By William Opalka
Five New York City-area legislators, including the chair of the State Assembly Committee on Energy, wrote to state regulators last week questioning the ratepayer-funded nuclear power plant subsidy and requesting disclosure of the operating costs of the affected plants.
The New York Public Service Commission last month approved a Clean Energy Standard that includes a subsidy for upstate nuclear power plants. (See New York Adopts Clean Energy Standard, Nuclear Subsidy.) In May, the commission granted Exelon’s request to keep the operating costs of its R.E. Ginna and Nine Mile Point 1 and 2 plants private (16-E-0270).
“Why should Exelon’s costs be blocked from public review when it is being given a government-directed and government-administered price subsidy?” the legislators wrote.
The zero-emission credits created by the order are expected to cost ratepayers $965 million in the first two years of their 12-year existence. Included in the subsidy is Entergy’s James A. FitzPatrick plant, which Exelon has agreed to buy. (See FitzPatrick Sale Filed with New York Regulators.)
The assemblymembers also said that Nine Mile Point 2 should be eliminated from ZEC payments and the cost of the program should be recalculated. They said the fact that Exelon refueled the plant in the spring indicates that that the facility is not financially stressed or in danger of closing.
“In the commission record, we take note that Entergy announced intentions to close FitzPatrick, and Exelon announced intentions to close R.E. Ginna and Nine Mile 1, but no formal announcement was made regarding intention to close Nine Mile 2, which produces 40% of the electricity of the four units. Without a publicly transparent cost review, and in light of the recent refueling of the unit, the payment should be removed from the commission’s order,” the letter said.
The letter also states that downstate ratepayers will be paying a disproportionate share of the subsidy — 60% — while most of the energy generated by the plants will be used upstate, closer to the plants’ locations in western New York.
The assemblymembers also said that the subsidy is based on EPA’s projected social cost of carbon, which could increase as much as 10% every two years after the first two years of the program.
The letter was signed by Energy Committee Chair Amy Paulin, who represents Westchester County; James Brennan of Brooklyn; Jeffrey Dinowitz of the Bronx; and Steve Englebright and Charles Lavine of Long Island.
In a response on Friday, PSC Chair Audrey Zibelman said there are “a number of fundamental errors” in the lawmakers’ understanding of how the power system works and the CES’ role in it.
Zibelman said the price of renewable energy credits is set by a competitive bidding process, but with few participants, ZEC prices must be set administratively. The federal social cost of carbon is a more effective mechanism and accounts for the externalities associated with fossil fuel generation, she said.
“Second, it is simply wrong for anyone to suggest that we can achieve targeted emission reductions by 2030 if we were to lose the zero-emissions attributes of the three upstate nuclear plants. Experience and fundamental economics show that the zero-emissions attributes they produce and New York needs will be replaced by adverse air emissions from existing coal and new natural gas-fired fossil units that can be dispersed throughout the state or come from out-of-state imports,” Zibelman wrote
The cost of replacing all of the nuclear generation with renewables would be more expensive than the ZECs, she added.
Finally, she disputed the assertion that the New York City area is being treated unfairly. “The CES allocates the obligation to meet the 50% renewables goals and zero-emission credits to all of the consumers of the state because all consumers will benefit from reducing carbon emissions,” Zibelman wrote.