trending Market Intelligence /marketintelligence/en/news-insights/trending/b60q_1txosal81n6aqavvq2 content esgSubNav
In This List

PSEG believes 2 in-state nukes rank high for NJ incentive payments

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


PSEG believes 2 in-state nukes rank high for NJ incentive payments

Public Service Enterprise Group Inc. executives said they believe two nuclear plants they own and operate in their home state of New Jersey have an advantage over other regional nuclear facilities in complying with a new state law.

The group's, or PSEG's, analysis shows the company's Hope Creek and Salem plants are likely to qualify for incentives called zero-emission credits, or ZECs, the company's executive vice president and general counsel, Tamara Linde, told attendees at a May 31 investor conference.

Many plants can qualify, but "on the ranking, I believe our plants have an advantage," Linde said. The state's utilities regulator, the Board of Public Utilities, will evaluate applications for ZECs. PSEG fully owns the 1,172-MW Hope Creek plant and co-owns the 2,328-MW Salem plant with Exelon Corp.

A new state law signed by Gov. Phil Murphy on May 23 creates ZECs to compensate nuclear plants extra for their contribution to fuel diversity, resilience and avoidance of air pollution. A 0.4 cent/kWh surcharge on retail electric customers is expected to generate about $300 million a year for the ZEC payments. The amount of nuclear generation receiving ZECs is capped at 40% of all electricity distributed in New Jersey.

The Board of Public Utilities is required by the new law to determine eligibility for the ZECs and select qualified plants within 330 days of the law's enactment, or by April 2019, PSEG executives said in a May 31 Form 8-K.

PSEG CFO Daniel Cregg said during the investor day that, given the company's partial ownership of Salem, it would receive about $200 million a year in revenues, or 28 cents per share, if Hope Creek and Salem were selected for ZECs.

During PSEG's first-quarter earnings call on April 30, company Chairman, President and CEO Ralph Izzo affirmed the legislation does not have a geographical limit. Izzo added that Salem and Hope Creek could compete for ZECs with plants in Pennsylvania such as Peach Bottom, which PSEG co-owns with Exelon, and Talen Generation LLC's Susquehanna Nuclear plant.

The legislation, however, caps amount of nuclear generation receiving ZECs to no more than 40% of the total generation distributed in New Jersey. The 40% share was based in historic generation from the state's three nuclear plants including Oyster Creek, which Exelon plans to shut this October. That leaves room under the cap for plants outside the state to qualify.

Capital plan

On May 31, PSEG also raised its 2018-2022 capital plan to between $14 billion and $17 billion, from $11.5 billion to $13.2 billion.

Most of the investment, or $12 billion to $15.5 billion, is for projects at its utility, Public Service Electric and Gas Co., whose service territory covers about 70% of the state's population.

PSEG also plans to invest $2.9 billion in a six-year "clean energy future" initiative around electric vehicles, battery storage and energy efficiency. The latest five-year plan includes about $1.5 billion that Daly expects to spend through 2022. About $700 million a year will be spent in 2023 and 2024, Public Service Electric and Gas President and COO David Daly said.

Daly also acknowledged additional opportunities for investments on top of the five-year plan. For example, the clean energy initiative invests in 35 MW of energy storage, and the state earlier in May passed a separate law that requires 600 MW of storage by 2021 and 2,000 MW by 2030. Transmission for potential offshore wind projects in the state is also not included in the current plan.

SNL Image