New Jersey Gov. Phil Murphy signed a few important energy bills on May 23 including one (S-2313) that establishes a zero emissions certificate (ZEC) program, which reportedly will provide the state’s nuclear power plants with $300 million a year in ratepayer subsidies. To qualify, the plants must demonstrate that they make a significant contribution to New Jersey air quality and that they are at risk of closure within three years, among other things.
Nuclear power contributes nearly 40% of the state’s electric capacity and is by far New Jersey’s largest source of carbon-free energy. The state is home to Public Service Enterprise Group’s (PSEG’s) Salem and Hope Creek nuclear plants, and Exelon’s Oyster Creek unit.
Support for Nuclear Power
The nuclear bill faced stiff opposition from a coalition of business, consumer, labor, and environmental groups. Independent power producers also spoke out against the measure. At a January 25 hearing before the state Senate Environment and Energy Committee, executives from NRG Energy and Calpine outlined a number of contentions, mostly concerning the role subsidies would play in PJM Interconnection’s competitive wholesale market. During the same hearing, PSEG CEO Ralph Izzo denounced the statements made by the two companies, calling them a “parade of nonsense” that was “outright misleading.” The bill passed both houses in April.
In February, meanwhile, Exelon announced it would accelerate Oyster Creek’s retirement, moving it up to October 2018 from the previously announced December 2019 deadline. Passage of S-2313 is not expected to have any effect on Exelon’s decision.
According to the governor, the new law gives the Board of Public Utilities broad latitude to engage outside experts to analyze nuclear power plant financial information and applications, and to adjust ZEC payments as necessary to meet a plant’s actual financial need. A plant seeking to participate in the program would be required to certify that it is not receiving funding from any other federal, regional, or state source that would negate the need for the ZEC. Employees at plants participating in the ZEC program would further be protected from layoffs for reasons other than underperformance or misconduct.
“The Salem and Hope Creek nuclear plants play pivotal roles in New Jersey’s economy and environment, and Governor Phil Murphy is to be commended for signing into law today a Zero Emissions Credit program to help preserve these critical energy assets. Joining New York, Illinois, and Connecticut in just the past couple of years, New Jersey is the latest state to act to preserve our nation’s largest source of resilient and reliable, carbon-free energy. Policymakers in Ohio and Pennsylvania should follow the leadership that New Jersey has demonstrated and act expeditiously to preserve nuclear plants in their states,” said Nuclear Energy Institute President and CEO Maria Korsnick.
However, Matt Fossen, spokesperson for the New Jersey Coalition for Fair Energy, was less pleased with the signing. “Today’s news is a disappointment for many, and a major setback for ratepayers. While PSEG shareholders just became more prosperous, the reality is New Jersey consumers now have to confront higher electric bills for no reason other than to bail out PSEG management’s bad business decisions. We wish officials would’ve waited to make a decision until after the results of PJM’s capacity auction were announced, which was literally only hours after his signing, but this issue is not over—and it’s unfortunate the courts may be necessary to bring a dose of reason to the debate,” he said.
Promoting Renewable Energy
The governor visited the New Road Solar installation in South Brunswick, New Jersey, to sign the measures, which he said would “move us toward a cleaner and stronger future.” In addition to the nuclear bailout, legislation promoting wind and solar energy was also signed.
The Renewable Energy bill (A-3723) establishes one of the most ambitious renewable energy standards in the country by requiring 21% of the energy sold in the state be from “Class I” renewable energy sources by 2020, increasing to 35% by 2025 and 50% by 2030. Class I renewable energy is defined as electricity derived from solar energy, wind energy, wave or tidal action, geothermal energy, landfill gas, anaerobic digestion, fuel cells using renewable fuels, and—with written permission of the New Jersey Department of Environmental Protection—certain other forms of sustainable biomass. A cap on costs is said to provide additional protection for consumers.
The solar provision reforms the state’s solar program by “making near-term structural changes to ensure that the program is sustainable over the long term.” The Renewable Energy bill also codifies the governor’s goal of 3,500 MW of offshore wind by 2030 and reinstates an expired program to provide tax credits for offshore wind manufacturing activities.
“Today Governor Murphy sent an unambiguous signal that New Jersey is ready for clean energy investment that will lead to good jobs and a more prosperous economy,” said Tom Kiernan, CEO of the American Wind Energy Association.
“The solar industry appreciates Gov. Murphy’s leadership,” said Sean Gallagher, vice president of state affairs with the Solar Energy Industries Association. “By signing this bill into law, many more New Jersey residents, businesses and communities will have access to solar energy. This is a huge win for customers, will support the thousands of solar jobs in the Garden State, and puts the state on track to meeting its ambitious clean energy goals.”
Other significant requirements included in the bill are energy efficiency measures forcing utilities to implement programs to reduce electricity usage by 2% and natural gas usage by 0.75%. The bill establishes a community solar energy program, which the governor claimed will “allow all New Jersey residents to benefit from solar energy,” and it includes a provision codifying the goal of achieving 600 MW of energy storage by 2021 and 2,000 MW by 2030.
—Aaron Larson, executive editor (@AaronL_Power, @POWERmagazine)