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Highlights

Decision could provide $300 million/year

Opponents argued the plants were profitable

New York — The New Jersey Board of Public Utilities voted Thursday to provide roughly $300 million a year in zero-emissions certificates to Public Service Enterprise Group and Exelon, owners of the Hope Creek and Salem nuclear power plants in the southern part of the state.

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"We are pleased with the decision to award ZECs to PSEG to help support New Jersey's primary supply of zero-carbon electricity," that company said in a statement.

Under legislation enacted in May, 2018, a ZEC is a certificate issued by the board representing the fuel diversity, air quality and other environmental attributes of 1 MWh of electricity generated by an eligible nuclear power plant.

"Our next step is to review the BPU's order to better understand today's decision in greater detail," PSEG said.

Under the ZEC tariff rate, the 1,172-MW Hope Creek and 2,328-MW Salem nuclear plants in Salem County, New Jersey, could receive up to $300 million a year. PSEG owns and operates the plants through its PSEG Nuclear LLC business. Exelon owns about a 43% interest in the Salem plant and would be eligible for up to $100 million of those ZEC incentives a year.

"With zero emissions credits in place, Salem and Hope Creek will continue producing carbon-free energy for more than three million homes and businesses for at least three more years," Exelon spokesman Paul Adams said in an email. "New Jersey has solidified its place as a clean energy leader by maintaining 90% of its emissions-free energy and marching one step closer toward the goal of becoming 100% powered by clean energy by 2050."

The first sentence in the ZEC legislation states "Climate change is one of the greatest threats facing the State today and in the future," and retaining the emissions-free power generated by the nuclear plants will help New Jersey meet its climate goals.

"In making this decision, the Board considered fuel diversity, resiliency, [Regional Greenhouse Gas Initiative] RGGI, New Jersey's economy and environmental impact, and we've concluded that now is not a time to move forward in a way that will remove nuclear from our energy mix and ultimately increase air pollution and carbon emissions in our state," BPU President Joseph Fiordaliso said in a statement.

CONTROVERSIAL DECISION

Multiple trade, environmental and consumer advocate groups opposed the subsidy program, which the NJBPU approved in a 4-1 vote.

Opponents argued the plants are profitable and questioned the degree to which the subsidies were required to continue operating the plants in the black. PJM Interconnection's independent market monitor, Monitoring Analytics, argued in comments filed as part of the ZEC proceeding that subsidies are not needed because the nuclear plants remain profitable.

"PSEG overstates its need for subsidies for the Hope Creek 1 and Salem units," the IMM said. "PSEG understates forward energy revenues, understates capacity revenues, overstates costs and overstates the cost of risk."

John Shelk, president and CEO of the merchant generator trade group Electric Power Supply Association, has been an outspoken opponent of nuclear plant subsidies in New Jersey and other states.

"Like ants at a summer picnic, nuclear subsidy seekers are swarming all over Illinois, Ohio and Pennsylvania," Shelk said in an email. "This proves that PJM market monitor Joe Bowring has been spot on warning that subsidies are contagious."

Ohio and Pennsylvania lawmakers are considering nuclear power support programs.

"To say the status quo is untenable and unsustainable if one truly believes in markets and their benefits is a gross understatement," Shelk said.

-- Jared Anderson, jared.anderson@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com