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Plan to save Pa. nukes calls for zero-emission resource requirement

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Plan to save Pa. nukes calls for zero-emission resource requirement

Pennsylvania lawmakers want electric distribution companies to get a portion of their electricity from zero-emission resources such as nuclear power to keep open plants declared to be at risk of shutting down.

Called the Keep Powering Pennsylvania Act, House Bill 11 amends the state Alternative Energy Portfolio Standards, or AEPS, Act of 2004 to create a third tier of zero-emission resources. The bill's sponsor, state Rep. Tom Mehaffie, on March 11 said keeping the state's nuclear plants open would ensure a diverse baseload power supply, save consumers money and keep Pennsylvania's air clean.

"For the state legislature to ignore the challenges facing these plants, it would be one of the most irresponsible and irreversible decisions we've made in a generation," he said during a press conference to introduce in the bill.

Mehaffie, a Republican, is among a bipartisan group of lawmakers that has been working on a plan to keep facilities including Exelon Corp.'s Three Mile Island and FirstEnergy Solutions Corp.'s Beaver Valley nuclear plants open.

Exelon is planning to close the remaining 829-MW reactor at the Three Mile Island plant in Dauphin County, Pa., in September. Mehaffie's district includes a portion of Dauphin County, east of Harrisburg, Pa. FirstEnergy Solutions, or FES, FirstEnergy Corp.'s competitive generation subsidiary that is currently undergoing a bankruptcy reorganization, is planning to shut down the 1,872-MW Beaver Valley plant in Beaver County, Pa., in 2021.

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Exelon on March 11 called for support of the bill. FES is still evaluating the bill, but said it "remains interested in a legislative solution that maximizes the economic and environmental benefits to the citizens of Pennsylvania, and allows them to continue to receive clean, safe, and reliable carbon-free energy."

The new tier created under the bill would include nuclear power plants, along with solar, wind, low-impact hydro and geothermal resources. Electric distribution companies would have to purchase Tier III credits for all retail customers equal to 50% of the electricity sold in their service territory starting June 1.

Mehaffie said creation of a third tier in the AEPS addresses a "fundamental unfairness" that even though nuclear plants in Pennsylvania provide 93% of the state's zero-carbon electricity and emit no harmful pollutants, as regulated by the U.S. Environmental Protection Agency, nuclear energy is not allowed to participate in the AEPS program.

The bill comes with an annual $500 million price tag. But this is far less than the $788 million consumers would pay each year through higher electricity costs should lawmakers fail to act to keep nuclear plants open, Mehaffie said.

A study by the University of Pennsylvania's Kleinman Center for Energy Policy in late February put the annual cost of the nuclear plant assistance at $981 million, and was revised March 8 with additional futures pricing data, putting the cost to customers of Pennsylvania electric distribution utility customers at $500 million a year. This is the figure Mehaffie cited.

The bill also comes with consumer protections, Mehaffie said, like a cap on Tier III credit prices and a prohibition on "double dipping." For instance, units participating in another state's environmental program or receiving cost-based recovery through state-regulated rates cannot take part in the Tier III program. New Jersey late last year approved a nuclear plant subsidy program and under certain conditions, plants located outside of the state are eligible to apply for aid.

Solar and wind generation resources, which are also counted as Tier I AEPS resources, are eligible to qualify for the new tier. However, the same unit of output from a wind or solar resource can only get compensated once under either Tier I or Tier III, not both.

To qualify as a Tier III resource, a facility has to interconnect to the regional grid operator, PJM Interconnection, and show that Pennsylvania's environment would be hurt should the resource stop operating or fail to open.

A generator that wants to qualify has to give written notice of its qualifications to the Pennsylvania Public Utility Commission. Regulators then have 90 days to review the notice and comments and pick applicants that will participate in the program. To initially qualify as a Tier III resource, a generator has to agree to operate for at least six years.

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Not everyone in Pennsylvania is on board with the proposal.

A group called Citizens Against Nuclear Bailouts said the proposal will further burden senior citizens and low-income ratepayers.

"Adding already profitable nuclear power plants to the AEPS is a bailout that would significantly increase consumer electricity prices, eliminate consumer choice and fundamentally change the way Pennsylvania's competitive energy markets operate," the group said in a statement.

Days before the bill's introduction, PPL Electric Utilities Corp. called on lawmakers to take time to properly evaluate the bill and its consequences for electricity customers. The PPL Corp. subsidiary has not yet reviewed the bill, but will not support any proposal that is not good for its customers, a representative said March 11.

FirstEnergy said on behalf of its Pennsylvania distribution utilities, Metropolitan Edison Co., Pennsylvania Electric Co., Pennsylvania Power Co. and West Penn Power Co., that "we are supportive of legislation that would include nuclear energy as a qualifying resource under the AEPS because of the many economic and environmental benefits it brings to the state." A representative for PECO Energy Co., Exelon's Philadelphia-area distribution utility, did not immediately return a request for comment on March 11.