In their first public discussion following the singing of zero emission credits, dubbed a nuclear subsidy, into law by Gov. Phil Murphy last week, Public Service Enterprise Group executives Ralph Izzo and Ralph LaRossa shared their initial frustration and ultimate relief with the bill battle in Trenton over the last several months.
Izzo, CEO and chairman, told ROI-NJ that, candidly, the bill saved the utility from having to file for a shutdown prior to the next auction to supply energy to the regional electric grid operator, PJM Interconnetion, for the 2022-2023 operational year.
“It’s awkward to talk about what might have been, but to be very blunt, if this bill had not happened, in September, we would have announced our intention to close those plants,” Izzo said. “We had a whole project plan ready to go that would have (put) that ball in motion.”
PJM has previously said that the loss of nuclear plants to the grid would not impact its supply pool.
But the impact to New Jersey residents would be huge, Izzo said.
“It really did save New Jersey from making a very bad mistake,” he said. “Three separate analyses, one we paid for, showed bills would have gone up more than what it’s costing to keep the plants online.”
That is because of the loss of jobs and $800 million economic impact on the state that would result from shutting down three plants. Not to mention the $400 million increase in electricity rates and $500 million a year in added environmental and public health costs.
Without nuclear energy, the grid would rely heavily on gas — which is cheaper, except for, as one standalone example, during sudden temperature drops in the winter.
LaRossa explained this during the investor day presentation Thursday at the New York Stock Exchange where he, Izzo and other executives discussed, among other things, the strategy forward, thanks to the bill being signed.
LaRossa said that, during the temperature drop in early January, the market price of gas spiked to more than $800 per megawatt hour, from a normal of less than $100 per megawatt hour, and PSEG switched to oil, to keep prices down. But even that was quickly depleting at the largest PSEG oil burning units.
Izzo said the company was hours away from having to start rolling brownouts because of how quickly the oil was burning.
This, despite regular maximum capacity deliveries of oil to these units.
“We literally just had around the clock delivery at that point,” LaRossa said.
Enter nuclear, the low-cost option that provided the bulk of the energy supply to the PJM grid — which is why PJM should be supporting nuclear, LaRossa said.
Now that the nuclear bill is signed, PSEG is preparing its applications for all three nuclear units — two at the Salem plant and one at Hope Creek, according to Tamara Linde, executive vice president and general counsel of PSEG.
The Board of Public Utilities has 330 days to choose up to three plants within the region, including Pennsylvania, and rank them according to most eligible. Each application will cost $250,000, or $750,000 total for PSEG, to help the BPU obtain the resources it needs to review each application. The Top 3 get to start charging $0.004 per kilowatt hour to customers to recoup the credits.
Izzo said he hopes the rhetoric that the plants aren’t in trouble will cease as PSEG has the opportunity to show its financials to the BPU.
But there has been no change in the SEC filing made earlier by PSEG and Exelon — which owns about half of the Salem plant — which informed investors that the companies will cease capital improvements that are not operationally required.
The filing, in March, stated that the step was being taken in light of the delay in signing the nuclear subsidy bill.
But it isn’t clear at what point in the process that step will be reversed.
“Exelon Generation and PSEG Nuclear agreed that the funding of these projects may be restored, when and if legislation is enacted in New Jersey that sufficiently values the attributes of nuclear generation and Salem benefits from such legislation,” the filing said.
On Thursday, Izzo said the bill signing creates the safety net the companies needed.
“It does create the safety net we needed to say, ‘OK, we can now make the investments we need to in the plants.’ Equally important, we are finally going to get out from under this ‘show us the dollars, open your books.’ Absolutely, we’ve said all along, before a dollar comes our way, we should and we will open our books. But we didn’t think it was right to do in the legislative process,” he said.
That being said, Izzo said the company is on board with Murphy’s ambitious clean energy goals, and is doing its own investing in solar and offshore wind.
“We are so supportive of where Gov. Murphy wants to go in terms of a clean energy future. But you cannot get there without nuclear power,” he said. “You just can’t afford it without nuclear power.”