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Negative pricing is a 'distraction' to maintaining US nuclear fleet: Norris

Highlights

Arguments over how negative pricing is impacting the nuclear fleet are a "distraction" to larger efforts to help maintain the existing fleet, a top US energy regulator said Thursday, arguing that the increasing use of natural gas for electricity generation is a far bigger source of concern.

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"I have concluded that the argument regarding the impact of negative pricing on nuclear viability is a distraction and not productive to the larger conversations regarding how to ensure that the existing nuclear fleet is maintained," Commissioner John Norris of the Federal Energy Regulatory Commission said at the commission's monthly meeting.

But Commissioner Philip Moeller disagreed with Norris, saying that negative pricing concerns are a relevant part of the debate.


"I don't think negative pricing is a distraction," he said.

The comments by Norris and Moeller reference an ongoing debate over how negative pricing linked to wind resources in organized markets is challenging the financial survival of nuclear resources. The American Wind Energy Association and the utility Exelon, which has a significant nuclear fleet, have offered competing views in recent months about the effects of negative pricing in these markets.

Norris said that he believes negative pricing is "having a very small impact on the nuclear fleet."

"I do not believe that 'but for' negative pricing, the currently troubled nuclear units would be economic," he said.

Negative pricing appears to be occurring in transmission-constrained generation pockets, Norris said, and that while FERC has advanced efforts to facilitate greater transmission development, "the continued existence of negative pricing pockets suggests that more work needs to be done."

Norris also argued that more transmission development is the "better, and more proactive solution" to address the issue rather than continuing to debate the merits of the wind production tax credit, which is currently being considered for renewal by Congress.

More broadly, Norris argued that "the current low gas prices and increased reliance on our gas fleet pose the biggest economic challenge to our nuclear fleet." He also highlighted the need to maintain the nuclear fleet while helping to advance wind and other renewables.

"I believe our electric energy system benefits from a diverse fuel mix that includes nuclear and renewable energy," Norris said.

Moeller, who has long expressed concerns about the distortive effect of the production tax credit on markets, said that a production incentive "does have an impact on competitive markets."

"I would hope that it's still part of the discussion," Moeller said.

--Bobby McMahon, bobby.mcmahon@platts.com
--Edited by Annie Siebert, ann.siebert@platts.com