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Nuclear Power Plant Owners Again Oppose Financial Needs Test To Receive Aid To Keep Plants Open At House Hearing

Talen Energy last week, and now Exelon told the House Consumer Affairs Committee at an April 15 hearing it would not support a financial needs test if it was added to House Bill 11 (Mehaffie-R- Lancaster) adding nuclear power plants to the Alternative Energy Portfolio Standards.

[Note: Representatives of the National Conference of State Legislatures told the Senate hearing last week states adopting plans to aid their nuclear power plants-- Illinois, New Jersey and New York-- all have needs tests.]

Kathleen Barron from Exelon added if House Bill 11 does not pass as is by June 1, it will go ahead with the announced shutdown of the Three Mile Island Nuclear Power Plant in Dauphin County in September.

Even if House Bill 11 was put in place, Barron told the Committee it would commit to keeping TMI open for no more than 6 years, the length of the program in the bill.

[Note: The Nuclear Regulatory Commission has licensed TMI Unit 1 to operate until April 19, 2034.]

The long term solution, Exelon and most others on the panel of presenters said, was to put a price on carbon emissions as a way of giving value of the price of energy not producing greenhouse gas emissions.

The April 15 hearing included representatives of natural gas, coal and nuclear energy and the Natural Resources Defense Council.

Presenting comments for the first time on this issue, Rachel Gleason, Pennsylvania Coal Alliance, said the coal industry opposes House Bill 11 because they have advocated for a state energy policy that promotes free and fair markets and provides for a level playing field for all generation sources.

“Unfortunately, the Pennsylvania Alternative Energy Portfolio Standards Act (AEPS) already tips the scales in favor of certain generation sources at the expense of others by mandating that 18 percent of all generation come from “alternative energy” sources.

“House Bill 11 or any similar legislation would only further advance preferential treatment given to certain sources of electricity and further undermine wholesale energy markets. Considering this, PCA opposes House Bill 11 and any related legislative initiatives.”

Gleason said since Pennsylvania’s energy generation market was deregulated in 1996, 17 coal-fired electric power plants have been deactivated or converted to gas and 2 more-- FirstEnergy Solutions’ Bruce Mansfield and Talen’s Brunner Island plants are scheduled to deactivate or end their use of coal by 2029-- a total of 11.4 GW of coal capacity.

These closures mean there are only 5 remaining coal-fired power plants in Pennsylvania.

[Note: David Spigelmeyer, Marcellus Shale Coalition, said at this hearing there have been 20 new natural gas power plants built and operating in Pennsylvania since deregulation in 1996-- 16 new and 4 retrofits.]

In addition, 50 percent of the coal mines in Pennsylvania shutdown over the last 10 years, Gleason said.

“The economic hardship these plant and subsequent mine closures have had on local economies throughout Pennsylvania have been devastating. Nevertheless, not once during this period, nor today, has the coal industry come to the Pennsylvania General Assembly to request a ratepayer funded subsidy,” said Gleason.

“When Exelon’s Cromby and Eddystone electric generating units in Chester and Delaware Counties went offline in 2011, Exelon’s CEO explained that it was because of “…significant capital expenditures…” and, commenting on the job losses at the plants, said “While any job losses are difficult, the decision is responsive to the current and projected market conditions.”

“When FirstEnergy’s Hatfield and Mitchell electric generating units in Greene and Washington Counties shuttered their doors due to regulatory compliance costs and heightened resource competition, 380 union jobs were lost, all without an ask for a ratepayer subsidy.

“FirstEnergy Solutions announced closure of the Bruce Mansfield plant, located adjacent to its Beaver Valley nuclear plant, is Pennsylvania’s largest coal plant with 2,741MW operable nameplate capacity, and is capable of producing more electricity than all but one of Pennsylvania’s five nuclear plants.

“With regards to the planned closing, FirstEnergy Solutions announced that “FES is closing the plants due to a market environment that fails to adequately compensate generators for the resiliency and fuel-security attributes that the plants provide.””

“On a mild spring day like today, coal is not the leader in PJM’s generation fuel mix. However, when demand is high during periods of cold and hot weather, when natural gas gets diverted to home heating, and when nuclear can’t produce any more generation, coal is left to pick up the slack and provide essential power to the grid.

“This past January, coal electric generation was 40 percent of PJM’s fuel mix when demand was high, outpacing all other fuel sources.

“In fact, in 2018, Andrew Ott, the President and CEO of PJM testified before the United State Energy and Natural Resources Committee and commented that during a deep freeze in late 2017 and early 2018, commonly referred to as the “bomb cyclone” that “we (PJM) could not have served customers without coal.””

She also pointed out House Bill 11 would end up requiring utilities to purchase nuclear power from out-of-state plants because in-state nuclear plants now provide about 42 percent of consumption when House Bill 11 requires 50 percent be purchased by utilities.

Gleason said it would be premature for the state to make any decision on legislation before the Federal Energy Regulatory Commission decides a series of issues before the Commission to reform the wholesale energy market.

“House Bill 11 picks winners and losers, will further upend an already unbalanced electricity market, and will jeopardize Pennsylvania’s coal industry, the 18,000 jobs it supports, and the over $4 billion it adds to the Pennsylvania’s economy.”

Mark Szybist, Natural Resources Defense Council, said NRDC has established 4 “best practices” to evaluate proposals like House Bill 11, and as drafted, the bill fails to include any of the 4 practices.

The best practices include a requirement to show financial distress [the bill would give financial support to all nuclear plants regardless of need]; programs to ramp up the development of renewable sources of energy [not included]; putting a price on carbon [not included, although it was generally agreed it would solve the problem for nuclear plants]; and programs to help communities where power plants have closed [not included].

Szybist pointed to the Regional Greenhouse Gas Initiative (REGGI) as a problem Pennsylvania could join now that puts a price on carbon and uses a market-based approach to reduce emissions across several Northeast states.

[Note: The PA Environmental Council and others have also recommended Pennsylvania join RGGI as did then candidate Tom Wolf in 2014.]

Szybist concluded by saying it’s never whether we are subsidizing sources of energy, because we always are, it depends on what outcomes we want.

The issue of what happens to the highly-radioactive spent nuclear fuel again came up at the hearing.

There are now about 7,560 metric tons of high-level radioactive waste fuel stored at Pennsylvania’s nuclear power plants that would be dealt with if one or more nuclear power plants closed.

Exelon filed a required decommissioning plan with the Nuclear Regulatory Commission on April 5 saying it would not begin dismantling Three Mile Island if it did close for 55 years. Spent radioactive fuel would be moved to a new dry cask storage facility onsite by the end of 2022.

A federal bankruptcy judge recently rejected FirstEnergy’s bankruptcy plan in part because it would have allowed the company to walk away from its responsibilities for its coal and nuclear power plants, including Beaver Valley in Pennsylvania.

Providing for long-term care of high-level radioactive waste from nuclear power plants is a federal government responsibility at public expense, but so far no strategy is in place.

Nuclear power plants have contributed about $40 billion to the federal government over the years to develop the long-term, security storage strategy for high-level waste.

[Note: The House Environmental Resources and Energy Committee is scheduled to have an informational meeting April 29 on nuclear waste containment in light of the pending closure of the Three Mile Island plant.]

Both Rep. Brad Roae (R-Crawford) who serves as Majority Chair of the Committee and Rep. Robert Matzie (D-Beaver) who is Minority Chair, made comments at the end of this hearing that this issue is one of the most complex to come before the Committee.

Rep. Roae said, as an example, if action was taken to support nuclear plants, there very well could be a further loss of coal jobs and less natural gas development and “we’d just end up moving the jobs around.”

At the same time, he noted during another part of the hearing that legislators want to know if they hand a pile of money to someone, they want to know if they need it and not use it to increase their dividends.

Given the complexity of the issue, Rep. Matzie said he was in favor of having a special session of the General Assembly to deal with energy issues.

Here are links to the written testimony presented at the hearing--

-- David Spigelmeyer, Marcellus Shale Coalition [Senate testimony]

-- Rachel Gleason, Pennsylvania Coal Alliance

-- Maria Korsnick, Nuclear Energy Institute

-- Kathleen Barron, Exelon Corporation [Senate Testimony]

-- Mark Szybist, Natural Resources Defense Council [Previous comments on the bill]

Also provide to the Committee were comments from the Environmental Defense Fund and the Brattle Group Report on the PA Nuclear Power Plants’ Contribution To The State Economy

Click Here for copies of written testimony. Click Here for video of the April 8 and 15 hearings.

Future Hearings

Two more hearings are scheduled on House Bill 11 by the Committee--

-- April 29: Electric utilities, suppliers, consumers, organized labor, Room 205 Ryan Building, Noon; and

-- May 6: Regulators of the electric market, industry, Room 140 Main Capitol, 11:00.

Agendas are subject to change, but indicate the types of witnesses the Committee intents to hear from on this issue.

Rep. Brad Roae (R-Crawford) serves as Majority Chair of the Committee and can be contacted by calling 717-787-2353 or sending email to: broae@pahousegop.com. Rep. Robert Matzie (D-Beaver) serves as Minority Chair and can be contacted by calling 717-787-4444 or sending email to: rmatzie@pahouse.net.

NewsClips:

Caruso: Subsidies In The Spotlight As Fossil Fuel Industries Hammer Proposed Nuclear Deal

Cusick: How Much Would Nuclear Plant Subsidy Add To Your Electric Bill?

U.S. Supreme Court Won’t Hear Nuclear Plant Subsidy Cases, Clarifying State Energy Jurisdiction

Exelon Statement On Court Decision Upholding State Programs To Preserve Nuclear Plants

Rep. Matzie: Important To Hear All Sides On Nuclear Subsidy Bill

Nuclear Power Plant Talks Continue In PA General Assembly

Nuclear Subsidy Bill Draws Concern For Future Of PA Energy Framework

State Grants If TMI Shuts Down? Senate Bill Would Help Municipalities That Lose Taxes If Power Plant Closes

NJ: Critics Slam PSEG’s Notice of Salem Nuclear Plant Shutdown On Eve Of Subsidy Decision As Hardball Tactic

Maykuth: NJ OKs $300 Million In Nuclear Power Plant Subsidies, Days After PSEG Threat To Close Reactors

NJ Approves $300 Million Annual Subsidy To Nuclear Power Industry That Threatened Shutdown