Appellate Court allows ZECs for PSEG nuclear plants to stand

Three-judge court says BPU properly followed statute when awarding certificates to Public Service Enterprise Group in 2019

In what can be considered a big win for clean energy and for Public Service Enterprise Group, a three-judge appellate court Friday affirmed the 2019 decision by the New Jersey Board of Public Utilities to award Zero Emission Certificates to PSEG to help operate the state’s three nuclear plants: Salem 1, Salem 2 and Hope Creek.

The court agreed that the award of ZECs by the BPU was appropriate under the statute and rejected all of the arguments of the objectors.

The decision essentially ensures that the three facilities, all of which are located in Salem County, will remain open.

The New Jersey Division of Rate Counsel, which argued that the BPU should not have awarded the ZECs, did not immediately indicate whether it would appeal the decision to the New Jersey Supreme Court.

PSEG released the following statement:

“We are pleased that the New Jersey appellate court agreed with the BPU’s decision, which granted ZECs to PSEG’s New Jersey nuclear units. This decision confirms that the BPU appropriately followed the statute and gives clear guidance on how to apply the existing law to the ZEC case currently before the BPU.

“Nuclear is critical to achieving New Jersey’s clean energy goals for 2050. The state is already is a national leader when it comes to generating carbon-free electricity, thanks to its nuclear plants, which deliver more than 90% of all of the state’s carbon-free energy.”

Here’s the background of the case:

  • PSEG, which operates all three facilities, told the BPU in 2019 that it needed the ZECs to keep its nuclear facilities open — since the cost of energy had been so dramatically reduced;
  • PSEG said if it was not granted the subsidies that the ZECs provided — which could be as much as $300 million annually — that PSEG would be forced to close the plants;
  • The BPU awarded the ZECs in April 2019, ending months of bitter discussion on the issue.
  • The New Jersey Division of Rate Counsel, feeling the rate hike for consumers that came with the ZECs was not justified or necessary, appealed the decision. It argued to the Appellate Court last December that PSEG had not met the requirements for the program and that the BPU was wrong to approve the application.

While the court’s ruling allows the BPU’s 2019 ruling to stand — and answers some of the larger constitutional questions surrounding the BPU’s ability to run the program — the issue is not necessarily over.

PSEG is in the process of asking for an extension of the ZECs, which it must do every three years.

The Rate Counsel is again fighting the program.

Rick Thigpen, PSEG’s senior vice president for corporate citizenship, told ROI-NJ in February that the nuclear plants are essential to the state’s ability to successfully achieve its goal of a 100% carbon-free energy supply by 2050.

Thigpen said nearly 40% of New Jersey’s energy supply is carbon-free because of PSEG’s nuclear plants — and that the company provides more than 90% of all of the carbon-free power generated in the state.

“This is not about us needing more, wanting more,” he said. “It’s about PSEG understanding the value of nuclear to New Jersey’s clean energy future. And we believe that this dialogue in this statutorily created process is the best way to address the issue.

“I don’t want people to think about this as PSEG wants more. That’s not what this is — even though people will try to characterize it that way. That’s why we’re trying to change that dialogue.

“What we want people to think of is, No. 1: Nuclear energy is an enormous asset for the state of New Jersey, as it provides all kinds of benefits — it creates jobs, it contributes to the economy, it keeps electric prices low, it helps keep our air clean and it helps fight climate change. And, No. 2: It’s a key pillar to our state’s clean energy future.”

Stefanie Brand, the director of the N.J. Division of Rate Counsel, represented the Rate Counsel.

David Chester Apy, assistant attorney general, represented the Board of Public Utilities.

Former New Jersey Attorney General Chris Porrino, of Lowenstein Sandler, represented PSEG.

Judges Mary Gibbons Whipple, Lisa Rose and Lisa Firko heard the case.