Two New Jersey legislative committees voted out bills to aid nuclear plants despite not having a clear picture of the costs to ratepayers, saying the bills help the state's environment.
In a joint hearing Feb. 22, the New Jersey Senate Budget and Appropriations Committee voted out Senate Bill 877 and the Assembly Telecommunications and Utilities Committee voted out the companion bill, Assembly Bill 2850. The bills create a zero-emission credit, or ZEC, program to assist financially struggling nuclear plants. A draft of the bill dated Feb. 21 replaces the term "nuclear diversity credits," used in prior versions, with the ZEC language. In the bill, the credits represent the environmental benefits from 1 MWh of nuclear power, which avoids common fossil fuel air pollutants such as carbon dioxide.
The state's largest utility, Public Service Enterprise Group Inc., called for an "economic safety net," with PSEG Chairman, President and CEO Ralph Izzo saying in testimony Feb. 22 that the company will otherwise plan to retire its two plants in southern New Jersey. Those plants are the 1,172-MW Hope Creek facility and the 2,328-MW Salem station, of which Exelon Corp. owns about 43%. The two plants generated about a third of the power used in the state in 2016, according to the U.S. Energy Information Administration.
One element nuclear plants need to be eligible for the credits is they must be licensed to operate through 2030 or later and show a financial need. That factor eliminates Exelon's Oyster Creek plant, which the generator plans to retire in October, but Salem and Hope Creek would be in the running.
Sen. Anthony Bucco, a Republican member of the Senate Budget and Appropriations Committee, had voted for similar bills, S. 3560/A. 5330, lin 2017 that focused only on nuclear. He voted against S. 877 this week because the bill has been expanded to include other energy issues, including measures to support the development of 3,500 MW of offshore wind and, by 2030, 2,000 MW of energy storage resources.
"I would have preferred to have the original legislation back here today because I supported it last year and voted yes on it. I thought it was a much better bill. I am concerned about what it is going to cost ratepayers — whether it is residential or manufacturing costs," Bucco said.
Izzo said the credits equate to maximum costs of $300 million per year. That amount assumes the state Board of Public Utilities raises rates by 0.4 cent/KWh, equal to $4/MWh, an amount allowed under the bill.
Stefanie Brand, the state's consumer advocate and director of the Division of Rate Counsel, said in testimony that changes in the bill to the state's solar target could add another $423 million per year to the costs. The bill extends the state's annual solar targets, which now end in 2028, out to 2033 and raises the state's demand for solar in 2019 through 2021.
In his testimony, Izzo said the benefits of keeping the nuclear plants operating outweigh the costs by a ratio of six to one. He cited a November 2017 report by consultant IHS Markit that showed about $1.75 billion per year in costs to New Jersey from lost economic benefits and higher prices and environmental costs.
Some proponents claim the bill has adequate checks and balances, including a cap on the costs and opportunities for the BPU to ensure the credit value is affordable. But Brand said the expanded bill is still not clear on the costs to commercial and industrial customers.
John Shelk, president and CEO of the Electric Power Supply Association, which represents competitive generators, said state intervention is not needed and could interfere with competitive power markets as Salem and Hope Creek sell into the regional wholesale power market managed by the PJM Interconnection.
Offshore wind developers including Ørsted A/S Siemens Gamesa Renewable Energy US Wind and Deepwater Wind backed the bill for its inclusion of the 3,500-MW offshore wind target, which Democratic Gov. Phil Murphy already called for in a recent executive order.
Clint Plummer, vice president of development at Deepwater Wind, said, "We can start construction in 2021 with projects coming online by 2024," assuming the BPU opens an application window this year for projects to seek incentives. New Jersey does not have any offshore wind projects in operation, and the board denied a 25-MW project proposed by Fishermen's Energy LLC due to legal issues and costs.