N.J. regulators open zero-emission credit proceeding for nuclear plants

The New Jersey Board of Public Utilities on Aug. 29 approved an order that opens a proceeding to create a zero-emission credit (ZEC) program for eligible nuclear power plants.

The BPU said the action is in line with legislation that Gov. Phil Murphy signed into law in May that made sweeping changes to the state’s energy policy.

The bill signed by Murphy (S-2313) creates a ZEC program to support nuclear generation in the state -- the 2,468-MW Salem plant and the 1,240-MW Hope Creek facility.

New Jersey needs to keep the plants open to reach the state’s clean energy goals, Murphy said in May, noting they provide 40 percent of the state’s electricity and 90 percent of its emissions-free energy.

Public Service Electric and Gas Nuclear owns the Hope Creek plant and has a majority share of the Salem plant, which it co-owns with Exelon Generation. PSEG officials have said the nuclear plants will close if they don't receive extra financial support.

Under the ZEC program, eligible nuclear power units that demonstrate a need would be designated to receive credits to maintain the state’s nuclear energy supply. 

The BPU was designated as the agency to create and administer a ZEC program and distribution mechanism.

By November 2018, the board will create the ZEC program including an application process for ZEC eligibility review and a mechanism for each of the state’s electric companies to buy ZECs from the selected nuclear power plants. The process to create the program will include extensive public hearings, the BPU said.

As part of the program, the board will also conduct a second proceeding to certify which applicant nuclear power units are eligible to receive ZECs and to establish a rank-ordered list of those plants that are eligible based upon the process the board creates. Under the law this proceeding must be completed by April 2019 and it will include public input.

Eligible nuclear energy generators with the ability to feed into the PJM Interconnection power grid footprint could be approved to provide ZECs for the state’s energy supply, which would then be purchased by the state’s four electric companies, the BPU said.

ZECs in other states

Other states have also moved to set up ZEC programs aimed at supporting nuclear generation.

In December 2016, Illinois Gov. Bruce Rauner signed a broad energy bill into law that was intended to ensure that Exelon's financially troubled nuclear power plants in Clinton and Quad Cities, Illinois, remain open for another 10 years, the governor's office noted in a news release at the time of the signing. The measure also will give a boost to energy efficiency and renewable energy efforts in Illinois.

The law will provide about $235 million a year through a 10-year contract to the two nuclear power plants. The 1,065-MW Clinton and 1,871-MW Quad Cities plants in Illinois faced looming shutdowns prior to the law.

The Future Energy Jobs Act amended the Illinois Power Agency Act and created a new commodity, the ZEC, which is a tradeable credit that represents the environmental attributes of one megawatt-hour of energy produced from a zero carbon-emission facility, such as a nuclear power plant. The statute grants ZECs to certain qualifying energy generating facilities.

In New York, a clean energy standard adopted by state utility regulators allows for ZECs as a way in which to nuclear generation online in the state.

Generators challenged the Illinois and New York ZEC programs in the courts.

The case in New York involved legal action brought by the Coalition for Competitive Electricity, Dynegy Inc., Eastern Generation LLC, the Electric Power Supply Association, NRG Energy, Roseton Generating LLC and Selkirk Cogen Partners L.P. against commissioners with the New York Public Service Commission.

The plaintiffs in the case challenged one aspect of the CES order adopted by the PSC that awards ZECs to certain nuclear generators for their zero carbon-emissions electricity production. Plaintiffs claimed that this program was preempted under the Federal Power Act and that it violates the dormant Commerce Clause.

But a federal judge in July 2017 turned aside the challenges. That same month, a judge with the U.S. District Court for the Northern District of Illinois issued an order that rejected challenges to the Illinois ZEC element of the Illinois law.

Meanwhile, earlier this year, the Federal Energy Regulatory Commission and the Department of Justice said in a brief filed with the U.S. Court of Appeals for the Seventh Circuit that the FPA does not preempt the ZEC program in Illinois.