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House Hearing: Bill To Aid Nuclear Plants Will Significantly Increase Electricity Costs For Businesses, Threatens Competitive Electric Market, Offers No Job Guarantees

On April 29, the House Consumer Affairs Committee hear testimony at its third hearing on House Bill 11 (Mehaffie-R- Lancaster) to provide financial support for nuclear power plant the bill will significantly increase electricity costs for business, offers no job guarantees for workers and threatens Pennsylvania’s competitive electricity market.

Michael Peters, Energy-Messer LLC and the PA Energy Consumer Alliance, said, “It is important to emphasize that the funds identified in House Bill ll to pay to the nuclear industry would go to Exelon's shareholders, Talen's investors and FirstEnergy Solutions' creditors from ratepayers...consumers.

“Ratepayers are being asked to take monies from their business and household budgets and create a funding stream for the nuclear plant owners. The ratepayers and consumers who will be forced to give handouts are businesses and residents in each of your home districts.

“We do not want our current deregulated market to change in order to support a nuclear bailout that will result in additional costs on Pennsylvania businesses.Such a move would make this Commonwealth unattractive for business and, therefore, unattractive to students and employees of all industries.

“PECA directly represents a group of large energy-intensive manufacturers in the state. We support clean energy; we support nuclear energy.

“But, because the Pennsylvania nuclear industry as a whole is profitable and because we do not want to financially support a handout to the nuclear industry like we already did in the 1990s, we strongly oppose this legislation and any legislation that picks one industry over another and disrupts the competitive market.

“HB ll would increase power costs for Messer LLC over $9 million for the first six-year term of the HB ll handout. This total results from a payment of $1.5 million per year, each year, for six years. And, as HB ll allows, this could continue forever with a never-ending renewal of six-year terms.

“Some of our competitors are in Pennsylvania, and would be subject to the same increases we would pay, but several of our competitors are not similarly situated and could easily use our cost disadvantage against us in the market.

“But the situation is worse for our customers and for my fellow PECA members since many or all of their competitors are from outside of Pennsylvania or outside of the United States, and not subject to this cost disadvantage.

“Without the ability to pass on these power costs through price increases, these companies' financial condition will weaken and could result in lower wage growth, less job growth or job losses far Pennsylvania workers.

“In essence, support for HB ll would hurt the very Pennsylvania businesses and economy that Pennsylvania elected officials repeatedly try to help.

“Based on usage data obtained from the Commonwealth, the cost of operating the many of the agencies' buildings including the Department of Corrections and others will increase by approximately $18 million in the first term ($3 million each year).

“Similarly, the costs for the 650 to 700 buildings where the City of Philadelphia pays the electric bill will increase by approximately $16.2 million in the first term ($2.7 million each year).

“The costs for the state-supported universities, including Pitt and Penn State, for the institutions in the Pennsylvania State System of Higher Education and for community colleges will also increase. This is another layer of costs that will impact Pennsylvania businesses and residents.

“We want to be clear that PECA supports economic low- or no-carbon emission generation sources, and we support the reliability and diversity of the current generation mix within the PJM interconnection.

“In fact, the best source of carbon-free emissions has been provided by industrial consumers over the last several decades in the form of more efficient use of energy in the production of our goods.

He pointed to a chart in his testimony that showed U.S. industrial energy intensity decreased 52 percent since 1990 while gross U.S. output increased by 221 percent.

“There is no justification to further enrich the owners of these generators, there is no credibility to predictions that these units will become unprofitable in the future, and there is disputed evidence that energy prices in the state would rise more than the price tag of this legislation if all the nuclear plants shut down.

“The nuclear plant owner's assertion of energy prices rising is based on their study that assumes every power plant shuts down. There is no evidence of this happening.

“In addition, professor Seth Blumsack of Penn State issued a study concluding that there would be a minimal impact on energy costs in the Commonwealth if TMl and Beaver Valley close. Professor Blumsack also addressed a scenario calculating that it was possible for electric costs to decrease with TMl and Beaver Valley's closure.

“We are also distributing today copies of a recent report from Dr. Paul M. Sotkiewicz, Ph.D., president and founder of E-Cubed Policy Associates, LLC, titled "The Market and Financial Position of Nuclear Resources in Pennsylvania." In the report, Dr. Sotkiewicz concludes that the Pennsylvania nuclear plants, except TMI, will continue to be profitable for the next 10 years.

“Perhaps this explains why the nuclear owners refuse to amend HB ll to include a ''needs analysis"or to offer any commitments in return for an approximate $500-million handout, per year, for six years.

“They criticize the PJM Market Monitor's analysis of their profitability, and will undoubtedly criticize Dr. Sotkiewicz's new study, yet they are unwilling to provide the public with a separate analysis to support this handout.

“From a consumer perspective, assigning the nuclear industry the substantial market share that it is given under HB 11 and SB510 is a retrenchment back to the centralized generation planning that occurred in the 1970s and 1980s.

“It was that centralized planning that made big bets on the nuclear industry as our "savior" because of the fear of natural gas and oil shortages.

“Those decisions, in hindsight. resulted in Pennsylvania having amongst the highest electricity rates in the nation, which was the impetus for Pennsylvania restructuring the industry through the 1996 Electricity Customer Choice and Competition Act.

“We should not be going back to greater regulation of the electric generation market under the guise of a job-retention program or a state-specific carbon reduction goal and the state government should not pick winners and losers.

“Instead, we ask that this committee lead state government to let the competitive market work.”

Click Here for Peters’ written testimony.

Rod Williamson, Executive Director, Industrial Energy Consumers of Pennsylvania, offer comments similar to Peters.

Tony Cusati, Retail Energy Supply Association representing competitive electricity and natural gas suppliers, said, “RESA believes competitive markets ensure that the prices paid reflect the true costs of providing electricity and represent the most cost-effective means of supporting reliability and resiliency goals.

“Competitive markets also provide signals to generators to build new facilities or retire old facilities. RESA would like to caution the Legislature to carefully review HB ll in order to ensure that the competitive market is not disrupted.

“Major policy changes like shifting energy source preferences under the AEPS must be viewed holistically and comprehensively.

“The goal should be to preserve the consumer benefits of competitive markets and not have the consumer cover the cost of such a substantial shift in an energy source

“...RESA believes that a discussion on energy policy in the Commonwealth should not solely focus on nuclear subsidies. After more than 20 years of competition, it is time to take a look at the entire picture and have a thoughtful, broader discussion to consider changes to enhance the competitive market to reflect changing consumer needs and preferences.

“Competitive markets are key to increasing voluntary renewable energy purchases because they provide an easy way for customers to select wind, solar or other renewables.”

To enhance competition, Cusati recommended--

-- Unbundling (Proper Costs Allocation): require electric and natural gas distribution companies to identify all costs associated with providing default service and allocating those lost between supply and distribution rates;

-- Supplier Billing: allow electric generation or natural gas suppliers to provide a single consolidated bill to a customer which includes both supply and distribution charges; and

-- Enroll-With-Your-Wallet: allow customers to select or change electric or gas suppliers using personal information rather than a utility account number reducing a barrier to shopping.

“I would like to recite the comments of Chairman Brown Dutrieuille at the PUC's 20th Anniversary celebration of Electricity Retail Choice in December. 2016 where she said: "For two decades, Pennsylvania has stood on the national forefront of electric competition, putting the power of choice in the hands of consumers and giving them greater control of their electric bills."

“She went on to say,"As a result of this historic legislation, millions of electricity customers have made choices and saved money, purchased renewable products and explored innovative new overs and plans."

Click Here for Cusati’s written testimony.

Kris Anderson, International Representative, International Brotherhood of Electrical Workers (IBEW), said Pennsylvania's nuclear fleet creates more jobs than any other source of energy, creating 500 jobs in each nuclear power plant for every 1,000 megawatts of capacity.

He said these jobs are crucial to local economies, and that plant closure forces relocation. He added that nuclear energy helps Pennsylvania align with the goals of the Paris Climate Accords by reducing the carbon footprint.

Anderson said this legislation is not a corporate bailout, rather it is providing for "family-sustaining, meaningful employment."

Anderson agreed with a comment by Rep. Marty Flynn (D-Lackawanna) House Bill 11 offers no guarantee jobs would, in fact, be protected by the legislation without some sort of direction on how the funding would be spent.

Anderson said the bill could be improved to protect workers.

Rep. Flynn said $500 million for nuclear generation companies does not guarantee any labor or environmental protection so why should ratepayers support this legislation. Rates may go up regardless of this legislation. It should find a balance between consumers and labor.

Click Here to watch a video of the hearing. Click Here for copies of written testimony. [When posted.}

Next Hearing

The 4th and final scheduled hearing on House Bill 11 will be held on May 6 starting at 11:00 in Room 140 of the Main Capitol. Click Here to watch the hearing online. Click Here for more on the agenda.

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:

Nuclear Power NewsClips For The Week

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