The cost of New York zero emissions credits is set to fall 14% for the next two years after the state agency that administratively sets ZEC prices issued its biennial price adjustment on Tuesday.

The New York Department of Public Service laid out the change in a letter to the state’s Public Service Commission. The letter explains that ZEC prices for Tranche 4 (April 1, 2023 – March 31, 2025), will be set at $18.27/MWh, down from $21.38/MWh for Tranche 3 (April 2021 to March 2023) (Case-15-E-0302).

Tranche 2 (April 2019 to March 2021) ZECs were priced at $19.59/MWh.

ZECs are subsidies for nuclear facilities that load serving entities purchase monthly from the New York State Energy Research and Development Authority to prevent those facilities from retiring. They play an integral role in the PSC’s Clean Energy Standard because they keep economically distressed nuclear plants, such as Nine Mile Point, James A. FitzPatrick and R. E. Ginna, online and use the collected funds to help build more renewable generation, which will replace the load generated by these nuclear plants.

Adjusted every two years, the ZEC is calculated by subtracting an adjustable reference price (currently $37.78) from the Zone A forecast energy price and rest-of-state forecast capacity price (currently $43.34/MWh). The difference between those is then subtracted from the social cost of carbon, which is currently set at $23.83/MWh.

The PSC has capped the number of ZECs that can be purchased, and that cap will be reduced should any facility close. Should any facility fall below the mandated production level of 85% of historical production for any two-year period, the PSC will further reduce the ZEC cap.

The program is intended to keep nuclear plants open until March 31, 2029, at which point New York expects to have installed enough additional renewable capacity to compensate for anticipated nuclear retirements.

ZEC prices will be adjusted again in 2025.