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NJ nuke owners apply for zero-emissions credit subsidies

New Jersey regulators will consider whether to grant a subsidy to three nuclear power plants in the state meant to prevent those units from closing early.

Public Service Enterprise Group Inc. subsidiary PSEG Nuclear LLC filed applications Dec. 19 with the state Board of Public Utilities for its Salem and Hope Creek units to receive a zero-emissions credit, or ZEC, subsidy. Exelon Corp., a co-owner of the Salem plant, also filed supplemental information for the Salem filings.

The applications were contained in nearly 200 boxes and are not yet posted on the board's website, spokesperson Peter Peretzman said in an email. Redacted documents will be available as soon as possible, Peretzman said.

The board approved a ZEC subsidy initiative and application process for "at-risk" nuclear power plants in November, as required by legislation Gov. Phil Murphy signed in May. New Jersey's ZEC initiative is similar to subsidy programs in Illinois and New York and seeks to maintain the state's nuclear generation, which is its largest source of carbon-free energy and constitutes almost 40% of the state's generation capacity.

If deemed eligible to receive the subsidy, ZEC-recipient nuclear units will initially be awarded payments from April 19, 2019, through May 31, 2019, and then for the next three "energy years" through 2022.

Under the ZEC tariff rate, the 1,172-MW Hope Creek and 2,328-MW Salem nuclear plants in Salem County, N.J., could receive up to $300 million a year. PSEG owns and operates the plants through PSEG Nuclear. Exelon owns about a 43% interest in the Salem plant and would be eligible for up to $100 million of those ZEC incentives per year.

The two units at Salem are licensed to operate into 2036 and 2040. The Hope Creek plant is licensed to 2046.

PSEG has said it would cost far more to replace the at-risk nuclear units than to preserve them. An Exelon representative could not provide more information Dec. 20 about the filing.

The board also approved tariff modifications in November to implement a rate to fund the ZEC subsidy. The funding will be collected by New Jersey's four investor-owned electric distribution companies: Exelon's Atlantic City Electric Co. FirstEnergy Corp.'s Jersey Central Power & Light Co. PSEG's Public Service Electric and Gas Co. and Consolidated Edison Inc.'s Rockland Electric Co. along with the municipal electric distribution company owned by the borough of Butler, N.J.

Tied to the generation performance of a nuclear unit and capped at a total capacity of 40% of statewide electricity supply in 2017, the ZEC payment rate will be 0.4 cent/kWh, or $4 per month, for a residential customer using 1,000 kWh/month, but collection of the tariff charge will start only if a nuclear plant is deemed eligible.

A list of reactor units eligible to receive credits, including their ranking, will be presented to the board for approval April 19, 2019.