Source: Politico New York |Scott Waldman | August 1, 2016
New York regulators are scheduled to vote Monday on the Clean Energy Standard, one of the most significant energy policies the state has advanced in years.
The plan would mandate that renewables power half the state’s power grid by 2030, and establish the Cuomo administration as a climate leader by enacting one of the most aggressive clean energy policies in the country.
In recent weeks, however, considerable attention has been focused on the nuclear component of the plan, which would require state residents and businesses to pay facilities above-market rates for the power they produce.
Nationally, the Clean Energy Standard could cause a seismic shift in the way states treat their nuclear facilities, experts say.
In New York, the Cuomo administration is placing a new value on nuclear facilities, essentially declaring they are worth preserving with billions of dollars in ratepayer subsidies because they are the workhorses of the power grid, producing electricity without producing air pollution. By offering generous subsidies, the administration is putting nuclear on equal footing with wind and solar facilities, declaring them worthy of out-of-market support because the energy they produce has the social benefit of being free carbon-free.
There are fewer than 100 nuclear facilities nationwide and many are struggling financially because they cannot produce power as cheaply as natural gas-fired power plants. Five have shut down since 2013.
New York’s policy is a road map for other states and could be immediately implemented elsewhere, said Scott Peterson, senior vice president at the Nuclear Energy Institute. It’s unique in that it doesn’t differentiate from one carbon-free technology to another.
“It really takes on the issue the way it should be considered, which is how do we preserve and add to the full portfolio of options that are carbon-free and that are going to meet the goals of the state from a carbon reduction standpoint, but also recognizing that the electricity system has different power plants on it,” Peterson said.
New York’s policy would also create a generous subsidy for nuclear facilities, worth billions of dollars, to prevent them from closing. Nuclear facilities would receive zero-emissions credits, which can be bought or traded, for each megawatt of power they produce. By the state’s own estimates, the Clean Energy Standard would cost $1 billion in the next two years, and could climb sharply after that for a decade.
The plan is expected to pass on Monday, but will likely be challenged in court.
The U.S. Supreme Court recently issued a precedent-setting decision on power plant incentives in Maryland that some critics say are similar to the Clean Energy Standard. In the Maryland case, the court determined the state incentives offered to a new power plant improperly interfered with the wholesale energy market, which is the purview of the federal government.
The Clean Energy Standard is one of the nation’s most aggressive renewable energy policies, and would likely result in a building boom in the solar panel and wind industry. It would also preserve thousands of jobs at upstate nuclear facilities that would shut down in just a few years without support.
The policy ensures that one of the state’s largest sources of carbon-free energy, or 20 percent of the state’s total energy output, does not get replaced with natural gas-fired power plants. The state estimates more than $5 billion in savings from the program, arguing that if the nuclear plants were closed, they would have to be replaced with fossil-fuel burning facilities. Residents would pay about $2 a month for the program, while businesses and industry would pay a lot more, according to the Cuomo administration.
A pro-nuclear environmental group will join with community members and union officials to rally in support of the plan before Monday’s Public Service Commission meeting in Albany. Critics who do not want to preserve money-losing nuclear plants will also hold a press conference.
“It takes guts to defend nuclear energy in this hostile political climate, but the data is clear—it’s one the best weapons we have to fight climate change,” Eric Meyer, organizing director for the pro-nuclear group Environmental Progress, said in a statement. “Losing these plants would be crushing for both the communities that depend on them, and New York’s climate goals.”
Critics say the Clean Energy Standard would also drive up utility bills across the state. Shortly after state lawmakers left Albany at the end of this year’s legislative session, the nuclear provision shifted dramatically. The public was only given two weeks to weigh in on a policy that would likely be more expensive than virtually every other energy initiative of the Cuomo administration.
The subsidy, which has been estimated by some opponents to cost about $8 billion, would go to a single company. Exelon owns the Ginna nuclear power plant in Wayne County and the Nine Mile Point facility in Oswego County that qualify for the subsidy. The company is expected to the buy the FitzPatrick plant from Entergy, which had planned to shut it down a few months.
Assemblywoman Amy Paulin, who chairs the chamber’s energy committee, said she is concerned the plan unfairly forces ratepayers to subsidize plants even though they will never use their power. She said it’s still unclear exactly how much utility bills will be affected and that the total subsidy may be confusing to understand even after it is included in monthly bills.
“We have a lot of poor people in the downstate region that are going to have to be paying this very regressive tax and it’s not going to be at all transparent,” she said.