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Economist doubts the need for New Jersey to subsidise nuclear power stations

ANOTHER EXPERT CASTS DOUBT ON NEED FOR NJ TO SUBSIDIZE NUCLEAR PLANTS, NJ Spotlight,  | FEBRUARY 11, 2019

Economist also disputes PSEG’s contention that South Jersey plants will have to close within three years unless given subsidies. New Jersey should hold off awarding ratepayers’ subsidies to nuclear power plants until a federal agency decides whether to boost energy prices under a pending proposal from the regional grid operator, according to an independent economist.

The Independent Market Monitor for PJM urged a state agency to hold off a decision on granting subsidies to PSEG Nuclear and Exelon Generation who are seeking financial incentives — dubbed zero emission certificates — to keep three nuclear units in South Jersey from closing.

In a heavily redacted filing with the state Board of Utilities, Joseph Bowring, who oversees the competitiveness of the PJM market, also disputed the contention that the plants will have to close within three years unless given the subsidies. His rationale echoed the contention of an earlier filing by Stefanie Brand, director of the state Division of Rate Counsel.

“PSEG overstates its need for subsidies of Hope Creek and Salem I and Salem II units,’’ Bowring said. “PSEG understates forward energy revenues, understates capacity revenues, overstates costs and overstates the risk.’’

Decision expected in April

Bowring and Brand are the only two intervenors in the case that have been granted access to the companies’ financials, which will determine whether PSEG and Exelon are awarded the zero emission certificates. The subsidies are projected to cost ratepayers up to $300 million annually, if approved by the BPU.

The agency is expected to make a decision in the case in April. Nuclear power plants across the country have closed prematurely because of failing economics. Some states, including Illinois and New York, have approved similar financial incentives to avert shuttering nuclear units……….

Power suppliers also are opposed

In a separate filing by the PJM Providers Group, a coalition of power suppliers opposed to the subsidy, also urged the BPU to reject a subsidy it said “is not necessary and would serve nothing more than to pad the coffers of the plant owners and their shareholders.’’

A consultant retained by the group, Paul Sotkiewicz, a former PJM chief economist, projected the plants will make profits between $377-$477 million every year for the

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February 12, 2019 - Posted by | business and costs, USA

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