Over last summer, the New York State Public Service Commission approved $7.6 billion to keep aging power plants in upstate New York running. The subsidy is part of New York’s proposed Clean Energy Standard (CES). Before the subsidy approval, nuclear power companies, including Exelon, stressed they could not keep the plants open without government assistance. Exelon intended to close its Nine Mile Point and Ginna nuclear plants if the Commission failed to approve CES.
This was welcome news for both the nuclear energy and nuclear manufacturing industries. Despite calls from federal and state governments for clean energy, U.S. nuclear power plants are losing money. Nuclear power plants can’t compete with the much lower prices of their natural gas competitors. Lack of demand for electricity is also hurting the industry. Five plants across the country have shut down since 2013. Many others are at risk of closing. The Nuclear Energy Institute estimates that 15 to 20 of the United States’ nuclear reactors may close. More could shut down if the economy takes a downturn.
NQA-1 manufacturing and custom manufacturing companies hope that New York’s CES will become a model other states adopt. The Clean Energy Standard pushed by New York Governor Andrew Cuomo would require 50 percent of New York’s electricity to come from “clean and renewable energy sources” by 2030. Under the plan, nuclear, solar and wind power utilities can earn zero-emission credits for generating electricity. In turn, utilities can trade or sell a credit for each megawatt hour of electricity generated. The credits could be worth an estimated $965 million in the first two years of the program. The subsidy will be cut if power prices increase.
Opponents contend that the subsidies will increase power costs for consumers. They point to the fact that subsidies will be funded by surcharges on electrical bills paid by residential and industrial customers over a 12-year period. Critics are also upset that the Clean Energy Standard allocates twice as much money to nuclear than it does to wind and solar power.
Governor Cuomo pushed for the passage of CES after last year’s climate accord in Paris. The United States joined both rich and poor countries at the accord and pledged to drastically cut carbon emissions. Another reason Cuomo supported the CES passage was to save jobs at the plants in danger of shutting down.
Immediately following the decision, Exelon Corp. said it would invest $200 million in its Nine Mile Point and Ginna power plants and continue its negotiations to buy the FitzPatrick plant from Entergy. “We’ll immediately invest hundreds of millions of dollars right back into the upstate economy, which will have a long-term positive impact across the state,” Exelon CEO Chris Crane said in a statement.
New York’s decision has given hope to the struggling nuclear manufacturing industry. As Whitney Herndon from the Rhodium Group states: “You need to start somewhere with a state having a successful proposal so that other states can use that as an example. Even if other states couldn’t apply this exact type of proposal, there’s enough information going around for them to take some lessons.”