the subsidies, which took effect immediately.
PSEG saw things differently. In a statement after the BPU vote, the company said it was pleased the state is backing the plants, which provide about 32% of the state's electricity and 90% of its carbon-free power.
"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 emissions," the company said. It argued that replacing the lost power from the nuclear units would have cost as much as $400 million.
Just days before the BPU vote, PSEG Nuclear notified grid operator PJM Interconnection and the Federal Energy Regulatory Commission (FERC) that the plants would be closed if they did not receive the $300 million per year in subsidies. In its filings, the PSEG unit said "if the ZECs (zero energy credits) are awarded to all three plants, the retirement submittals would be unnecessary.''
Roughly 125 miles away, in Harrisburg, Pennsylvania, after Keystone State legislators indicated they would not be advancing either of two bills to award Exelon a subsidy to keep financially ailing Three Mile Island (TMI) Unit 1 open, Exelon on June 1 began preparations to shut the unit. Exelon had said it needed to decide the unit's fate by June 1, since it needed to order nuclear fuel if the unit was to continue operating.
"Today is a difficult day for our employees, who were hopeful that state policymakers would support valuing carbon-free nuclear energy the same way they value other forms of clean energy in time to save TMI (Unit 1) from a premature closure," Bryan Hanson, Exelon senior vice president and chief nuclear officer, said in a May 8 statement.
Exelon had been saying the plant was not economic for years. In its statement acknowledging it was unlikely to win passage of a financial support package, Exelon said it would begin to shut down the unit starting June 1. The Three Mile Island nuclear power plant was the site of the United States' worst commercial nuclear power accident in 1979, when the core of Unit 2 partially melted down.
Exelon had been successful at securing financial support in other states, namely Illinois and New York, to keep financially challenged nuclear plants in those state operating. 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. But in Pennsylvania, Exelon was opposed by the state's powerful Oil & Gas lobby, which was joined by consumer advocates and industrial gas users in opposing the measure Exelon sought.
In Ohio, FirstEnergy finally made some progress in its years-long effort to win financial support for its unprofitable nuclear plants, Davis-Besse Nuclear Power Station and Perry Nuclear Generating Station. On May 29, the state House voted 53-43 to pass House Bill 6, which would award about $190 million in annual subsidies to the two nuclear plants. A companion bill was introduced in the state Senate a day after the House passed its version. A vote could come in the coming days. The governor has indicated he supports the measure.
In a shift from earlier unsuccessful efforts, the bill was broadened to include subsidies for coal-fired power plants and cutting state aid for renewable energy and energy efficiency. For more on FirstEnergy's earlier efforts to win support for financial support for nuclear, see October 4, 2017, article - Electricity Scrum Set to Resume in Ohio Legislature and May 17, 2017, article - Down but Not Out? FirstEnergy Still Seeking $300 Million Per Year in Nuclear Support.
Ohio House Bill 6 would add a $1 monthly charge to residential customers' bills starting in 2021 that would bolster the economics of the state's two nuclear plants. Commercial and industrial customers would pay much higher monthly fees, ranging from $15 to $2,500.
HB 6 also would extend a $2.50-per-month charge through 2030 for Ohio Valley Electric Corporation to support coal plants owned by a consortium of utilities. Finally, the bill would eliminate the state's renewable portfolio standard (RPS) and its energy efficiency mandates, removing about $4.60 per month from residential customers' monthly bills. The bill would eliminate Ohio's renewable portfolio standard requiring 12.5% of all electricity to come from renewable sources by 2027. That RPS was enacted in 2008.
Renewable power and energy efficiency supporters, among others, cried "foul" and pointed out that the state's increased energy-efficiency standards have lowered Ohio electric bills by a cumulative $5.1 billion between 2009 and 2017, according to filings by the Midwest Energy Efficiency Alliance (Chicago, Illinois). Energy efficiency also helps to slow the growth of electricity demand, which reduces the need to build new power plants.
"No analysis can reach the conclusion that reducing efficiency results in lower bills or cleaner air," said Rob Kelter, senior attorney for the Environmental Law and Policy Center (Chicago, Illinois), who testified before an Ohio House panel early last month. Critics from the left and the right also lambasted the bill as bad public policy.
Those seeking subsidies for uneconomic nuclear and coal plants, which include the Trump administration, have claimed premature closure of those baseload plants would hurt electric reliability and grid resilience. But regional grid operators, including those at PJM Interconnection, have told Ohio lawmakers and the news media that taking the Ohio nuclear plants offline is not expected to adversely impact the reliability of the transmission system. For more on this, see June 12, 2018, article - Industry Split on Trump's Plan to Rescue Uneconomic Coal and Nuclear Plants.
"Efforts to subsidize less-competitive plants will result in higher power prices for Ohioans," said a PJM official. "Such actions have the potential to roll back the progress and stability that the markets have facilitated. Such actions could prevent the building of more efficient and cost-effective plants, including cleaner technologies like solar and wind."
And, in an unrelated matter, the Pilgrim Nuclear Power Station in Plymouth, Massachusetts, produced its last kilowatt-hour of electricity on May 31. Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) several years ago announced plans to retire the 47-year-old plant. The closing leaves Seabrook in New Hampshire and Millstone in Connecticut as New England's only still-operating commercial nuclear plants.
The loss of Pilgrim's 680 megawatts of generation capacity likely won't affect electric reliability in the region, said officials with grid operator ISO-New England. They said three new gas- and oil-fired power plants are expected to be online this summer. Several small solar facilities and a new windfarm also will help offset the loss of Pilgrim. But the loss of carbon-free generation could complicate the state's requirement to shrink its carbon footprint.
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.
