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PSEG CEO says carbon price, nuclear generation essential to climate response

SNL Image

Public Service Enterprise Group's 1,190-MW Hope Creek nuclear plant in Salem County, N.J.
Source: Public Service Enterprise Group Inc.

While touting the benefits of a freshly approved $1 billion energy efficiency program in New Jersey, the head of power provider Public Service Enterprise Group Inc. reiterated his stance that nuclear generation and a price on carbon are critical to a clean energy future.

"Of course, to the credit of Gov. Phil Murphy in New Jersey and other policymakers in the state, the most important thing that we do from a carbon point of view is just the preservation of our nuclear plants," Public Service Enterprise Group, or PSEG, Chairman, President and CEO Ralph Izzo said Sept. 23 during a fireside chat at the virtual Energy Thought Summit.

The CEO pointed out that 40% of the electricity in New Jersey and 90% of the state's carbon-free energy is supplied by PSEG's nuclear plants.

"It is a real indictment of the absence of national leadership that we don't have a price on carbon and it's resulting in the closure of the existing nuclear fleet," Izzo said. "The existing fleet is 20% of our nation's energy supply and 50% of its carbon-free energy, and the loss of that because we're not reflecting the economics of emitting carbon in any way, shape or form is just a failure of public policy."

While acknowledging PSEG itself is a carbon emitter, Izzo also noted the company is exploring the sale of PSEG Power LLC's fossil fuel generation fleet.

"I'm not complaining about the nation's need to use natural gas but either you need to burden that with a carbon capture and storage technology or you need to burden it with some sort of carbon price," Izzo said. "But then, the insane thing that we do is we go ahead and we grossly subsidize renewables, which I am a fan of, but when you give an out-of-market payment to a renewable and then allow it to pretend that it's free to operate because it's getting some payment outside of the market, now the nuclear plant is running against a zero marginal cost asset, in the form of wind or solar ... and it's running against natural gas, which is not burdened by carbon at all."

The CEO added that an economic system that subsidizes renewables and damages nuclear often results in new natural gas plants.

"I do think that [there are] so many things that we could do to help nuclear preserve its rightful place in our energy mix without constantly batting it on the side of the head with a 2-by-4 through over-subsidization of renewables or letting fossil fuel-fired power not be burdened by the true economic costs," Izzo said.

The PSEG CEO, however, also defended the company as an advocate for renewable energy.

"PSEG has invested over $1 billion in solar. We're big fans of solar," Izzo said. "I complain at every opportunity about the fact that New Jersey subsidizes rooftop solar to the tune of $600 million per year to produce less than 4% of the energy consumed in the state of New Jersey. ... Our preference would be put a national price on carbon, I don't care how you design it ... put a visible price on a ton of carbon and then stop everything else. Don't pick technology winners and losers, don't set renewable portfolio standards, let the market work."

Energy efficiency

Izzo's comments on PSEG's clean energy transition came as the New Jersey Board of Public Utilities approved subsidiary Public Service Electric and Gas Co.'s energy efficiency program.

Nearly 70% of the program is targeted toward business customers to lower their energy consumption and costs, enhancing New Jersey's economic competitiveness, the company said in a news release. The company estimates the program will deliver $1 billion in net customer savings.

"We're hoping that this $1 billion program will set an example of how utilities can grow their earnings, I'm not shy about saying that, grow our rate base and at the same time put people to work, reduce the impact on the environment and lower the customer bills," Izzo said.

"That's about $350 million a year that we'll be spending on energy efficiency," the CEO added. "In the last 10 years, we were a leader in energy efficiency but for all 10 years, we spent $500 million. ... I think that that's going to be an area of wonderful opportunity because it helps so many people. Not only does it mitigate climate change, it lowers the customer bill."

PSEG also sees potential and planned investments in offshore wind, battery storage, electric vehicle charging stations and advanced metering infrastructure as key parts of its energy transition.