Legacy of TMI, power of gas industry makes subsidies uphill battle

(Harrisburg) — Pennsylvania is the latest state to debate whether to provide a rescue package to its nuclear power industry, but the commonwealth’s unique history and current energy landscape may make subsidies a tougher sell here.

The nuclear industry has struggled with stagnant demand for electricity, competition from cheaper natural gas and renewables, and high operating costs. Its response in part has been to make a controversial, but often successful, pitch to state governments to create so-called zero emission credits — effectively broadening the definition of what counts as clean energy.

It’s worked in Illinois, New York, Connecticut, and New Jersey. But Pennsylvania is different.

Cost is ‘a little hard to swallow’

“Three Mile Island is the only plant facing an imminent shutdown, and Three Mile Island is the only plant with all this baggage associated with it,” said David Hess, a former state environmental secretary and lobbyist who worked for Exelon, owner of Three Mile Island’s Unit 1 reactor.

TMI’s Unit 2 reactor partially melted down in March 1979, an event which caused tens of thousands of people to evacuate central Pennsylvania. Hess said Exelon (which did not own Unit 1 at the time) may not have realized the legacy was, “as strong as it was–especially with the 40th anniversary and all the media coverage.”

Pennsylvania’s natural gas industry, which has been growing its share of electric power generation — in direct competition with nuclear plants — provides “more of a counterweight, in terms of a political presence, opposing the proposals,” Hess said.

State aide to nuclear plants was challenged in court. However, earlier this month, the U.S. Supreme Court refused to hear a case from the Electric Power Supply Association, a power industry trade group, after lower courts upheld the New York and Illinois programs.

The Supreme Court’s decision clears the path for Pennsylvania to implement similar subsidies.

Two bills under consideration in the state House and Senate would provide an approximately half-billion-dollar annual subsidy to nuclear plants. Public hearings have been held on both. More hearings on the House version are scheduled for April 29 and May 6.

Rep. Donna Bullock (D- Philadelphia) is undecided on the bailout bill. Both the House and Senate measures would cost the state’s electric customers about half-a-billion dollars annually.

“That’s a little hard for me to swallow, to spend this amount of money, and not have any advances when it comes to cleaner energy, and to not have any advances when it comes to more affordable energy,” Bullock said.

The nuclear industry argues the design of the power market is flawed, because it’s focused on delivering the cheapest electricity in the short-term, and it fails to consider the valuable long-term assets nuclear power brings to the table — like carbon-free emissions.

‘What did we do for people who make buggy wheels?’

In remarks at the Upstream PA 2019 oil and gas conference in State College last week, Sen. Gene Yaw (R-Bradford), who chairs the Senate Environmental Resource and Energy Committee, said he does not see a lot of support for the subsidies.

“Some of these things, it’s really time to close them,” Yaw said, referring to nuclear plants. “When the nuclear industry came into my office I said, ‘I don’t understand why we should be doing something for you. What did we do for the people who used to make buggy wheels?’ Some things just have a natural life cycle.”

A state utility regulator also sent a memo to legislators last week, noting his opposition to the Senate version of the nuclear bill, SB 510. Public Utility Commissioner Andrew Place said there are less expensive ways to achieve similar goals — citing carbon pricing and energy efficiency, among other things.

Republican legislative leaders and Democratic Gov. Tom Wolf have chosen their words carefully on issue of nuclear subsidies — generally saying it’s an important issue they’re willing to discuss.

In a February interview for StateImpact Pennsylvania’s documentary Three Mile Island: The New Nuclear Dilemma, Exelon’s Senior Vice President of State Governmental and Regulatory Affairs David Fein said he did not think it was awkward for the company to be asking for a subsidy on the 40th anniversary of the Three Mile Island accident.

“I think the performance of the station since that time is exceptional,” Fein said. “Exelon didn’t own the station when the accident happened, and there’s a reason why people hire Exelon to run their nuclear stations.”

At a hearing on the House bill last week, Exelon said HB 11 must be passed (as currently written) by June 1 in order to avoid the planned early retirement of Three Mile Island in September. Only nine voting days remain on Pennsylvania’s legislative calendar before that deadline.

 

StateImpact Pennsylvania is a collaboration among WITF, WHYY, WESA and the Allegheny Front to report on the commonwealth’s energy economy.