The utility says credits will help it meet clean energy goals, while skeptics say it’s all about moneymaking.
New Jersey’s Public Service Enterprise Group this week doubled down on claims that only state subsidies can save its three nuclear power plants. The comments come just a week after the group’s electric and gas utility presented a plan to invest $4.1 billion in clean energy.
PSEG’s push toward less carbon-intensive power, coupled with its continued emphasis on nuclear, hints at challenges confronting utilities across the country. As the more progressive of the bunch look toward a future that incorporates renewables, many are also clinging to baseload plants they view as vital to a reliable grid.
While New Jersey this spring passed a bill that supports nuclear with zero emissions credits, PSEG still has to make its case for the financial backing. Similar legislation floundered in Minnesota. Xcel Energy has also framed nuclear as a keystone in its clean energy goals. Illinois and New York also recently implemented credits for nuclear facilities.
At a Thursday New Jersey Board of Public Utilities hearing, PSEG Deputy General Counsel Joseph Accardo said the purpose of New Jersey’s law “is clear and well-defined to prevent the retirement of at-risk nuclear generating plants essential for the welfare of New Jersey residents.”
PSEG, one of the country’s largest electric companies, hopes to use the subsidies to help three plants it says produce over 90 percent of the New Jersey’s carbon-free generation. The BPU decision on which plants receive credits, valued at $300 million, is slated for April.
Alongside the legislation that authorized those credits, New Jersey passed a renewable portfolio standard of 35 percent by 2025 and 50 percent by 2030. In the past, PSEG has framed nuclear as an environmentally friendly generation source.
“Nuclear is a tale of two stories. In regulated markets, nuclear plants are fine. In unregulated markets, basically, externalities are not being priced in — typically the environmental benefits of nuclear being carbon-free and the fuel diversity benefits,” said Ralph Izzo, PSEG’s CEO and chairman, in a February interview with CNBC. “We’re OK at the moment with what we did in hedging those plants the prior three years, but if we look at where the forward price curve is pointing in the next few years, that won’t be the case.”
Some skeptics argue that it’s money that motivates PSEG’s bid for support for its nuclear plants. Some have called the credits a “bailout” and others have suggested the plants are actually profitable.
To receive the credits, PSEG must present the BPU with financial information demonstrating the plants need the support. In a recent publication for investors, PSEG estimated annual revenues at about $200 million — or around $0.28 per share — if all three units benefit from the credit program.
PSEG has presented maintaining the state’s nuclear fleet as an essential tenet of a goal announced in February to reduce emissions equivalent to 13 million tons of carbon dioxide by 2030. Izzo also told CNBC the company doesn’t see a future for coal and wants a national price on carbon.
Its recently introduced clean energy plan includes $2.8 billion for energy efficiency programs, $364 million for electric vehicles and $180 million for energy storage over six years. Alongside the previously announced goal, PSEG said it would invest over $1.5 billion in solar.
The controversy over the “bailout” smacks of debates at both the regional and federal levels. Regional grid operator PJM has rejected FirstEnergy’s claims that retiring its coal and nuclear plants will destabilize the grid. Meanwhile, the Trump administration is reportedly at work on policies to support both generation types.