New York PSC chair defends nuclear role in state clean energy program

New York State Public Service Commission Chair Audrey Zibelman has drafted a letter publicly responding to legislative critics of the state Clean Energy Standard (CES) and nuclear power’s role in the program.

Zibelman issued the letter Sept. 9 in response to a Sept. 7 to address issues raised by five members of the New York State Assembly.

“At the outset, it is critical to address a number of fundamental errors in your understanding of how our power system works, the design of the Clean Energy Standard (CES) and the efforts that Governor Andrew M. Cuomo has made and is making to manage the price impacts of securing our environmental future,” Zibelman said in the letter.

Cuomo (D) has set a 50% renewable target as part of a strategy to reduce statewide greenhouse gas emissions 40% by 2030. “Indeed, New York’s Clean Energy Standard is being held up by national experts as a model for the rest of the country,” Zibelman said.

“The payments that are being made under the CES are of two types, but both types are environmental attributes purchase programs that are carefully designed to not conflict with Federal jurisdiction,” said the PSC chair. “There is however a necessary pricing difference between the Renewable Energy Credits (RECs) methodology and the Zero-Emission Credits (ZECs) methodology,” Zibelman said.

The latter credits, ZECs, can benefit nuclear power. The nuclear-friendly policy has been called important to the future of three plants in upstate New York: the Exelon (NYSE:EXC) Ginna and Nine Mile Point facilities as well as the Entergy (NYSE:ETR) Fitzpatrick nuclear plant.

Entergy had actually announced retirement plans for FitzPatrick prior to the New York Clean Energy Standard. With the CES, Exelon agreed to acquire FitzPatrick from Entergy.

“For RECs, we have the benefit of many developers that are willing to compete to be awarded RECs contracts such that the price of the added value to society of the project attributes can be determined in open procurement solicitations. For ZECs, there are too few potential bidders to rely on a competitive process to set prices, so the only real alternative is to establish the value of ZECs administratively,” Zibelman said.

“The value of ZECs is based upon the federally established societal cost of carbon and represents the avoided carbon benefits they produce,” Zibelman said.

“Second, it is simply wrong for anyone to suggest that we can achieve targeted emission reductions by 2030 if we were to lose the zero-emissions attributes of the three upstate nuclear plants,” Zibelman said.

“Experience and fundamental economics show that the zero-emissions attributes they produce and New York needs will be replaced by adverse air emissions from existing coal and new natural gas-fired fossil units that can be dispersed throughout the State or come from out-of-state imports,” said the PSC chair.

“Even if it were physically possible to replace all of the lost nuclear zero-emissions attributes with renewables, the cost to develop new renewables is greater than the cost to preserve the existing zero-emissions nuclear attributes,” Zibelman said.

“Thus, the CES as designed is the least cost mechanism for your constituents and all New Yorkers to achieve our shared climate objectives,” Zibelman said.

“Finally, it is simply not accurate that downstate customers do not benefit from the presence of the upstate nuclear plants. We in New York are part of a single power pool,” Zibelman said. “Any substantial change in the makeup of the pool will impact the entire State. More importantly, carbon emissions themselves are not geographically bounded,” she added.

The letter addressed New York State PSC Case 15-E-0302 and Case 16-E-0270.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.