The New Jersey Board of Public Utilities voted unanimously April 27 to extend the state's zero-emission certificate subsidies for PSEG Nuclear's Hope Creek and Salem plants, payments the company said it must continue to receive if the plants are not to be permanently shut for being unprofitable to operate.
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The board's decision extends, until May 2025, a ZEC subsidy of $10/MWh provided to PSEG for generation from its Hope Creek and Salem-1 and -2 nuclear units in Hancocks Bridge, with a combined capacity of 3.736 GW.
PSEG officials have said, including at a hearing in March on the proposed extension of the ZECs, that the company would permanently shut the units if the subsidies were not extended, because they would be uneconomic to continue to operate.
PSEG said in a statement April 27 it was pleased with the BPU decision "to extend the ZECs at the current rate to help support New Jersey's largest supply of carbon-free electricity. The BPU's actions today helped the environment, saved jobs, and avoided higher energy costs. We appreciate the BPU's detailed review and consideration of PSEG Nuclear's ZEC applications."
The statement did not mention the company's future plans for operating Salem and Hope Creek.
Paul Flanagan, executive director of the BPU, said in his presentation during the meeting that BPU staff recommended extension of the ZECs, in part because closure of the plants "would negatively impact New Jersey's ability to comply with its air emissions requirements."
Flanagan said staff had also found that because "there is financial risk in continued operation," for the state to provide "less than full ZEC amount might not be sufficient to prevent closure of the units."
All five BPU commissioners spoke during the meeting in favor of extending the ZECs, emphasizing the importance of nuclear power in New Jersey for mitigating climate change and air pollution and helping to assure a resilient electric grid.
Joseph Fiordaliso, president of the BPU, said before the vote that Hope Creek and Salem provide more than 90% of New Jersey's in-state carbon-free generation and more than one-third of overall in-state energy supply. If they were to be shut, the state's electricity consumers would "lose the single largest source of the state's overall clean energy power supply and be forced to make up that supply with sources such as fossil fuels," Fiordaliso said.
The increased emissions that would result were not acceptable when the ZECs were first approved, "and they are not acceptable today," he added.
Commissioner Mary-Anna Holden said the estimated cost of solar-generated electricity in New Jersey without government subsidies is $217/MWh, "much more expensive" than a $10/MWh ZEC.
Commissioner Bob Gordon said he would vote to extend the ZECs because he did "not want to shut down nuclear power in New Jersey" or forgo its environmental and economic benefits for the state. However, he claimed that PSEG and Exelon "have told us it is all or nothing," and "unless the maximum ZEC subsidy of $10/MWh was approved, the plants would be closed. And I believe them." Gordon noted that he was "disappointed by the level of intransigence in this exercise of market power."
Opponents of the ZEC program have said that the subsidies are an unnecessary bailout of nuclear power, claiming that economic analyses had not demonstrated that such large subsidies are needed to keep Hope Creek and Salem in operation and renewable generation is a more desirable path for the state.
Jeff Tittel, director of the anti-nuclear New Jersey Sierra Club, said in an April 27 statement, "this is the third year in a row that the BPU rubberstamped these unneeded subsidies," which "will take money away from offshore wind, solar, and energy efficiency programs in New Jersey. We are concerned that it will prevent this state from moving forward with our 100% renewable goals by 2050."
"According to reports completed by Levitan & Associates, PSEG may not need the full $300 million annual subsidy that they requested in the applications. However, BPU staff found that Hope Creek and the Salem Plants are still not profitable even after the adjustments made in the reports," New Jersey Sierra Club said in its statement. The reports were prepared earlier this year by Levitan & Associates for BPU staff's analysis of the ZEC extension.
The firm confirmed in its reports that none of the three nuclear units were currently profitable to operate, Aida Camacho-Welch, secretary of the board, said in January 19 letters on the reports posted on the BPU website.
Asked about the claim that the amount of ZEC payments awarded was more than is needed to keep the plants in operation, PSEG spokeswoman Marijke Shugrue noted April 27 that company officials had previously said the payments might in fact be less than necessary.
PSEG President and CEO Ralph Izzo said during the company's Feb. 26 earnings call that "these units are actually in need of more than $10 per megawatt-hour, partly due to the fact that PJM forward market prices are lower versus 2018," when the ZEC program began. Dan Cregg, PSEG's CFO, said during the board's March 8 hearings on the ZECs: "Make no mistake, the $10 ZEC that can be granted by virtue of this process still falls short in our view of where we think things should be for the longer term."