Oswego County Business Magazine

Critic Nukes Subsidy Deal

Anti-nuke group irate over fallout of state bailout agreement

By Lou Sorendo

An anti-nuclear group is taking aim at the state subsidy deal that is keeping Oswego County nuclear power reactors afloat.

The Nuclear Information and Resource Service (NIRS) heavily criticized the fact that the cost to subsidize Central New York nuclear plants is increasing by $57 million a year, mainly because electric prices are low.

New York utility ratepayers are charged about $540 million a year, up from $483 million, to bolster the two nuclear power facilities in Oswego County — Exelon’s Units 1 and 2 nuclear power facilities at Nine Mile Point and the James A. FitzPatrick plant, along with the R.E. Ginna plant in Rochester.

Exelon — which owns all four reactors — considers its two reactors at Nine Mile Point as one facility.

The nuclear subsidy payments, first implemented in 2017, are scheduled to increase every two years unless market prices for electricity rise. The goal is to guarantee the nuclear plants enough income to stay afloat, with subsidies making up any shortfall from what the plants earn in the wholesale market.

The subsidies occurred on the heels of both Exelon and Entergy — then owner of the FitzPatrick plant — saying they would shutter the plants unless they received financial help from the state in 2016.

However, Tim Judson, executive director of the NIRS, claims the increasing cost of the nuclear deal reinforces its criticism of subsidizing aging reactors.

The NIRS is an anti-nuclear group founded in 1978 to be the information and networking center for citizens and organizations concerned about nuclear power, radioactive waste, radiation and sustainable energy issues.

“What other industry gets to come to the ratepayers or taxpayers and demand money because they are not making sufficient profits?” he asked.

Alluding to the 2008-2010 bailout of the auto industry, Judson said, “It seems that if you are a big and powerful enough industry, you can do that.”

“When the county used to fund schools or increase taxes to fix roads, nuclear plants were the first in line to ask for a payments-in-lieu-of- tax agreement to reduce costs associated with property taxes,” he added.

Judson is also chairman of the Board of Citizens Awareness Network, one of the lead organizations in the successful campaign to close the Vermont Yankee reactor. He is also co-founder of Alliance for a Green Economy in New York.

Judson said there is a “basic question of fairness” when looking at the subsidy deal.

“When New York state deregulated the electricity market 20 years ago, ratepayers were charged over $1 billion to pay off the standard costs on the reactors as part of the transition,” Judson said. “The deal was that this was the last time ratepayers were going to have to cough up the extra money to support nuclear plants. Now here we are 20 years later, and the industry is asking us for a handout.”

He said NIRS’ contention has been the reactors in Oswego and Wayne counties are aging reactors that are going to have to close at some point, he said.

“The state needs to plan for that transition and these subsidies are just kicking the can down the road very expensively without providing any meaningful economic transition for the host communities,” he said.

Offers counterpoint

Tammy Holden, senior site communications specialist for Exelon Generation, said over time, natural gas production has increased significantly, and energy prices have declined dramatically, challenging the sustainability of the nation’s carbon-free nuclear plants.

“The wholesale markets are designed to provide electricity reliably and cost effectiveness but have failed to value nuclear energy’s resiliency and environmental benefits,” she said.

To continue operating these plants, policy reforms that properly valued nuclear power for its reliability and environmental benefits were necessary, Holden said.

New York’s Upstate nuclear plants save New Yorkers $1.7 billion on their electricity bills annually, according to a 2017 report by The Brattle Group. Additionally, the plants contribute approximately $3 billion to the state gross domestic product, account for nearly 25,000 direct and secondary jobs, provide more than $140 million in taxes and avoid 16 million tons of carbon (valued at $700 million), according to the same study.

“Preserving these plants allowed New York to maintain the environmental and economic benefits they bring — carbon-free energy and low electricity costs for consumers,” Holden said.

Holden noted New York state recently established one of the nation’s strongest policies to address the urgency of climate change with the passage of the Climate Leadership and Community Protection Act (CLCPA), aimed at eliminating emissions from electric generation by 2040.

She said nuclear energy is a critical carbon-free resource and Exelon Generation’s three nuclear facilities provide approximately 42 percent of New York’s carbon-free electricity and play an important role in meeting these aggressive targets.

Holden said Exelon Generation invests in state-of-the-art technology and keeps the plants in excellent condition, resulting in carbon-free power generation more than 95 percent of the time.

“All carbon-free resources, including nuclear, are necessary to achieve New York’s aggressive goals aimed at combating the immediate climate crisis. Without the three nuclear facilities, costs would be higher, emissions goals would be out of reach and the effects of climate change would persist,” she said.

Judson said Constellation (former owner of Units 1 and 2) and Entergy “made massive profits” off the reactors for the first 10 years that they owned them.

“Ratepayers didn’t get a rebate when they were making up to 100 percent per year profits on those reactors, but now here we are years later being asked to give them a subsidy because they are afraid of the risks inherent in the market,” he said.

CES to the rescue

Holden said due to market conditions, the state’s nuclear energy plants were not economically viable several years ago and would have prematurely retired if New York did not adopt the Clean Energy Standard.

The CES is a clean energy goal designed to fight climate change, reduce harmful air pollution, and ensure a diverse and reliable low carbon energy supply.

The CES acknowledged nuclear generation’s positive environmental attributes, she added.

Environmental attributes aside, without these nuclear facilities, consumers would pay approximately $1.7 billion more annually and almost $15 billion in higher market prices over the next 10 years, according to a Brattle Group study.

“The CES leveled the playing field for all carbon-free resources, including nuclear energy, which has significant environmental and reliability benefits,” Holden said. “New York’s CES values all low-carbon energy sources, including wind, solar and nuclear.”

Judson noted the nuclear subsidy pact is a “fundamentally wasteful program. We could be spending our dollars much more cost-effectively to build up a new energy industry in New York that will have a long-term impact as opposed to what’s coming, which is a deadline when these plants are going to be closing anyway.”

Holden said New York has a history of advancing nation-leading energy policies, including the CES and corresponding zero emission credits program, and the recent CLCPA.

“Several states have followed New York’s lead with the implementation of similar programs acknowledging nuclear generation’s role in fulfilling clean-energy policy initiatives, particularly when it is cost-competitive with renewable forms of electric generation,” she said.

Holden said by maintaining these nuclear plants, New York is leveraging its existing investment in technology and reaping the benefits of carbon-free energy and low, stable consumer pricing.

The nuclear subsidy deal is a 12-year program ending in 2029.

Judson said two of the four reactors that are being subsidized are going to see their operating license expire that same year.

“They are going to be closing anyway. The amount of benefit that the public ostensibly is going to receive from mitigating carbon emissions is getting less each year this program goes on, and it has to pay more in order to support this,” he said.

Environmental stance

Holden said carbon accumulates in the atmosphere the same in 2019 as it will in 2029.

“Any amount of carbon that can be avoided by running nuclear instead of fossil is valuable, more so in the future as the costs to society of climate change increase,” she said. These costs include recovering from severe storms and flooding damage, heating and cooling during periods of extreme weather and reduced crop yields.”

Holden said the premature closure of these nuclear plants would undo most of the clean energy progress made to date and jeopardize New York’s ability to meet its new goals before the CLCPA program even begins.

“These plants do not have to shut down. Their licenses can be extended if stakeholders determine it’s necessary as a cost-effective way to combat climate change,” she said.

In terms of the program itself, Judson said energy efficiency was largely disregarded in the equation.

“The Public Service Commission was given a directive by the governor to provide subsidies for these nuclear reactors. There were other options presented by the public as an alternative, and one of them was to actually invest in energy efficiency programs in the state,” he said.

He said a study showed if New York had ramped up its energy efficiency programs like in other states, the state could have been reducing electricity demand by 2030 by as much power as the four Upstate reactors generate every year.

Judson said that would have resulted in a net cost savings to ratepayers of $3 billion, which would actually have been a greater reduction of ratepayer costs compared to what it was going to cost the public in increasing renewable energy generation in the state.

“They could have actually increased renewable energy up to 50 percent and reduced electricity consumption, and that would have resulted basically in a net cost savings to consumers. Instead, the PSC decided that energy efficiency just wasn’t part of the scope of its decision that they were making, so they opted to subsidize the nuclear plants instead, which is costing $7.6 billion instead of saving ratepayers money,” he said.

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