A report for the Manhattan Institute, a conservative policy group, concludes that premature closure of the Entergy (NYSE: ETR) Indian Point nuclear units could eliminate up to 30% of New York City’s electric supply and replace it with energy resources that exist mostly “on paper.”
Jonathan Lesser, the chief author of the report and president of Continental Economics, discussed his findings in a Sept. 18 presentation to the New York-based organization. The economist was joined at the event, which was webcast, by former New York Mayor Rudy Giuliani.
“Closing Indian Point is going to act as a big tax on New York ratepayers,” said Giuliani. The former New York mayor and federal prosecutor is now a partner at Bracewell & Giuliani, a firm that represents a lot of energy company interests.
Lesser, who is based in New Mexico, said that Gov. Andrew Cuomo appears intent on forcing Indian Point Units 2 and 3, and their more than 2,000 MW of electric generation, to retire when the original NRC operating licenses expire by the end of 2015.
New York has been opposing a 20-year NRC license extension for the nuclear units. The state has also been active on the issue of cooling water regulation for the nuclear plant.
Lesser’s report: “The Economic Impact of Closing and Replacing the Indian Point Energy Center,” draws upon many of the same conclusions reached in an earlier study by Charles River Associates.
Lesser concludes that closing Indian Point would increase average annual electric expenditures in New York State by $1.5bn-$2.2bn over the 15-year period 2016–2030. For a typical residential customer, this would mean an increase in the household electric bill of $76–$112 each year, according to the executive summary.
Economist: Energy Highway exists mostly ‘on paper’
To replace the power from Indian Point, Cuomo appears to be counting on his much-ballyhooed “New York Energy Highway” plan. The Energy Highway is a multi-billion-dollar collection of proposals, consisting mostly natural gas and renewable projects along with electric transmission upgrades, Lesser said.
Lesser criticized the Cuomo Energy Highway plan as relying heavily on new natural gas power generation – while seemingly not making plans for significant new pipeline capacity to move the gas.
It’s also important to remember that an early Indian Point retirement would occur at the same time as closure of many coal units serving the New York power market, the economist said.
History also shows that any new infrastructure built to replace Indian Point “is going to be opposed, too,” Lesser said. Environmental and anti-nuclear critics have been trying to shutter Indian Point for 30 years, Lesser said.
Traditionally, much of the opposition to Indian Point has centered upon its relatively close proximity to New York City, Giuliani noted. The units sit on the bank of the Hudson River about 40 miles from the city.
But Giuliani sees the location, close to New York’s heavy electric demand, as a strength. Continued operation of the Indian Point units means that the city is less dependent on far-away power sources, Giuliani said.
Giuliani also said it’s not out of the question that Cuomo might eventually soften his hard line on Indian Point after reviewing the economic implications of its early closure.