Electricity Markets

New Jersey BPU awards ZECs to preserve nuclear generation

The New Jersey Board of Public Utilities on April 18 awarded zero emission certificates (ZECs) to the Salem One and Two and Hope Creek nuclear power plants in the state.

Operated by PSEG Nuclear, a subsidiary of Public Service Enterprise Group, Salem is located along with Hope Creek Generating Station on a 740-acre site in Salem County, N.J. PSEG owns 57% of Salem, while Exelon Corporation owns the remaining 43%.  Hope Creek is entirely owned by PSEG.

The BPU in November approved a ZEC program and application process for nuclear power plants. The creation of the ZEC program was a requirement of legislation signed by New Jersey Gov. Phil Murphy in May 2018. Murphy signed a bill (S-2313) that created a ZEC program to support nuclear generation in the state -- the 2,468-MW Salem plant and the 1,240-MW Hope Creek facility.

Application process opened in November 2018

The application process opened in November 2018 and PSEG submitted applications for Salem One and Two and Hope Creek.

The applications were evaluated for eligibility by one team of BPU staff.

The criteria for eligibility included having a license to operate until 2030; contributing to New Jersey air quality; demonstrating anticipated plant shutdown within three years due to the plant’s financial situation; and not receiving subsidies from other entities or agencies. BPU staff found that the three nuclear units “are not in financial distress and are viable under current market conditions.”

The Board however determined that the plants were eligible for the ZEC program based on a consideration of the impacts of the plants’ retirement on fuel diversity, fuel security, and compliance with State environmental goals, as well as on the state and regional economy.

As part of the evaluation process, the BPU made redacted applications publicly available and conducted a public engagement process including several public hearings, an open comment period in which stakeholders could provide written comments and provided both the PJM Interconnection’s Independent Market Monitor and New Jersey Division of Rate Counsel access to confidential financial information so they might be able to provide their own assessment of each application.

In addition, the BPU noted that it released a redacted version of the report written by consultant Levitan & Associates, which assisted BPU staff and the Board in the financial and economic review of the applications.

Collection of funds

The BPU said that collection of funds to pay for the credits approved by the BPU will begin immediately and will result in approximately $100 million in subsidies for each of the plants per year for three years at the statutorily mandated rate of $0.004 per kilowatt hour.

If more money is collected than is needed, the additional funds will be returned to ratepayers. At the end of three years the program will be reevaluated by the Board. Should the utilities receive additional funding via state or federal subsidies those funds would need to be reconciled against the ZECs.

The BPU order, which passed by a vote of 4-1, is available here.

Supreme Court declines to consider nuclear support program challenges

The U.S. Supreme Court recently declined to consider two appeals court decisions that upheld state programs in Illinois and New York that provide support for nuclear power plants.  

Meanwhile, other states are taking steps to support nuclear generation.

Legislation has been introduced in both the Pennsylvania General Assembly and Senate that would incorporate nuclear power into a new tier in the state’s Alternative Energy Portfolio Standard (AEPS).

In Ohio, state lawmakers recently held a hearing to consider a clean energy bill that would keep the state’s two nuclear power plants operating.