New Jersey utility customers are officially committed to paying $300 million each year to keep the state’s three remaining nuclear reactors open.
The New Jersey Board of Public Utilities decided Thursday to award Public Service Electric and Gas (PSE&G), the state’s largest utility, three “Zero Emission Credits” — massive subsidies that have been fiercely debated in Trenton for well over a year.
The money will go toward operating the Salem 1 and 2 reactors in Lower Alloways Creek that make up the Salem Nuclear Power Plant, which is co-owned by PSE&G and Exelon, and the Hope Creek Nuclear Generating Station, also owned by PSE&G and also located in Lower Alloways Creek.
All three of the plants are licensed to operate for decades into the future. PSE&G said in its subsidy applications that the plants would permanently close within three years without financial help.
The average residential utility customer in New Jersey will see their bill increase about $41 annually to pay for the subsidies. Customers from all public utilities in the state would foot the bill through a rate hike.
The NJBPU’s commissioners voted 4-1 to approve the subsidies.
“We are pleased with the decision to award ZECs to PSE&G to help support New Jersey’s primary supply of zero-carbon electricity,” the utility said in a statement following the vote. “The BPU just saved the people of the state hundreds of millions of dollars in what would have been higher energy costs, thousands of jobs lost and tons of environmentally damaging air emissions.”
When he approved the subsidy plan, Murphy, a Democrat, also signed a companion law that sets aggressive energy goals for New Jersey as his administration pushes to slash the emission of greenhouse gases like carbon dioxide and methane, which drive climate change. The law requires that the Garden State obtain 50% of its energy from clean sources by 2030.
New Jersey currently gets more than 40% of its energy from nuclear power, according to a New York Times report.
PSE&G has aggressively pushed for the benefits, arguing that the nuclear plants will fail financially without subsidies because of increasing competition from natural gas plants, which are cheaper to operate.
Earlier this week, NJ Spotlight reported that PSE&G had filed notice of its intent to shutter the three nuclear units, a move that was slammed by bailout opponents as little more than a hardball tactic by the utility in the lead up to today’s NJBPU decision. Before that, in March 2018, PSE&G filed notice that it would not make planned upgrades to its nuclear plants unless it was granted the bailout.
Shutdown threats aren’t the only tool that PSE&G used to push for the subsidies. In 2017 and 2018 combined, the utility spent more than $3.7 million lobbying for the bailout bill in Trenton, according to the New Jersey Election Law Enforcement Commission.
Politico has previously reported that months after the bailout bill was passed, PSE&G tried to make a $55,000 donation to a “dark money” group with close ties to South Jersey powerbroker George Norcross, a supporter of state Senate President Steve Sweeney. It was Sweeney who was the primary sponsor of the bailout bill.
But the bailouts have been fiercely opposed by a range of groups, from consumer advocates to environmentalists, who argue that PSE&G doesn’t need the money and that the funds would be better used to push the development of renewable energy like wind and solar power.
“The BPU sold out the ratepayers and renewable energy today by going along with this unnecessary nuclear subsidy,” said Jeff Tittel, the director of the New Jersey Sierra Club. “This giveaway is about greed and not need.”
New Jersey Rate Counsel Director Stefanie Brand, the official advocate for Garden State ratepayers, has opposed the new subsidy since its initial proposal.
“In sum, this is a ‘heads I win, tails you lose’ situation for PSE&G,” Brand said in a testimony to the state Senate budget committee last year. “It puts all the power and benefits on PSE&G’s side of the ledger, allowing it to determine what it is entitled to earn, whether other programs provide enough assistance, and even its own eligibility.”
Brand added at that time that she has not seen evidence that the subsidy is needed to keep the nuclear power plants profitable.
“There has been no demonstration that PSE&G’s nuclear plants are in financial difficulty other than bald assertions and ultimatums issued by the company,” Brand said.
The state’s nuclear bailout did not come in time to save the Oyster Creek Nuclear Generating Station in Lacey Township, also owned by Exelon, which closed in September. The plant was shut down because Exelon was not able to build new cooling towers for the facility.
New Jersey’s subsidizing of nuclear plants is a strategy that is already being used by other states. New York and Illinois put nuclear subsidies in place in 2017, according to a ProPublica report, while Pennsylvania, Ohio and Maryland are also considering similar programs.
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