By William Opalka

New York utilities would be required to procure more than 15% of their forecasted load in 2020 from struggling upstate nuclear power plants under a proposal now before the state’s Public Service Commission (15-E-0302).

The staff white paper on a Clean Energy Standard released late Monday also sets a goal of obtaining 29.5% of the state’s energy from renewable resources by 2020. Gov. Andrew Cuomo wants the PSC to finalize the CES by June.

The interim targets are part of Cuomo’s proposal to procure 50% of its energy from “clean” sources by 2030. The nuclear component is an economic lifeline to three struggling plants in western New York while also providing a “bridge” until renewable resources are developed at a mass scale, said Scott Weiner, director for markets and innovation. The three plants provide about half of the state’s nuclear energy; overall, nuclear provides 30% of New York’s electricity. The state’s fourth nuclear facility, Indian Point north of New York City, has been targeted for closure by Cuomo and is excluded from the proposal.

“The closure of the upstate New York nuclear plants due to the current natural gas market prices, and concomitant electric prices, would have a large negative impact on the state’s ability to meet its carbon reduction goal,” the paper states. “If the upstate New York power plants were to close in the near term, New York would have to procure more of its electricity from fossil fuel generating plants, primarily those burning natural gas, resulting in significant increases in carbon dioxide, nitrogen oxide and other air pollutants.”

‘Tier’ for Nukes

A new “Tier 3” would be created for nuclear facilities under the CES.

States with a renewable portfolio standard or a CES create tiers to distinguish between different types of clean energy resources and designate load requirements for each. In New York, Tier 1 is reserved for new renewable resources and Tier 2 is divided among existing renewables.

“The use of these three tiers will allow for clear connectivity among CES program elements and desired outcomes,” the proposal states.

Under the proposal, the nuclear requirement would start out at 4.6% in 2017 and escalate yearly through 2020. The mandate would start April 1, 2017, the day that both Exelon’s R.E. Ginna and Entergy’s James A. Fitzpatrick nuclear stations on Lake Ontario are now expected to close.

Ginna is seeking ratepayer subsidies to continue operating temporarily for grid reliability. Entergy announced plans to close the FitzPatrick plant because of low energy prices, and a third plant, Exelon’s Nine Mile Point, is under financial pressure.

All three plants are assumed by the white paper to remain open, although Entergy said last month that the governor’s incentives would not change their plans to retire FitzPatrick. (See Entergy Rebuffs Cuomo Offer; FitzPatrick Closing Unchanged.)

The renewable energy goals also would increase over time, from 26.8% in 2017 and 29.5% in 2020, reaching 50% in 2030. Targets for 2020 through 2030 will be added later.

Nuclear plants would be eligible to earn Zero Emission Credits (ZECs), similar to renewable energy credits (RECs) earned by wind and solar generators. Like RECs, ZECs will be tradable, but the two would not be interchangeable under the plan.

The maximum price of ZECs would be administratively set by the PSC. The white paper said that is intended to counter the potential exercise of market power, because of the limited number of facilities producing nuclear energy.

Prices “should be updated every year based upon the difference between the anticipated operating costs of the units and forecasted wholesale prices. In this manner the commission will be only setting an appropriate and fair value of the environmental attribute and will be acting independent of the actual wholesale prices for energy and capacity in the NYISO administrative market,” the proposal states.

An environmental group that advocates the closure of the plants said the nuclear component of the CES is a “slap in the face to the communities” affected by the plants.

“Nuclear power reactors may not emit carbon dioxide or methane, but that doesn’t make them clean or safe,” said the Alliance for a Green Economy. “The Public Service Commission is writing a blank check from electricity consumers to Exelon and Entergy corporations, owners of the aging upstate nuclear plants. Exelon and Entergy stand to gain hundreds of millions of dollars per year from this policy, while everyday people are left in the cold and the dark.”

A business group supports the overall policy but is worried about its cost.

Darren Suarez, director of government affairs for The Business Council of New York State, said Monday that his group supports the commission’s efforts to “grow renewable energy and conservation measures, and address the challenges of the state’s nuclear generators.”

“However, we remain concerned that the projected savings could vanish quickly, especially if customers are forced to subsidize a costly CES,” he added.

Anne Reynolds, the executive director of the Alliance for Clean Energy New York, said its members have a “keen interest” in the CES. ACENY has no position for or against nuclear power but hopes New York’s moves to keep it in the state’s energy mix are temporary.

“We were glad to see the reference to nuclear as a bridge to a renewables future, but we hope it does not become a permanent bridge that would preclude the development of renewables,” Reynolds said.

New York’s most recent renewable portfolio standard expired in 2014. State regulators have been discussing a revised RPS for months in a so-called large renewables proceeding. Nuclear generation has now been added to the proceeding.

‘Drama’

The nuclear mandate was outlined at Thursday’s commission meeting.

The meeting started with “drama,” as PSC Chair Audrey Zibelman put it, when the Republican-led state Senate hand-delivered a letter to the commission seeking a delay in action on the CES and the creation of a $5.3 billion Clean Energy Fund.

The letter, signed by Majority Leader John Flanagan, his deputy and the head of the energy committee, said action was “premature” on the CEF, another order that’s part of the state’s Reforming the Energy Vision proceeding.

“The CEF is a major fiscal initiative and has the potential to be even larger when taking into account the CES,” they wrote. “While we do not believe the commission is taking the fiscal implications of these initiatives lightly, it is the position of the conference that these proceedings would be strengthened by a real cost-benefit analysis and genuine opportunity for public input.”

The commission held a 38-minute executive session to discuss the letter but decided to proceed. Zibelman was particularly pointed in saying the letter failed to demonstrate any reason for the commission to delay action.

“This petition was filed in 2014 and there has been considerable opportunity for public commentary both in terms of the number of public statements, hearings and meetings … as well as the process before us,” she said. “There’s no question that we have in front of us a very robust record.”

For administrative ease, Zibelman said, the CES has been rolled into the existing proceeding for large-scale renewables (15-E-0302) rather than a new docket.