April 16, 2018

New Jersey Passes Nuclear Subsidies, Boosts Renewables Target to 50%

The RPS bill includes a 2 gigawatt energy storage target and sets higher goals for solar. The nuclear bill includes a lot of controversy.

The New Jersey state legislature passed three bills on Thursday that are designed to maintain and enhance access to low-carbon resources in the Garden State.

One piece of legislation (A3723/S2314) boosts New Jersey’s renewable portfolio standard to 35 percent by 2025 and 50 percent by 2030 — putting the state in line with clean energy leaders, New York and California. The same bill also increases New Jersey’s solartarget, enables the launch of a community solar program and establishes a process to deploy 2 gigawatts of energy storage by 2030.

Another bill (S1217) directs the New Jersey Board of Public Utilities to accept applications for an offshore wind project near Atlantic City with up to 25 megawatts in nameplate capacity.

The third bill (S2313) approves a $300 million annual subsidy for the state’s remaining nuclear power plants, a move Public Service Enterprise Group and Exelon say is necessary to keep their plants in operation. The bill specifically allows for cost recovery of up to $0.004 per kilowatt-hour within 180 days of enactment. Financial assistance is offered for up to four years, but does not specify a sunset date.

All three bills passed by a wide margin and Gov. Phil Murphy (D) is expected to sign them. However, the he could choose to conditionally veto or amend parts of either bill, sending it back to the legislature for another vote. A full veto would require lawmakers to pass the bill again with a two-thirds majority.

If S2313 holds up, New Jersey will become the latest state to implement a zero-emission certificate (ZEC) program for struggling nuclear plant operators, following in the steps of New York and Illinois. ClearView Energy Partners said it expects opponents to challenge the ZEC program in the U.S. District Court for New Jersey on grounds similar to lawsuits filed in other states.

So far, however, nuclear subsidy programs in Illinois and New York have stood up to legal threats. Furthermore, ClearView says the New Jersey bill was designed with legal challenges in mind.

Competitive energy suppliers came out strongly opposed to the New Jersey bill, calling it a “bailout” for the state’s nuclear plants, which currently make up around 40 percent of the state's energy mix, at the expense of consumers and fair market practices.

The Electric Power Supply Association said the nuclear subsidies would “undermine competition in the broader PJM markets and thus unfairly harm competitors who depend on those markets.” The group called on Gov. Murphy to veto the new legislation and urged the Federal Energy Regulatory Commission to swiftly implement “effective countermeasures” to protect the integrity of PJM’s energy and capacity markets.

PJM has filed two proposals with the FERC seeking to reform its capacity market, in order to minimize the impact of electricity subsidies on wholesale market prices — specifically calling out ZEC programs. The grid operator has asked FERC to choose a policy proposal or suggest an alternative by June 29.

Separately, the Department of Energy is weighing whether or not to take emergency action to shore up U.S. nuclear power plants at the request of Ohio utility FirstEnergy. Secretary Rick Perry said this week an emergency declaration may not be “the most appropriate” wayto address the issue, but indicated the Trump administration is still looking for ways to help struggling coal and nuclear plants.

Clean energy advocates, meanwhile, had mixed reactions to New Jersey’s nuclear bill. The Natural Resources Defense Council said it did not oppose the legislation, while the Sierra Club argued it could undermine the aims of New Jersey’s renewable energy goals.

“It’s going to put a chilling effect on spending more for renewable energy, because to build out renewable will cost much more,” said Jeff Tittel, director of the New Jersey Sierra Club, told the New York Times. “This bill is about a nuclear subsidy, and that’s the primary purpose. And that’s the diversion to make you think you’re getting something that you’re not.”

S2313 is expected to cost ratepayers an additional $30 to $41 a year, although a portion of those costs could be offset by savings stemming from the federal tax bill.

Solar supporters were focused largely on celebrating the passage of the New Jersey RPS bill this week, which they say helped to avoid a market crash and grow the more than 7,000 solar jobs in the state.

According to Vote Solar, the New Jersey bill will stabilize the solar market by increasing the behind-the-meter solar target to 5 percent by 2021, and ending the current solar renewable energy credit trading program in an orderly way. The bill will also reduce the overall cost of the current solar RPS by lowering the Solar Alternative Compliance Payment, and commence a process for determining the next generation of solar incentives in the Garden State.

"The New Jersey legislature took a major step today toward protecting thousands of solar jobs that were at risk,” said Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association. “We urge Gov. Murphy to swiftly sign the bill into law and get the state on a path to meet its ambitious clean energy goals."

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