On July 31, 2017, Greentech Media published an article entitled “Court Victories for New York, Illinois Nuclear Subsidies Are a Big Win for Renewables,” and declared that the court proceedings represented “a significant win for the nation’s largest nuclear fleet owner Exelon.” While recent developments are certainly good for Exelon shareholders, they are bad for consumers and the environment.
First, no matter how you slice it, these nuclear bailouts are bad public policy. Rather than supporting renewables, they starve green policy initiatives of cash and instead funnel billions of hard-earned consumer dollars to Exelon Corporation’s bottom line. This is no win for renewables.
Second, both the New York and Illinois judges ruled that private parties, including other power generators and ratepayer advocates, lacked “standing” to challenge these handouts in federal court. Depriving private parties of the right to sue in federal court is a breathtaking limit on the right of ratepayers -- on whose backs these nuclear bailouts will be paid -- to challenge these decisions. In other words, these judicial decisions have every electric consumer in Illinois and New York paying for nuclear power rather than renewable energy, while denying those citizens any say in the process.
Third, the impact of nuclear “zero-emissions credits,” or ZECs, on the market is simply too big for federal regulators to ignore. The Federal Energy Regulatory Commission, the consumer protection agency charged with ensuring that wholesale electricity prices are “just and reasonable,” has generally taken a hands-off approach to state programs that incent renewables development. But if nuclear subsidies are identical to state renewables programs, then FERC may have to regulate both.
On ZECs, it is important to note that the American Wind Energy Association joined the competitive generators in describing how renewable and nuclear bailout programs are vastly different. ZEC may rhyme with REC, but under the ZEC programs, only specific nuclear facilities qualify for the subsidy -- wind and solar operators need not apply. Why should ratepayers be forced to “rent” obsolete and uneconomic nuclear plants that they’ve already paid for, rather than build new, modern generation?
Finally, while the New York federal judge dismissed the complaint, this case is far from over. The two District Court decisions represent only the first skirmish in a war that could easily end up at the Supreme Court. In fact, the Illinois appeals court has already set an aggressive schedule for filings and hearings, with the first brief due from the plaintiffs -- including consumer advocates -- at the end of August.
Hopefully, the judges will carefully reflect on the dangers of supporting these nuclear bailout programs by asserting that they’re the same as renewables programs. This false equivalence directly and significantly harms consumers by burdening them with billions of unnecessary costs and actually hurts the efforts of the states and sustainably focused generators and consumers to build new renewables.
Abe Silverman is vice president and deputy general counsel of regulatory affairs at NRG.