New Jersey approves up to $300M in annual nuclear plant subsidies, despite profitability claims

Dive Brief:

The New Jersey Board of Public Utilities (BPU) on April 18 awarded zero-emission certifications to three nuclear power plants in the Garden State, providing Public Service Enterprise Group (PSEG), which owns and operators all three plants, with a potential $300 million annual windfall.
The BPU's decision saved the state "hundreds of millions of dollars" as a potential shutdown of all three nuclear plants would have resulted in "higher energy costs, thousands of jobs lost and tons of environmentally damaging air emissions," PSEG said.
Opponents of the decision, however, claimed that all three plants are profitable and "not in need of a subsidy," according to media reports.

Dive Insight:

Nuclear energy and its potential role in fighting climate change remains a contested issue within the energy industry. While studies on the issue differ widely in their conclusions, they agree that nuclear energy faces economic challenges that threaten its viability in the United States and other Western countries.

"The economic challenges facing nuclear plants are part of a historic transition in the US electricity sector," a 2018 study by the Union of Concerned Scientists, called The Nuclear Power Dilemma, said. "Over the last decade, natural gas generation and renewable energy generation from wind and solar have grown rapidly as their prices have fallen. … While nuclear power's share of electric power production has remained relatively flat over the past decade, most analysts project that share to decline in the future without additional financial or policy support."

The nonprofit organization warned that without new policies, environmentally harmful natural gas and coal will fill the void left by unprofitable nuclear plants. New Jersey's recent decision to approve three nuclear power plants — Hope Creek and Salem 1 and 2 — for zero-emissions certificates is one way keep this from happening.

"Now is not a time to move forward in a way that will remove nuclear from our energy mix and ultimately increase air pollution and carbon emissions in our state," the BPU said.

Newark, N.J.-based investor-owned utility PSEG owns and operates all three nuclear plants, while Exelon has a 43% ownership stake in the in Salem plant. The BPU's decision to provide up to $300 million in subsidies for the three nuclear facilities will help support New Jersey's plan to pursue zero-carbon electricity by 2050, PSEG said in a statement.

PSEG did not respond to a request for comment from Utility Dive.

New York, Illinois and Connecticut also have nuclear subsidy programs. Fossil fuel generators have challenged the legality of Illinois and New York's subsidy programs in court. However, the U.S. Supreme Court last week declined to take up the issue and therefore affirmed the lawfulness of these and similar programs.

While state subsidies are intended to level the playing field for nuclear power providers in the competitive energy market, a report by energy consulting firm Levitan and Associates, commissioned by New Jersey regulators before the BPU's vote, found that the three nuclear plants were profitable and did not require any government incentives, the AP reported.

Dennis Hart, the executive director of the Chemistry Council of New Jersey, told the AP that the BPU's 4-1 vote was a "sad, sad day" for the citizens and businesses of New Jersey.

PSEG previously said that it would have to close all three plants should regulators fail to approve the subsidy. This would have not only put around 2,000 jobs in jeopardy, but also increased air pollution, media reports said.