NewYork City officials slammed a proposed state subsidy for nuclear power plantsas unnecessary and unfair. Environmental groups also chimed in, complainingthat the subsidy is solely meant for ExelonCorp., which owns R.E.Ginna and NineMile Point and is a possiblebuyer of Entergy Corp.'sJames A. FitzPatricknuclear plant.
Incomments filed July 22 with the New York Public Service Commission, the city ofNew York criticized the July 8PSC staff proposal to subsidize upstate nuclear plants that are unable tocompete against natural gas-fired generation. Speaking on behalf of Mayor Billde Blasio's administration, New York City Director of Energy Regulatory AffairsAnthony Fiore and City Counsel Kevin Lang said the most glaring flaw of theproposal was its failure to establish any link between the value of carbon andthe subsidy amount needed by Exelon subsidiary, ,or CENG, to maintain operations of its present and future nuclear plants.
Knownas zero emissions credit, or ZECs, the subsidy is a part of Gov. Andrew Cuomo'sproposed renewable energy mandate called the clean energy standard that, ifapproved, would also subsidize renewables as a means of helping New York meetits goals of cutting carbon dioxide by 40% from 1990 levels and procuring 50%of its electricity from renewable energy by 2030.
Fioreand Lang said CENG "has acted prudently and not relied on spot marketprices for revenue generation" in an era of low market prices. "Inother words, none of its nuclear plants are losing money, and there is nopresent justification or need for providing out-of-market subsidies to CENG."The city officials called on the commission "to closely monitor thesubsidy level, CENG's needs, and its market revenues over the duration of the2017 to 2029 period to prevent CENG from receiving excessive and unjust profitspaid for by captive ratepayers."
NewYork City, in its filing, also decried the proposal as unfair in costs todownstate New Yorkers due to transmission constraints and levels of consumptionand requested a comprehensive study on the proposal's impact on energy bills.Fiore and Lang also cited the findings of the PSC staff's cost-benefit analysis and saidthe subsidy is not needed past 2023 due to expected market price increases.Currently, under the proposal's pricing formula, subsidizing an expected 27.6million MWh of emissions-free nuclear generation would avoid 31 million metrictons of CO2 but could possibly cost up to roughly $7.6 billion over a 12-yearperiod through 2029.
Exelonhas threatened to close Ginna and Nine Mile Point and drop its proposed acquisitionof Entergy's FitzPatrick nuclear plant, which is otherwise due to close inJanuary 2017, if the commission fails to pass the subsidy and have contractssigned by the end of September. In its comments, Exelon subsidiary CENG urgedquick approval of the staff proposal but warned the proposal's price capexposes CENG to the risk of unanticipated operating costs as it allows only aone-sided adjustment to ZEC prices.
Ascompared to the original staff proposal, which based ZEC prices off of areactor unit's anticipated operating costs and updated prices every year toreflect changes in the market, CENG said the July 8 proposal would only allowZEC prices to be reduced under the U.S. EPA-defined social cost of carbon, orthe amount of avoided damage done by each ton of carbon dioxide, if forecastedwholesale prices rise above a wholesale price of $39/MWh. However, the proposalwould prohibit ZEC prices from increasing above the social cost of carbon ifwholesale prices fall below that $39/MWh baseline. Thus, CENG said, if marketprices plummet, capped ZEC prices would prevent the recovery of rising costsand the offsetting of market revenue losses.
FitzPatrick-ownerEntergy also urged quick passage of the proposal but lambasted currenteligibility requirements that exclude Entergy's Indian Point and . The dual-unit plant islocated downstate and, as a result, is not at economic risk but is opposed bythe Cuomo administration over safety concerns it might pose to the greater NewYork City area.
TheAtlantic Chapter of the Sierra Club and three other anti-nuclear groups, in ajoint filing, noted that if Indian Point remains excluded the "entirety ofthis uncompetitive subsidy" would go to Exelon "in what is likely thelargest gift of public funds to a single corporation in New York's history."