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PSEG seeks more time to decide role in PJM auction as it awaits emission credits

PSEG Energy Resources & Trade LLC asked U.S. regulators for more time to decide whether two of its nuclear plants will participate in the PJM Interconnection's next capacity auction as the company waits to see if New Jersey awards the facilities zero-emission credits under a new state law.

The Public Service Enterprise Group Inc., or PSEG, subsidiary filed the March 11 request with the Federal Energy Regulatory Commission on behalf of its PSEG Nuclear LLC affiliate. The company sought a waiver to extend deadlines to submit "must offer" exception requests for PJM's August 2019 base residual auction and related notices of deactivation for PSEG's 1,172-MW Hope Creek nuclear plant and its majority share of the 2,328-MW Salem facility in New Jersey. The auction is set for Aug. 14-28 and will cover the 2022-2023 delivery year

PSEG has said it will retire the plants due to financial performance issues unless they receive zero-emissions credits, or ZECs, from the New Jersey Board of Public Utilities. PSEG Nuclear filed ZEC applications with the board in December 2018, and the state agency is required to decide on the applications by April 18. That date is beyond PJM's March 17 deadline for resource owners to provide preliminary notices to seek must-offer requirement exceptions and the April 16 cutoff for final notices and warnings of deactivation.

PSEG Energy Resources accordingly asked FERC to provide a waiver of those deadlines and allow the company to submit must-offer exception requests and notices of deactivation within three business days of the New Jersey board's decision on whether to award the ZECs to Hope Creek and Salem. The generator asked FERC to decide on its request by 4 p.m. ET on March 15.

The New Jersey Board of Public Utilities approved the ZEC program in November 2018 in response to legislation signed into law by Gov. Phil Murphy. The state's ZEC law is modeled after similar programs in Illinois and New York aimed at propping up financially struggling nuclear plants by awarding them subsidies for their zero-emissions environmental attributes.

Under the New Jersey law, investor-owned electric distribution companies in the state will collect funds for the ZECs at a rate of 0.4 cent/kWh, or $4 per month for a residential customer using 1,000 kWh/month. Collection of the tariff charge will start only if a nuclear plant is deemed eligible. ZEC-recipient nuclear units will be awarded payments initially from April 19 through May 31 and then for the next three "energy years" through 2022.

PSEG has said the credits, which could total up to $300 million a year for the Hope Creek plant and the company's share of the Salem station, would cost far less than replacing the at-risk units. But critics, including the New Jersey Sierra Club and AARP New Jersey, worry that the subsidies will raise costs for consumers and that the law authorizing the ZECs will limit transparency around the financial information that generators use to justify the credits. (FERC docket ER18-2222)