Dive Brief:

• New York's subsidies aimed at keeping four upstate nuclear units in operation have come under fire from five lawmakers and a generator six weeks after the state announced it would spend almost $1 billion to keep the plants running.
• The New York lawmakers said in a  letter to Public Service Commission Chair Audrey Zibelman that they oppose a statewide rate increase that requires downstate electric customers to pay for nearly 60% of the nuclear subsidies.
• Castleton Commodities, a global commodities merchant, has also filed a challenge with the PSC, arguing the Zero Energy Credits (ZECs) utilities will be required to purchase intrude on federal regulatory of wholesale energy markets.

Dive Insight:

New York's plan to reach 50% renewable energy has hinged in part on the state keeping three struggling nuclear plants afloat, but new challenges to that strategy have come under fire from the power industry and lawmakers representing customers.

The Fitzpatrick, Ginna and Nine Mile nuclear plants are expected to produce 27.6 million MWh of carbon-free generation per year, making their operation essential to meeting Gov. Andrew Cuomo's goal of cutting greenhouse gas emissions 40% from 1990 levels by 2030, and 80% by 2050. 

Five members of New York's Assembly—Jim Brennan, Amy Paulin,  Jeffrey Dinowitz,  Charles Lavine and  Steve Englebright—in a letter to regulators say they worry the costs of sustaining the state's nuclear fleet are being unfairly determined. But they stressed it is just the allocation, and not the larger clean-energy goal, they are questioning.

"We do support the State’s goal of achieving 50% electricity from renewable sources of energy by 2030," the wrote. "We do, however, object to a statewide electric rate increase that requires downstate electric customers to pay for nearly 60% of the nuclear subsidies."

The lawmakers asked the PSC to take three steps, including reconsidering the share of the rate increase shouldered by downstate customers, and then publishing the cost analysis. They say they are concerned the PSC "blocked public access to a cost review of the nuclear fleet in the case proceedings."

They have also asked the PSC to unseal the nuclear fleet cost review and to eliminate a subsidy for Nine Mile's Unit 2, "at least until the next refueling of the unit, but not until the cost review of the nuclear fleet is made public."

In a statement, Brennan, a Democrat who chairs the Assembly's Committee on Corporations, Commissions and Authorities, said the lawmakers are concerned about the subsidy's fairness. "I urge the Commission to review the order and make sure that the rate increase isn’t unfair to downstate energy customers.” he said.

Separately, a small generator has challenged the subsidies in a filing at the PSC. Castleton Commodities owns about 1,300 MW of generation, most of it near New York City, and has a 100 WM cogeneration plant near Albany. The company said the PSC's nuclear subsidies intrude into wholesale markets regulated by the Federal Energy Regulatory Commission.

Castleton criticized the PSC "for abandoning its commitment to competitive forces to manage the wholesale markets," along with going beyond its authority and failing to fully explain the nuclear costs.

The PSC says its payments are for a distinct product: nuclear generation's zero-carbon attributes. But Castleton said the PSC's characterization "cannot disguise that the ZEC Program adds an administratively determined premium to the competitively set price to overcome the Commission's dissatisfaction with the natural operation of the wholesale marketplace."