Pennsylvania lawmakers are circulating memos in both the state House and Senate seeking sponsors for legislation that would better support the state’s five nuclear power plants as the facilities continue to face stiff competition from other generation sources such as natural gas.
The move marks a new phase in the nation’s second-largest gas producing state, where the oil and gas industry has been battling to stave off a trend that has swept across parts of the country. In nearby states, such as New York and Illinois, legislatures have advanced subsidies for the nuclear industry as wholesale electricity markets have shifted dramatically to favor natural gas and renewables.
The bipartisan memos were circulated by the Pennsylvania Nuclear Energy Caucus, which late last year shared a 42-page report with the governor and legislature that recommended a handful of options to help nuclear power in the state, including a zero emission credit (ZEC) program like those in New York and Illinois, or a carbon pricing program.
The memos, however, seem to stop short of going that far, saying that sponsored legislation would update the state’s Alternative Energy Portfolio Standards Act (AEPS) to “recognize” nuclear energy. The AEPS requires that 18% of electricity supplied by Pennsylvania’s distribution companies come from alternative energy sources by 2021. The memo indicates that any potential legislation would include nuclear energy in the AEPS as a qualifying resource.
“The memo reinforces our long-held view that the Keystone State is unlikely to enact a zero emissions credit program or a similar nuclear subsidy,” wrote analysts at ClearView Energy Partners LLC in a recent note to clients.
Driven by production from the Marcellus and Utica shales, the state was on track to produce 6 Tcf of natural gas last year. The industry has become a dominant part of the state’s economic fabric, and it has enjoyed support from some members in the Nuclear Energy Caucus, making nuclear subsidies a tough sell in the state.
Abundant gas supplies have also driven down prices, leading more generators to burn natural gas throughout the region, while renewables also continue to make strong gains. There are more than 20 gas-fired facilities under construction or being upgraded in the PJM Interconnection, the grid serving all or parts of 13 states and the District of Columbia, including shale-rich Appalachia.
Even still, referencing data included in the caucus’ report, the lawmakers noted in their memo that nuclear power plants generate more than 40% of the state’s electricity and provide 93% of its zero-carbon electricity. They warned that policymakers must act fast, given plans by Exelon Corp. and FirstEnergy Corp. to soon close Three Mile Island Generating Station and the Beaver Valley Power Station.
“To be clear, the shutdown process is irreversible, thereby guaranteeing the permanent loss of Pennsylvania’s nuclear assets,” the memo said.
Given the tone of the memo, ClearView analysts added that “we remain cautious in assuming the legislature could move fast enough to avert the scheduled close of Exelon’s Three Mile Island on September 30.”
The memo also comes at a time when PJM is in a closely-watched proceeding before the Federal Energy Regulatory Commission about how it should best accommodate state subsidies for power sources. The lawmakers, however, said the state shouldn’t wait for federal intervention or new PJM policies to protect nuclear facilities.