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Entergy proposes alternative to Cuomo's clean energy standard

Asan alternative to New York's proposed, multi-tier renewable and upstate nuclearsubsidies, Entergy Corp.has put forward a single, market-based "clean energy credit" tocompensate all generation for avoided emissions per megawatt-hour instead.

Entergy,the operator of James A.FitzPatrick and Indian Point nuclear plants, raised the idea oftechnology-neutral compensation for emission-free electricity in April 22 submitted to the NewYork Public Service Commission in response to a by PSC Staff onGov. Andrew Cuomo's clean energy standard proposal. The state regulators arecurrently considering the governor's initiative to subsidize renewables andexisting upstate nuclear plants to ensure New York meets its goals of cuttingcarbon dioxide 40% from 1990 levels and generate 50% of its electricity fromrenewables by 2030.

"Thelong-lived character of CO2 in the atmosphere means that a ton of CO2 notemitted today is as important as the ton avoided tomorrow," said expertwitness Susan Tierney on behalf of Entergy in her testimony. What matters isthe carbon intensity of a megawatt per hour of electricity that is produced byan energy resource, continued Tierney who is an advisor at Analysis Group Inc.If the purpose of New York's clean energy standard is to cut emissions by 40%by 2030, then it should "focus like a laser on that outcome" byproportionally compensating energy resources at incremental levels, "whetherthrough avoiding emissions by producing power with no CO2 emissions or reducingemissions at power plants that emit CO2," she said.

"Designinga technology-neutral CES program that compensates suppliers for the zero- orlow-emission electricity they produce mitigates the existing failure inelectricity markets to internalize the costs associated with CO2 emissions andclimate change," Tierney said. This market-based approach of recognizingthe incremental value of energy resources by the amount of carbon dioxide perMWh they produce would help New York meet its emissions cuts by 2030 morecost-effectively than the current proposal would, she said.

TheCuomo administration has been pushing to subsidize New York's atabove-market energy prices to keep the uneconomic fleet online since Entergyannounced in November 2015 that it is closing 851-MW FitzPatrick nuclear plantby early 2017. Entergy is however standing by its decision to retireFitzPatrick despite proposed emergency bailouts and subsidies to keep the plantrunning.

Tierneywarned in her testimony that the reality that FitzPatrick and possibly othernuclear plants will be closing before their operating licenses expire willthreaten to undo progress in statewide emissions cuts. According to stateDepartment of Public Service staff, in order for New York to reach its goal of40% cuts by 2030, the clean energy standard must both prevent this "blacksliding"by maintaining existing zero-emission generation and by adding an incremental33,700 GWh of renewable.

However,not all emission-free energy resources are equal as capacity factors differfrom 86% for nuclear to 51% for hydropower and 26% for wind in New York. Thatmeans the loss of 1 MW of nuclear power would require 1.6 MW of hydropower or3.3 MW of wind to simply offset the emission-free MWhs lost, Tierney said. Withnatural gas making up two-thirds of NewYork ISO's interconnection queue as of April 2016 and 56% of thestate's operating capacity in 2015, there is also a possibility thatcombined-cycle natural gas plants, which generate emissions of 935 lbs/MWh,would replace loss nuclear generation.

Accordingto Tierney, the retirement of FitzPatrick in 2017 will lower the state'semission-free generation mix from 55% to 45%. Tierney recommended setting theclean energy standard's starting target at 38% for 2017 and growing the cleanenergy mix by 2.5 percentage points annually through 2030 to achieve both a 40%cut in emissions and a 50% of renewable electricity by 2030.

Theonly reactors to be excluded from Cuomo's proposed zero-emissions credits areEntergy's 1,031-MW IndianPoint 2 and 1,047-MW IndianPoint 3, which are about 50 miles north of New York City along theHudson River. Cuomo's administration and environmentalists are adamant thedual-unit should be not be relicensed over public safety concerns. The plant iscurrently at the center of several lawsuits and investigations following aseries of incidents at the plant, including a low-level radioactive leak inFebruary.