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Legal challenge to stop New Jersey bailout for nuclear power

New Jersey’s $300 Million Nuclear Power Bailout Is Facing a Court Challenge. Does It Have a Chance? The state’s utility advocate said regulators should not have approved the subsidies for the energy company PSEG.by Talia Buford , May 16,

But some of the board members who voted for subsidies had openly questioned the need for them, echoing concerns expressed by the board’s staff and objections raised by utility watchdogs.

Now, the unusual circumstances around the vote are the basis of a legal challenge by the state-appointed utility advocate, who says the subsidies — and the surcharge financing them — should be cut off.

In an appeal filed on Wednesday in state court, Stefanie Brand, the state’s rate counsel, said that by ignoring its own staff experts and providing little basis for the amount of the surcharge, the board had violated the law.

“It’s very unusual and inconsistent with the statute,” Brand said.

But will that argument persuade a court?

“It’s hard, in general, to beat regulators at their own game,” said Ari Peskoe, a lawyer and director of the Electricity Law Initiative at the Harvard Law School. ……..

“The significant thing about this filing is the rate counsel was given this on a silver platter on why these subsidies are unwarranted,” said Doug O’Malley, director of Environment New Jersey. “It’s not a surprise that she’d be filing an appeal. I think the surprise is the ratepayer has such a strong case.”

The appeal focuses on four issues: the staff findings that PSEG didn’t meet the criteria for the subsidy; the board’s dismissal of those findings; the lack of reasoning for setting the subsidy rate at $0.004 per kilowatt hour, which was calculated to provide a total subsidy of $300 milion; and whether the amount of the subsidy represented clean-energy benefits as legislators claimed.

PSEG’s Hope Creek and Salem plants in Salem County make up the second-largest nuclear facility in the United States, and they serve as an economic anchor for the area, which is represented by New Jersey’s most powerful legislator, Senate President Stephen Sweeney. New Jersey passed its nuclear subsidy last year after intense lobbying by PSEG, which spent nearly $4 million in 2017 and 2018 on the effort.

Similar measures that offer incentives for nuclear plants to stay open after the companies have threatened to close them survived challenges in federal court. This month, Pennsylvania legislators said they didn’t have the support to bring the proposed subsidy bill to a vote, prompting Exelon to announce plans to close Three Mile Island nuclear plant in September.

Since the debate over the New Jersey measure began in 2017, Brand has questioned how legislators came up with the amount of the subsidy…….

At the board meeting last month, BPU staff and an independent consultant reported that PSEG was including some ineligible costs and inflating others in an attempt to satisfy the statute’s requirements, but they said that the facilities were not actually in danger of closing. …….

While the run-up to the BPU vote was marked by full-page newspaper ads and stories in local media, the only indication that customers were subsidizing PSEG’s nuclear plants was, for some, a note on the top corner of their latest bills. https://www.propublica.org/article/new-jerseys-300-million-nuclear-power-bailout-is-facing-a-court-challenge-does-it-have-a-chance#

May 18, 2019 - Posted by | Legal, USA

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