Groups Fight NY’s Subsidies to Nuke Plants

MANHATTAN (CN) — Energy companies and trade associations challenged New York Gov. Andrew Cuomo's clean energy program that would send hundreds of millions of dollars in subsidies to failing upstate nuclear power plants.

Arguing that the proposed "Zero Emission Credits" program will increase prices of local utilities, harm competition and deter renewable energy generators from entering the market, the Coalition for Competitive Energy and six others sued the New York Public Service Commission on Wednesday in Federal Court.

The groups claim that "(u)nless enjoined or eliminated, these credits will result in New York's captive ratepayers paying the owners an estimated $7.6 billion over twelve years to the owners of these plants."

The four plants involved in the subsidies plan are the James A. FitzPatrick Nuclear Power Plant near Oswego, two plants at Nine Mile Nuclear Station in Scriba and the R.E. Ginna Nuclear Plant near Rochester.

Calling the purported local benefits of subsidies "illusory," the plaintiffs say that "New York has thus failed to regulate evenhandedly to effectuate a legitimate local public interest, and the effects of its regulation on interstate commerce are more than incidental."

Lead defendant Audrey Zibelman, chairwoman of the Public Service Commission, called the complaint a frivolous lawsuit "right out of the fossil fuel industry's playbook to deny and thwart actions to combat climate change."

Zibelman said in a statement Wednesday: "This challenge to New York's authority is a challenge to the 29 states that have taken similar actions to encourage renewable energy development. New York's goal to reduce carbon emissions by 40 percent by 2030 is essential to protect New York and New Yorkers."

A spokesperson for the Public Service Commission said that the Zero Emission Credits will be adjusted every two years, with costs expected to go down.

The plaintiffs say that at today's wholesale prices, for every megawatt hour of energy the upstate nuclear plants sell into the Federal Energy Regulatory Commission market, the nuclear plants will receive more than 80 percent extra from the Zero Emission Credits.

For example, they say the Nine Mile and FitzPatrick nuclear plants will get a total of $38.11 per megawatt hour produced, while a nearby competitor will get just $20.63 per megawatt hour.

The plaintiffs include direct competitors to Exelon, a Chicago-based company that stands to receive more than $600 million a year from captive ratepayers under the arrangement,

They claim that the prospects of Zero Emission Credits, scheduled to start April 2017, induced three of the four struggling nuclear plants to reverse their decisions to close.

Governor Andrew Cuomo described the project in an August statement: "Maintaining zero-emission nuclear power is a critical element to achieving New York's ambitious climate goals. Starting in April 2017, the Clean Energy Standard requires all six New York investor-owned utilities and other energy suppliers to pay for the intrinsic value of carbon-free emissions from nuclear power plants by purchasing Zero-Emission Credits. "

The statement cited research by climate scientists that suggests that if the affected nuclear power plants were to close abruptly, "carbon emissions in New York will increase by more than 31 million metric tons during the next two years, resulting in public health and other societal costs of at least $1.4 billion."

The plaintiffs seek declaratory judgment that the subsidies are pre-empted by federal law, and want them enjoined.

They are represented by Jonathan Schiller, with Boies Schiller & Flexner.

The plaintiffs include Dynegy, Eastern Generation LLC, the Electric Power Association, NRG Energy, Roseton Generating LLC, and Selkirk Cogen Partners.

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