Dive Brief:
- New Jersey regulators on Monday approved a Zero Emission Credit (ZEC) program and application process for nuclear power plants, moving the state one step closer to creating a mechanism to support uneconomic units.
- New Jersey would join New York and Illinois as states that have put programming forward to keep nuclear plants afloat. They have been struggling against gas-fired generation, but some state regulators have made efforts to retain the carbon-free generation.
- The New Jersey Board of Public Utilities' (BPU) decision opened an application window for nuclear operators to apply, which ends Dec. 19. Regulators said the plants must show a "clear need" for the credits, while meeting a number of other requirements, including evidence they'll help the state reduce emissions.
Dive Insight:
With New Jersey's approval of the ZEC program, and Connecticut poised to save Dominion's Millstone plant, four states may be working to keep the uneconomic nuclear units afloat. Particularly in the Northeast, where natural gas-fired generation is prevalent, there is a lot of incentive to keep carbon-free generation online.
The moves come as an increasing number of nuclear plants may face shuttering. Earlier this month, a new report from the Union of Concerned Scientists concluded more than one-third of nuclear plants in the United States are at risk of early retirement. In total, 21 of 60 facilities could be prematurely closed in the next decade.
New Jersey gets about 40% of its electricity from nuclear plants, which makes it "an important part of the state's carbon-free energy blueprint," BPU President Joseph Fiordaliso said in a statement. But he also said the applications would be carefully analyzed "to determine whether credits should be awarded."
Subsidies for the plants are a controversial topic, and not all parties are convinced they are necessary. The BPU's decision will allow both the New Jersey Division of Rate Counsel and PJM Interconnection's market monitor to have access to confidential financial information used to make the determinations.
A ranked list of eligible nuclear plants will be sent to the BPU for approval in April next year. The BPU says it will determine eligibility for the credits through filings supplied by applicants. Nuclear units must also be licensed by the U.S. Nuclear Regulatory Commission through 2030, demonstrate they can significantly help the state minimize emissions, and demonstrate they would likely close down within three years due to financial difficulties.
Applicants must also certify that the unit does not receive other subsidies.
Along with the application and program approval, regulators also approved tariff modifications needed for utilities to collect the ZEC funding. The rate, set in legislation signed in May, will be $0.004/kWh if a plant is deemed eligible.
Debate over support for uneconomic nuclear plants has been a hot topic over the past year, with some generators arguing the supports interfered in wholesale markets overseen by the Federal Energy Regulatory Commission (FERC).
But FERC and the U.S. Department of Justice filed a joint legal brief in support of Illinois' nuclear subsidies earlier this year, with the 7th Circuit Court of Appeals ultimately upholding the program.
While each state has developed a different approach to keeping the plants online, Matt Crozat, senior director of strategy and policy development at the Nuclear Energy Institute, told Utility Dive the debate over state generation subsidies is largely finished.
"We have argued that states should be able to pursue their own clean energy goals without forcing customers to pay for unneeded generating capacity or forcing states completely out of FERC-regulated markets," Crozat said. “The courts and FERC have recognized that states have authority to support clean energy generation and determine their electricity generation mix."
Crozat also said that FERC is now in the process of deciding how PJM Interconnection should balance its capacity markets "while accommodating legitimate state policies such as zero-emission credits."
The implications of a declining nuclear fleet could be severe, UCS warned in its report. Depending on how much nuclear capacity is taken offline, it could drive the power sector's carbon emissions higher by 4% to 6% by 2035.
