Legal & Regulatory

Pennsylvania Move to Join RGGI May Save Nuclear Plant

Energy Harbor Corp., the new name for the former FirstEnergy Solutions (FES) after FES’s bankruptcy, on March 13 said its Beaver Valley nuclear plant in Shippingport, Pennsylvania, will remain open. FES in March 2018 had told state regulators it would close the plant in 2021 because it was no longer economic to operate.

Energy Harbor President and CEO John Judge said the decision to keep the plant open came after Pennsylvania Gov. Tom Wolf said the state would join the Regional Greenhouse Gas Initiative (RGGI), a program for capping and decreasing carbon dioxide (CO2) emissions from the power generation sector that currently includes 10 states in the U.S. Northeast and mid-Atlantic.

Energy Harbor, headquartered in Akron, Ohio, was announced as the new name for FES in late February. The company while operating as FES was the unregulated power generation arm of FirstEnergy Corp.; Energy Harbor is now an independent business.

The company’s emergence from bankruptcy was aided in large part by Ohio lawmakers, who approved an 85-cent monthly surcharge that starts in 2021 for residential ratepayers. The surcharge is intended to keep the company’s Ohio nuclear power plants operational, and could provide as much as $150 million annually to Energy Harbor. The company had said without the funding it would close its two Ohio reactors, costing about 1,400 jobs.

FES prior to its bankruptcy had lobbied for help from state lawmakers in both Ohio and Pennsylvania, saying it needed government subsidies to continue operating its nuclear plants. FES had notified state and federal regulators that it planned to close the 908-MW Davis-Besse Nuclear Power Station in Oak Harbor, Ohio, in 2020. It had said it would close the 1,268-MW Perry Nuclear Power Plant in Perry, Ohio, and the twin-unit 1,872-MW Beaver Valley Power Station in Shippingport, in 2021. Beaver Valley was a POWER Top Plant in 2008.

Pennsylvania lawmakers have not approved government financial help, but Wolf’s decision for the state to join the RGGI “will begin to help level the playing field for our carbon-free nuclear generators,” Judge said in a statement Friday. The Beaver Valley plant employs about 1,000 workers.

The RGGI requires coal, gas, and oil-fired power plants in the participating states to pay a fee for their carbon emissions. Most of the revenue from those fees is spent on efforts to improve air quality and further reduce cut greenhouse gas emissions. The RGGI is the first mandatory market-based program in the U.S. to reduce GHG emissions. Its membership includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

Draft of Pennsylvania’s RGGI Rules Expected in April

Wolf, a Democrat who took office in January 2015, had announced his intention to add Pennsylvania to the 10-state RGGI program in October 2019. The state’s Department of Environmental Protection is writing rules to guide Pennsylvania’s participation, and a full first draft is expected in mid-April. The state’s goal is to join the program in 2022.

Energy Harbor on Friday warned that if Pennsylvania doesn’t stick to that timeline, it “would need to revisit deactivation” of the Shippingport plant.

Nuclear operators have said the state’s participation in the RGGI is critical to keeping the state’s nuclear plants in operation. Pennsylvania has eight reactors in operation at four sites, each with two units: Beaver Valley in Shippingport; Limerick in Pottstown; Peach Bottom in Delta; and Susquehanna in Berwick. Operators of the state’s reactors have said the nuclear plants would become cost-competitive with coal, gas, and oil-fueled plants if the state joins the RGGI, because the fossil fuel facilities would need to purchase carbon emissions credits.

An economic research group, Resources for the Future, in an October 2019 report said a carbon price of $3 to $5 per ton would be enough to keep Pennsylvania nuclear plants economically viable for the foreseeable future. Carbon allowances were sold at $5.65 per ton in the RGGI’s most recent quarterly auction.

Pennsylvania’s Republican-led legislature has opposed the state’s participation in the RGGI, citing its impact on the state’s coal and natural gas industries. Gene Yaw, a Republican state senator and head of the Senate’s environment committee, last month said if the state joins the RGGI, it “will lead to a discriminatory and job killing tax on all coal and gas-fired electric generation plants in the Commonwealth.”

Wolf’s administration, meanwhile, said Energy Harbor’s decision is “very encouraging.” The governor’s spokesperson, Elizabeth Rementer, said, “Reducing emissions and maintaining existing clean energy resources are primary components in the fight to address climate change, and energy companies like Energy Harbor recognize this. That Energy Harbor is reversing course specifically because of our efforts to participate in RGGI is a concrete example of the importance of this policy, and one that Pennsylvania is extremely pleased to hear.”

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).


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