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N.J. BPU OKs program aimed at supporting nuclear plants

The New Jersey Board of Public Utilities (NJBPU) on Nov. 19 approved a zero-emission credit (ZEC) program and application process for nuclear power plants.

The creation of the ZEC program is a requirement of legislation signed by New Jersey Gov. Phil Murphy in May. 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.

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 said its recent action formally approves the ZEC application and review process and immediately opens an application window that will close on December 19. “The thorough and extensive application process requires that nuclear generating stations applying for ZECs demonstrate a clear need for these credits, ensuring ratepayer funding is allocated appropriately,” the BPU said in a news release.

Nuclear generating facilities will have to demonstrate a need for ZECs in order to receive the credits.

 To determine eligibility, applicants must answer questions and provide supporting documents, studies, certifications, and/or narratives.  Additionally, each unit must:

  • Be licensed by the U.S. Nuclear Regulatory Commission through 2030;
  • Demonstrate a significant and material contribution to New Jersey air quality (minimizing emissions);
  • Demonstrate anticipated plant shutdown within three years due to its financial situation; and
  • Certify that the facility does not receive any subsidies from other entities or agencies.

Two teams will evaluate the ZEC program application requirements to ensure consistency with the applicable law. A ranked list of nuclear plants eligible to receive ZECs will be voted on by the BPU in April.

NRC licenses for Units 1 and 2 at the Salem plant expire in 2036 and 2040, respectively, while the license for Hope Creek’s lone unit expires in 2046.

In August, the BPU approved an order that opened a proceeding to create a ZEC program for eligible nuclear power plants and, more recently, in October, the BPU hosted a series of public hearings to gather input on the state’s new ZEC program. 

In its most recent quarterly report filed with the Securities and Exchange Commission in late October, PSE&G Power, a PSEG subsidiary, said that it may be unable to cover its costs and would be inadequately compensated for its market and operational risks at the Salem and Hope Creek nuclear units, which would result in PSEG Power retiring these units early if:

  • Energy market prices continue to be depressed;
  • There are adverse impacts from potential changes to the capacity market construct being considered by the Federal Energy Regulatory Commission; or
  • Salem and/or Hope Creek are not selected to participate in the ZEC program or the ZEC program does not adequately compensate our nuclear generating stations for their attributes.

The costs associated with any such retirement would be material to both PSEG and PSEG Power, according to the filing. “If any or all of the Salem and Hope Creek units were shut down, it would significantly alter New Jersey’s energy supply predominately by increasing New Jersey’s reliance on natural gas generation. Such a decrease in fuel diversity could also increase the market’s vulnerability to price fluctuations and power disruptions in times of high demand,” the filing said.

Courts have weighed in on state ZEC programs

Other states have also taken steps to set up ZEC programs in support of nuclear generation. Those programs have been challenged in the courts, but to date, none of those challenges have been successful.

The U.S. Court of Appeals for the Second Circuit on Sept. 27 issued a decision that upheld a New York state program that provides support for certain nuclear power plants in the state.  

The New York appeals court decision follows closely on the heels of a similar ruling in Illinois. The U.S. Court of Appeals for the Seventh Circuit on Sept. 13 ruled that an Illinois ZEC program providing support for nuclear plants in Illinois is not preempted by the FPA.

Connecticut nuclear plant

Meanwhile, Connecticut's Public Utilities Regulatory Authority (PURA) this month determined that the Millstone nuclear power plant in the state is at risk of retirement beginning in 2023. This finding allows the plant to participate in the state Department of Energy and Environmental Protection’s request for proposals for zero carbon energy purchased power contracts but does not determine whether Millstone will receive such a contract.

The determination “is an interim decision and not yet official, but assuming it holds, it gives the Dominion-owned plant -- the largest in Connecticut -- a leg up in an ongoing competitive process to win long-term contracts to sell power to the state's utility companies,” Hartford Business reported in a Nov. 20 article.

The story said that the state-run procurement of zero-carbon energy (nuclear, wind, and solar) resulted in dozens of bids in September and the Connecticut Department of Energy and Environmental Protection could select winners before year's end.