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StateImpact PA: PUC Commissioners Raise Serious Concerns With Senate Bill To Aid Nuclear Power Plants

On April 22, Marie Cusick of StateImpact PA reported Public Utility Commission member Andrew Place sent a memo to members of the Senate saying “... I do not believe Senate Bill 510, as currently drafted, is just and reasonable for Pennsylvania’s ratepayers, and encourage consideration of alternatives for addressing this intricate issue.”

He suggested looking at alternatives like putting a price on carbon, investing in energy efficiency, adopting a needs-based approach to supporting nuclear power plants, providing incentives for technological innovations or investing in other zero emission generation.

He also said, “...this bill does not provide certainty that these nuclear plants would not close.”

Cusick also reported the other commissioners on the PUC sent a statement to Senators underlining the fact only the Three Mile Island plant is in financial trouble now and concluding the bill “could affect the ability of the Commonwealth to continue to operate its retail competitive markets, or at a minimum, result in significant modifications to its current operation.”

The Commissioners also noted additional reforms being considered by the PJM Interconnection, the regional electric grid operator, could, if approved, provide additional financial benefits to nuclear power plants on top of the subsidies proposed in Senate Bill 510.

Sen. Ryan Aument (R-Lancaster), prime sponsor of Senate Bill 510, declined comment on the criticisms of his bill.

Similar legislation-- House Bill 11 (Mehaffie-R-Dauphin)-- is under consideration in the House Consumer Affairs Committee.

Statement By Commissioner Place

Here is the text of the statement by PUC Commissioner Andrew Place--

“As it is the Public Utility Commission’s practice to only transmit the majority position on proposed legislation, I am writing independently to express my dissenting opinion on Senate Bill 510.

As currently drafted, the annual cost to the Commonwealth’s ratepayers for Senate Bill 510 would be between $422M and $506M. While the revenue would accrue to all of the Commonwealth’s nuclear units, only Three Mile Island (TMI) is currently uneconomic, with some uncertainty whether Beaver Valley is profitable.

Pennsylvania’s residential consumers would see increases in monthly bills of between $2.36 to $4.50, depending on heating source.

Large commercial customers would see monthly increases of between $608 and $730, while industrial customer impacts would range from $1.216 to $1,459.

The Commission is tasked with ensuring just and reasonable rates. Allocating these significant costs to ratepayers for nuclear generators to maintain the status quot in terms of carbon emissions, jobs, tax base etc. does not comport with that obligation.

While human health and environmental quality; job creation and retention; and maintaining a robust tax base are cornerstone public policy goals, this bill, in its current form, is far from the least cost mechanism to achieve those goals.

Fundamentally, the opportunity cost of foregoing alternatives-- such as a price on carbon, energy efficiency, need-based support for distressed nuclear units, incentivized technological innovation, or investments in other zero-emission generation-- is sizable.

It is also noteworthy that if TMI and Beaver Valley were to retire in the near-term, grid reliability would not be compromised, while the subsidization of such a significant portion of the wholesale energy market would be distortional to competitive market prices.

Additionally, this bill does not provide certainty that these nuclear plants would not close.

While other states have passed legislation in support of nuclear generation, there are key differences between those statutes and the proposal currently before your Committee.

Particularly, states have only subsidized a portion of their nuclear generation, required plants to show evidence of financial necessity and coupled nuclear support with enhanced support for renewable energy and energy efficiency.

For the above reasons I do not believe Senate Bill 510, as currently drafted, is just and reasonable for Pennsylvania’s ratepayers, and encourage consideration of alternatives for addressing this intricate issue.”

Statement By Other PUC Commissioners

Here is the text of the statement by the other Commissioners on the PUC on Senate Bill 510--

“The legislation will provide considerable out-of-market revenues to all nuclear generation pursuant to establishment of a new AEPS [Alternative Energy Portfolio Standards] Tier III product, regardles of whether or not the plants require financial assistance above that provided by PJM wholesale markets.

Based on information provided by the PJM Market Monitor, only TMI is clearly financially troubled at this time.

Loss of certain unprofitable nuclear power plants will result in the loss of some of the carbon free generation from our nuclear fleet in Pennsylvania.

Should the Beaver Valley Plant retire, estimated incremental transmission project spending of approximately $182 million would need to be accelerated. No additional transmission spending is needed for TMI’s retirement.

The impact on costs of wholesale power in PJM resulting from the loss of some nuclear power generation may be positive or negative, as potential gains in energy markets are likely to be offset by lower capacity market prices, and lower prices imposed by replacement by new efficient natural gas units, and wind and solar facilities.

Payment of Tier III subsidies to all Pennsylvania nuclear plants could result in higher capacity market payments by Pennsylvania customers should the Federal Energy Regulatory Commission (FERC) approve capacity market proposals filed by PJM.

Additional, a number of energy and ancillary service reforms are under consideration by PJM: energy price formation, fuel security, and resilience, which all have the potential to raise energy prices to the benefit of nuclear generators.

These additional revenues would be additive to those provided under the AEPS amendments and would utimately be borne by ratepayers.

Additionally, PJM has convened a stakeholder process to study how to incorporate various carbon pricing options into its market.

Large out of market payments related to capacity could create structural supply market challenges related to both default service customers and competitive suppliers, and could affect the ability of the Commonwealth to continue to operate its retail competitive markets, or at a minimum, result in significant modifications to its current operation.

If enacted, much of Pennsylvania’s generation portfolio will be subject to a ratepayer funded financial subsidy, which may be a market shift away from the goals of the Competition Act passed in 1996.”

NewsClips:

Caruso: Fossil Fuel Industry Poll Finds Pennsylvanians Uninformed About Proposal To Aid Nuclear Power Plants

Maykuth: Solar, Wind Energy Advocates May Hold Swing Vote In Nuclear Rescue Debate

Cusick: PUC Commissioner Place Speaks Out Against Senate Nuclear Power Plant Bill

PA PUC Commissioner Blasts State’s Nuclear Bailout Bill

PUC Commissioner Voices Opposition to Nuclear Subsidy Bill

Millions On The Line For Municipalities If TMI Closes, Local Officials Say

Rally Held To Support Bill That Would Save TMI

Caruso: Anti-Nuclear Activists Cry Foul Over Exelon/TMI’s Request To Use Decommissioning Dollars For Radioactive Waste Storage

Cusick: Legacy Of TMI, Gas Industry Makes Nuclear Subsidies Uphill Battle In PA

Small Businesses Fear Huge Electric Bill Increases Under $500M Nuclear Power Plant Proposal

Op-Ed: PA Nuclear Industry Looking For Handout, Not Bailout