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Exelon readies for legal fight to keep New York nuclear subsidies

legal costsExelon girds for challenges to Cuomo’s N.Y. nuclear subsidy, Jeffrey Tomich and Saqib Rahim, E&E reporters EnergyWire: Friday, August 19, 2016 Even before the first counterpunch to New York’s plan to subsidize a trio of upstate nuclear power plants in the name of fighting climate change, the beneficiary of almost $500 million in annual payments is airing its legal defenses.

Chicago-based Exelon Corp., owner of the R.E. Ginna and Nine Mile Point plants and the soon-to-be-owner of a third plant, James A. FitzPatrick, said it has vetted all of the potential arguments its opponents could raise and its defense is airtight.

“Given the importance to the company, we’ve gone through these legal theories in great detail and each of the potential challenges,” William Von Hoene, Exelon’s senior executive vice president and chief strategy officer, said in a recent presentation. “And we will have the challenges.”

Exelon is on the same page as New York’s Public Service Commission, which designed the policy to avoid specific legal tripwires. Experts say there’s likely to be a court challenge anyway, if only because of the money at stake and the precedent it could establish. If it survives, the plan could be a blueprint for other states to achieve the same policy goals, even after similar efforts have been blocked by judges and regulators.

This year, the U.S. Supreme Court overturned a Maryland incentive program for new gas-fired generation because it strayed too far into federal jurisdiction over wholesale electricity markets (Greenwire, April 19). And the Federal Energy Regulatory Commission blocked a plan approved by Ohio regulators to subsidize utility-owned coal and nuclear plants because it clashed with affiliate transaction rules (EnergyWire, April 28).

The New York PSC approved its clean energy standard (CES) on Aug. 1, formalizing the state’s goal of getting half its power from renewable energy by 2030. Toward that end, the CES will subsidize three nuclear power plants, giving more time for wind and solar power to develop in New York…..

Opponents said the process moved too fast given the high stakes. They’ve said it’s dubious to peg the subsidy to the social cost of carbon, and that it will lead to burdensome costs for large energy users, like manufacturers. And some environmentalists have objected to any support for nuclear power in a policy meant to advance renewable energy…….

Regulators moved quickly to finalize the clean energy standard. Entergy Corp., the owner of FitzPatrick, planned to shut the plant in January. Exelon was willing to buy it and add to its nuclear fleet, but it wanted clarity about what their economics would be……

On July 8, the state Department of Public Service proposed its plan to rescue the nuclear plants with ZECs. The plan contemplated nearly $1 billion in subsidies for the first two years. It said the $4 billion net benefit, largely from cutting carbon, was worth it.

Regulators took public comments for two weeks and issued a final order on Aug. 1.

Opponents said the process moved too fast given the high stakes. They’ve said it’s dubious to peg the subsidy to the social cost of carbon, and that it will lead to burdensome costs for large energy users, like manufacturers. And some environmentalists have objected to any support for nuclear power in a policy meant to advance renewable energy.

Legal fight on the horizon?

What remains unclear: Will any of the objections lead to a formal legal challenge?…….

Parties have 30 days to petition the PSC for a rehearing, said Jon Sorensen, a spokesman for the Department of Public Service. They have four months to challenge a decision at the New York Supreme Court.

At FERC, parties could lodge a complaint at any time, asserted Tyson Slocum, energy program director at Public Citizen, a consumer watchdog.

What might be the substance of such a challenge? “We do expect opponents to challenge the order both on administrative process as well as the merits,” said Fox of ClearView.

That opens many angles of attack, though not all of them are equally likely. Some parties question how regulators set the amount of the nuclear subsidy. At first, it was based on the cost of running the reactors. They ultimately decided to use the social cost of carbon.

Whether the recent appellate court ruling validates the social cost of carbon metric, some critics say the PSC staff didn’t allow enough time for parties to vet the formula.

“Two business weeks is a wholly inadequate amount of time for parties to review, evaluate and comment on a proposal that is projected to result in billions of dollars in costs and with a newly-created methodology for calculating ZEC prices,” the National Energy Marketers Association said in a filing last month.

The PSC’s timetable violated the state’s Administrative Procedure Act, NEMA said. It declined to comment on a possible challenge to the CES.

Exelon is also bracing for challenges that claim the PSC strayed too far into FERC’s jurisdiction……http://www.eenews.net/stories/1060041817

August 21, 2016 - Posted by | Legal, USA

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