Dive Brief:

• The New York Department of Public Service has approved the sale of the FitzPatrick nuclear plant, from Entergy Corp. to Exelon, part of an arrangement aimed at keeping the state's nuclear fleet online.
• Entergy had planned to shutter the struggling facility, but Exelon agreed to purchase it for $110 million, contingent on the state developing a Clean Energy Standard program to keep it profitable.
• The deal, approved in a 4-0 vote, has its detractors and still faces review from the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission.

Dive Insight:

New York's approval of the FitzPatrick deal is a necessary step to keep the plant online, but more challenges will likely be raised in front of federal regulators.

Entergy was considering closing the 838 MW plant before New York Gov. Andrew Cuomo and proposed the CES program last year, allocating about $8 billion over 12 years to three of the state's nuclear power stations. State regulators unanimously approved the proposal in August.

Electric generators filed a lawsuit in October, arguing that the subsidy program intrudes on federal jurisdiction of wholesale markets. Those arguments mirror concerns from a Supreme Court case decided earlier this year: The Justices struck down a plan in Maryland designed to incentivize new in-state power generation by outlining a price floor while using ratepayers to make up the potential differences.

Previously, PSC Chair Audrey Zibelman defended the program, saying the plan was "carefully designed" to not run afoul of federal oversight. Under the CES program, nuclear generators would be allocated Zero Emission Credits (ZECs) designed to value the carbon-free attributes of nuclear plants and other clean power. 

On a press call Thursday, Zibelman reiterated that the use of the ZECs did not infringe on FERC's authority to regulate price formation in wholesale markets. 

“FERC says payment for an environmental attribute [like a ZEC] is not setting wholesale energy prices, and is outside of their jurisdictional interests and can coincide with wholesale markets," Zibelman said. "We obviously looked at those issues when we designed the program."

If Exelon completes the purchase of FitzPatrick, the deal would add to its New York nuclear portfolio, giving it three nuclear plants in the state, including the 576 MW Ginna plant and the 1,907 MW Nine Mile Point station.