Carbon Credit Watch

Will NJ consumers be hit with zero-emission surcharge for nuclear?

It may not have been able to compete with fossil fuels but global warming has given nuclear power an edge: on more subsidies. The example of New Jersey shows how desperation on the global warming front is jeopardizing decision-making and ignoring the penalties and perils of “clean energy’s” new good guy.

By Tom Johnson for NJ Spotlight

If nuclear is going to be a part of NJ’s zero-carbon mix, state may have to help power plants remain commercially viable.


Ralph Izzo, chairman, chief executive officer, and president of PSEG.

The state will not achieve its ambitious goal of reducing global warming without nuclear power, but that will likely mean higher prices for consumers, according to a panel of energy experts.

In a wide-ranging roundtable discussion on how New Jersey can achieve a low-carbon future, industry executives and a prominent lawmaker suggested that keeping nuclear power plants commercially viable may require financial incentives similar to those enjoyed by solar and other renewable-energy technologies.

With natural gas prices at historic lows, some nuclear power plants around the country are closing because they can’t compete economically with the fossil fuel. It is a trend that threatens the nation’s efforts to reduce greenhouse-gas emissions, most panelists at a NJ Spotlight Roundtable in Trenton on Friday agreed.

The economics of a rapidly changing marketplace are leading some nuclear power companies, including the Public Service Enterprise Group, which runs three plants producing 3,000 megawatts in South Jersey, to begin lobbying for extra incentives for producing zero-emission electricity from those units, a cost that would be passed on to ratepayers.

No question that option is sure to be controversial. Here in New Jersey, Public Service Electric & Gas customers have just finished paying off nearly $3 billion in stranded costs stemming from energy deregulation, a move the company argued had left its plants at a competitive disadvantage. Consumer advocates disputed that view, noting the company’s earnings from power plants soared in the first decade of deregulation.

Sen. Bob Smith (D-Middlesex), the chairman of the Senate Environment and Energy Committee, noted he already has been approached by PSEG about developing a so-called “zero-emission’’ credit, for carbon-free electricity from nuclear plants. He is willing to listen.

“Maybe. There has to be a vetting process; there has to be some discussion of economics. Are they making money? Are they losing money?’’ asked Smith, who made a point of saying New Jersey has no choice but to use as much carbon-free energy as possible.

The state has a law mandating an 80 percent reduction in greenhouse-gas emissions by 2050, a target that is unlikely to be met in the near term by exclusive reliance on renewable energy, like solar and wind. Three percent of the state’s electricity is produced by solar, 97 percent of the rest of the carbon-free electricity comes from nuclear power plants.

Ralph Izzo, chairman, chief executive officer, and president of PSEG, said the problems nuclear units are facing are a consequence of the absence of a national policy on carbon. That failure has led to a patchwork of policies that has the potential to create disastrous economics and lead to an increase in carbon emissions.

“If the federal government had done its job, we wouldn’t be having this conversation’’ Izzo said.

Several panelists argued electricity prices likely will go up if nuclear power plants are retired due to the cost of replacing those units.

Susan F. Tierney, a senior advisor at The Analysis Group, argued that a study of New York State and New England projected that replacing the power from nuclear with solar and wind would demand eight times the capacity of the unit being retired. More renewable capacity would be required because solar and wind are intermittent sources of power unlike nuclear, which typical runs 24 hours, 7 days a week.

“We cannot possibly allow ourselves to see safely performing nuclear plants retire too early,’’ Tierney, a former assistant secretary at the U.S. Department of Energy and a state utility commissioner.

The alternative — replacing nuclear plants with natural-gas units — means increasing greenhouse gas emissions.

“It’s time for us to ring the alarm bell because, 3,000 megawatts of nuclear replaced by 3,000 megawatts of natural gas is bad for everyone,’’ Izzo said, while adding his company’s nuclear units are profitable and are not at risk of closing.

They do face increasing costs, however, particularly dealing with safety and performance standards imposed after the partial meltdown of the Fukushima nuclear power plant in Japan.

PSEG, whose nuclear plants produce almost half of the electricity used in New Jersey, also said its support of a zero-emission credit is not meant to undermine renewable technologies, like solar, nor energy efficiency.

But Izzo and others argued it is time for the nation to recognize nuclear should be given additional value given that it is a carbon-free source of electricity.

In the absence of a carbon-pricing policy, “people get to pollute for free,’’ said Tierney, who has proposed a “clean-energy standard’’ in New York state that would apply to nuclear and other carbon-free forms of electricity.

“We have a fundamental market failure,’’ she said, referring to the problems faced by nuclear. “When you correct a market failure, it is not a subsidy; it’s making the market work better.’’

“They’ve gotten all the incentives they need. It is up to them to show they can compete.’’

Not everyone would agree. New Jersey Division of Rate Counsel Stefanie Brand, who was in the audience but not a panelist, said she would oppose a new incentive for nuclear, which as Smith acknowledged has been “fairly well subsidized.’’

“There is no evidence that they are not making money from nuclear,’’ Brand, said referring to PSEG. “They’ve gotten all the incentives they need. It is up to them to show they can compete.’’

But Fred Krupp, president of the Environmental Defense Fund, said the politics of carbon pricing is changing all over the country and predicted such a policy will come to pass. “No political party has a future unless it decides we’re going to act nationally on carbon,’’ he said.

“It’s right to say the future of low-carbon energy depends upon renewables,’’ Krupp said, while conceding there may be a place for existing nuclear units to serve as a bridge. “We need to think how we orderly transform these old plants to newer forms of zero carbon. We just cannot turn the switch off right away.’’

In striking any deal for a zero-carbon credit, Krupp said it is important the EDF, the rate counsel, and others participate in the dialog to make sure it is good for consumers, the environment and that it includes things to modernize the electric grid.

To Smith, the issue of cost must also factor in the cost of not doing anything. “Our planet is in serious jeopardy,’’ he said, referring to the extreme weather that has been a more frequent occurrence “Our state with its 130 miles of coastline is right on the front lines.’’

Read the original version of this article here at the publisher’s website

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