The New Jersey Board of Public Utilities (BPU) approved applications submitted by PSEG Nuclear LLC seeking subsidies of up to $300 million annually, in the form of zero emission credits (ZECs), for PSEG’s Hope Creek and Salem 1 and 2 nuclear generating stations on April 18. The PSEG applications were filed on December 19, 2018, after New Jersey enacted legislation on May 23, 2018, establishing a ZEC program for the state (the ZEC Act).
The US Court of Appeals for the Second Circuit on September 27 affirmed a decision of the US District Court for the Southern District of New York dismissing a complaint seeking to invalidate New York’s Zero Emissions Credit (ZEC) program. This decision comes on the heels of a Seventh Circuit decision affirming the validity of a similar ZEC program in Illinois. In its opinion, the Second Circuit noted that its conclusions accorded with the Seventh Circuit’s decision, which we wrote about in an earlier post.
The US Court of Appeals for the Seventh Circuit on September 13 affirmed a decision of the US District Court for the Northern District of Illinois that dismissed two complaints seeking to invalidate the Illinois Zero Emission Credits (ZEC) program.
The Illinois ZEC program was created in 2016 as part of the Future Energy Jobs Act. A ZEC is a credit that represents the environmental attribute of one megawatt hour of energy produced from an eligible zero-emission facility as defined by the statute. The Illinois Power Agency confers ZECs to eligible facilities generating zero-emission power and requires utilities to purchase those ZECs. The act set an initial price for ZECs based on a calculated “social cost” of carbon, but the price can adjust downward based on an index of wholesale power prices. While the eligible zero-emission generators will still participate in wholesale electricity markets, ZECs provide additional out-of-market payments to compensate the generators for their zero-emission power.
Public comments made last week by Federal Energy Regulatory Commission Chief of Staff Anthony Pugliese before the American Nuclear Society indicate that the agency is working with other federal government officials to identify power plants that are “absolutely critical” to the grid, E&E News reported.
In a June 26 letter, a broad coalition of 77 former government officials, lawmakers, and industry leaders urged US Department of Energy (DOE) Secretary Rick Perry to take “concrete steps” to prevent the premature shutdown of any additional nuclear power plants.
The letter commends Secretary Perry’s support of the nuclear industry to date but asks him to specifically promote the national security significance of nuclear energy. In doing so, the letter underscores the key role that nuclear energy plays in national security, particularly as an essential component of electric grid resilience and the largest source of emission-free generation.
The letter acknowledges that discussions of the general importance of nuclear energy are underway at the Federal Energy Regulatory Commission as well as at the grid operator and state regulator levels, but asserts that only DOE has the power to integrate nuclear power into the broader national security imperatives. The letter notes that such an integration will take time to consider, but asks Secretary Perry to ensure that no more nuclear power plants are closed in the meantime.
This letter appears to support President Donald Trump’s June 1 request for DOE to take measures to prevent further closures of nuclear power plants due to a national security interest in securing the national power grid's resilience.
The commissioners from the Nuclear Regulatory Commission (NRC) and the Federal Energy Regulatory Commission (FERC) held a joint meeting to discuss grid reliability and cybersecurity, including issues such as nuclear new build that factor into power availability. Both NRC and FERC staff provided presentations on the activities of both agencies to promote a stable, resilient, and secure grid, and a representative from the North American Electric Reliability Corporation (NERC) addressed grid reliability.
President Donald Trump directed Energy Secretary Rick Perry late last week to “prepare immediate steps to stop the loss” of “fuel-secure power facilities” arguing that a decline in coal and nuclear generation is jeopardizing the nation’s security. The federal government has not yet disclosed what those steps might be or which generation facilities are at issue. Nonetheless, press reports from CNN and Bloomberg, among others, suggest that the US Department of Energy (DOE) is considering a directive requiring Independent System Operators and Regional Transmission Operators (ISOs/RTOs) to purchase energy from designated “fuel-secure” plants for a period of up to, and possibly more than, 24 months to prevent any near-term decommissioning.
The US Department of Justice (DOJ) and the Federal Energy Regulatory Commission (FERC) filed a joint brief on May 29 in the US Court of Appeals for the Seventh Circuit, stating that Illinois’ zero emission credit (ZEC) program for eligible nuclear plants in Illinois is not preempted by the Federal Power Act (FPA). Because the panel in a substantially similar case pending in the Second Circuit has indicated that it would review the government’s filing in the Seventh Circuit case, the views of FERC and DOJ could be critical as this issue plays out in the federal court system.
The Illinois legislature passed a law in 2016 requiring utilities to purchase ZECs at administratively set prices from nuclear plants in the state. Generators that compete with the ZEC-receiving nuclear plants challenged the law, arguing that the ZEC program is preempted by the FPA. The district court upheld the program, and the generators appealed the decision to the Seventh Circuit. FERC did not take a position in the trial court but has now done so after the Seventh Circuit invited the US government to file a brief.