Two legislative committees in New Jersey on Feb. 22 will consider a bill to save nuclear power plants that has been modified to align with clean energy goals from Gov. Phil Murphy.
The New Jersey Senate Budget and Appropriations and Assembly Telecommunications and Utilities committees will consider Senate Bill 877, which creates a program to support financially struggling nuclear plants through the use of "nuclear diversity credits." The latest version, which the New Jersey Senate released Feb. 16, also includes a higher offshore wind target to align with the governor's goals.
The state's largest utility company, Public Service Enterprise Group Inc., has backed a state fix for its 1,172-MW Hope Creek plant and the 2,328-MW Salem plant, which it co-owns with Exelon Corp. When backing similar bills, S. 3560/A. 5330, in testimony to legislators in December 2017, PSEG Chairman, President and CEO Ralph Izzo said the two plants could be uneconomic in two years under current projections.
Similar to last year's bills, the latest proposal authorizes the state Board of Public Utilities raise electric rates by 0.004 cent/kWh, equal to $4/MWh, to cover the costs of the credits, which represent the value that nuclear power provides to the state in avoiding fossil fuel air emissions and keeping the state's energy mix diverse. But the bill now includes support for developing 3,500 MW of offshore wind, the same amount that Murphy aims to achieve by 2030, as outlined by a Feb. 1 executive order. A Jan. 25 version of S.B. 877 had supported at least 1,100 MW of offshore wind, a goal contained in a 2010 state law.
Conforming the bill to the governor's energy goals is not surprising. In a Feb. 1 interview, Sen. Bob Smith, who co-sponsored S. 877, said he would try to match the design of the bill to Murphy's energy master plan, which the governor, who was sworn in in January, has said he plans to file within his first 100 days in office.
The bill still includes energy efficiency portfolio standards for gas and electric utilities and extends the state's solar target through 2033. The state's current targets end in 2028.
In addition, the bill doubles the state's net metering cap to 5.8%, which means the amount of customer load participating in net metering cannot be more than 5.8% of the total electricity sold in the state in a prior year. Net metering is a billing mechanism that offers incentives for property owners to install rooftop solar and other projects by allowing customers to receive credits on their bills for excess power they sell back to their distribution utility.
Costs
PSEG estimated that a $4/MWh tariff charge could cost ratepayers roughly $300 million a year, according to Izzo's Dec. 20, 2017, testimony. But the CEO also argued that the costs of not taking action and letting the Salem and Hope Creek plants shut would be more costly, citing economic studies from consultants The Brattle Group and IHS Markit that both estimated economic impacts over $800 million a year in lost gross domestic product from closing the plants.
New Jersey Division of Rate Counsel Director Stefanie Brand commissioned a study released on Feb. 6 that estimated a net present value $2.7 billion impact in lost economic output from a nuclear diversity credit or "zero-emission credit" program running through 2025. If the credit program runs for 10 years, the total economic impact rises to $3.4 billion.
The analysis, by Acadian Consulting Group, also estimates that the solar provisions of the bill, excluding net metering subsidies, could expose ratepayers to a total of $6.76 billion in costs accumulated over the 2018-to-2033 period. The bill lifts the percentage of power each year coming from solar to a high of 4.9% by 2022 and then lets the target decline to 1.1% by 2033. Current law lets the target reach a high of 4.1% by 2028.
