New Jersey committees pass bill supporting nuclear

22 December 2017

A bill that would recognise the environmental and fuel diversity attributes of New Jersey's nuclear power plants has been approved by House and Senate utility committees and will now go forward to the full legislative body.

The Salem-Hope Creek nuclear complex (Image: @PSEGNews)

The New Jersey Senate Environment and Energy Committee and the Assembly Telecommunications and Utilities Committee on 20 December unanimously approved the legislation, which was introduced on 14 December. The bill will now go before the full Assembly and Senate, with a vote possible early next year.

The proposed legislation - Assembly Bill 5330 and Senate Bill 3560 - directs the New Jersey Board of Public Utilities to establish a Nuclear Diversity Certificate (NDC) programme. Under the bill, an NDC would represent the environmental and fuel diversity attributes of one megawatt-hour of electricity generated by an eligible nuclear power plant. Nuclear power plants selected by the state's Board of Public Utilities to receive NDCs would receive a yearly payment from the state's public utilities.

To be eligible, a nuclear power plant must be licensed to operate until at least 2030; demonstrate that it makes a "significant and material contribution" to the diversity and resilience of the state's energy resource mix; show that it contributes significantly to state air quality by minimising emissions; and be at risk of closure unless it experiences a "material financial change". It must not be in receipt of any other credit or payment that would save it from premature retirement, and must also pay a fee of up to $250,000 to the state's Board of Public Utilities to cover the costs of administering the scheme.

"A programme that recognises and compensates nuclear power plant operators in a manner similar to other non-emitting energy generation resources, to the extent required to prevent the loss of nuclear energy, which the State's residents and businesses rely on for approximately 40% of their electricity needs, would further this State's interest in environmental protection and maintaining a diverse mix of energy sources," the bill notes.

New Jersey is home to four nuclear reactors that together generate 38.5% of the state's electricity: the single-unit Hope Creek and twin-unit Salem plants, both owned by Public Service Enterprise Group (PSEG), and Exelon's single-unit Oyster Creek. Oyster Creek is already scheduled for early closure in 2019, a decision made following changes to state water use rules that would have required the construction of new cooling towers at the plant in a project that would have cost over $800 million.

In written testimony presented to the Senate and Assembly committees ahead of the vote, PSEG chairman Ralph Izzo said Hope Creek and Salem were currently "in the black" thanks to electricity contracts secured at above-market prices over recent years. Those contracts are now due to expire.

"Unless circumstances change, these plants will no longer be covering their costs within the next two years. Thus, without intervention - without a thoughtful, economic safety net - PSEG will be forced to close its New Jersey nuclear plants," he said.

A recent study by consulting group IHS Markit suggested premature closure of the plants would result in $530 million per year in public health and environmental costs from increased air and carbon pollution, including an annual increase in CO2 emissions of 13 million tonnes; over $400 million per year in higher electricity costs; and an $820 million per year reduction in New Jersey's GDP; as well as job losses and the loss of $37 million in annual state tax, he said.

The proposed bill would provide for a "robust process" ensuring support would only be received by plants "demonstrably in need", Izzo said. "PSEG supports this effort by the New Jersey Legislature to squarely face this fundamental issue and to take steps to preserve the nuclear power plants serving the state's electricity consumers before irreversible steps are taken to shut down these vital resources," he said.

US nuclear plants, particularly those operating in deregulated markets, have found themselves facing economic challenges from the short-term nature of the competitive market, coupled with competition from low-cost gas and federally subsidised wind power. New Jersey is one of a number of states including New York and Illinois that are taking, or considering, action to preserve values not recognised in the markets.

US Energy Secretary Rick Perry has called on the US Federal Energy Regulatory Commission to act swiftly to address threats to grid resiliency through market reforms to recognise the attributes of baseload generation sources including nuclear. The regulator is considering Perry's proposed rule, which would recognise the ability of traditional baseload generation with on-site fuel supplies to provide grid resiliency during extreme events such as hurricanes.

Researched and written
by World Nuclear News