Subsidies Proposed for New York’s Upstate Nuclear Power Plants
http://www.powermag.com/subsidies-proposed-for-new-yorks-upstate-nuclear-power-plants07/12/2016
The New York Department of Public Service has proposed subsidizing zero-emissions attributes from zero-carbon electric generating stations, namely nuclear power plants, in order to encourage the preservation of the facilities.
In an 11-page document titled “Staff’s Responsive Proposal for Preserving Zero-Emissions Attributes,” a formula that starts with published estimates of the social cost of carbon (SCC) is used to value and pay for zero-emissions attributes. The proposal attempts to lock-in 12 years of carbon emission reductions at a cost that it says is “a fraction of the benefit to be achieved.”
According to the staff’s analysis, low natural gas prices are causing forecasted wholesale market prices to be significantly lower than the average operating costs of the upstate nuclear units.
“Given the current economic realities, every baseload MWh of zero-emission power from these units that is lost would be replaced with power generated with significant levels of CO2 and other unwanted air emissions from existing mothballed fossil-fueled units in the State or new gas-fired generation,” it said.
The staff projected that at the time of program inception there would be “a public necessity for subsidies” at the FitzPatrick plant, which Entergy has already announced will be retired in January 2017; the Ginna plant, which had long been rumored as a target for closure but was spared when a reliability support service agreement was reached with Rochester Gas & Electric last year; and the Nine Mile Point facility, one of the oldest plants in the country. Staff noted, however, that the Indian Point Energy Center did not have a “current public necessity for subsidies.”
The Brattle Group, an independent consulting services and expert testimony provider, estimates that electricity costs would increase by $1.7 billion per year, averaged over the period 2015–2024, if the upstate nuclear plants were closed. It said the result would be an increase of more than one cent per kilowatt-hour averaged across all customer classes—or about a 7.2% increase over current rates. For that reason, the subsidy (capped at $482 million per year in the first two years) would actually save customers money in addition to curbing carbon emissions, according to the group....
