At its fourth and so far final hearing on legislation to aid nuclear power plants-- House Bill 11 (Mehaffie-R- Lancaster)-- the House Consumer Affairs Committee heard advocates for residential and small business ratepayers say the bill represents the “worst of all worlds” for ratepayers and “windfall profits” for nuclear power plant owners.
And, bottom line, it won’t save Three Mile Island from closing.
Tanya McCloskey, Acting Consumer Advocate, Office of Consumer Advocate at the Public Utility Commission, said, “Our competitive wholesale markets have now produced a diverse array of generation serving the needs of customers in the PJM region, lower emissions of carbon and other pollutants, and lower prices for consumers homeowners, businesses and industries.
“...we should not simply turn away from the market mechanisms that have worked so well and impose hundreds of millions of dollars annually in unnecessary subsidies on ratepayers as I believe would occur under House Bill 11.
“We have had much success with our competitive wholesale markets, and should not introduce distortions to those markets that would compromise the benefits for ratepayers from our transition to a restructured electricity industry.”
She said House Bill 11 creates a “heads I win, tails you lose” situation for nuclear power plant owners and is a bad deal for ratepayers.
“House Bill 11 would provide windfall profits to shareholders of the corporations that own the already profitable nuclear plants at the expense of our families, businesses and industries.
“Despite receiving these substantial windfall profits, some $2.5 billion to $3.5 billion over the first six year term, there is no requirement that the nuclear plant owners continue to operate the plants, no payback of the rate payer funds if the owners decide to close the plants in a few year, and no adjustment to reduce the subsidies if market prices adjust upward to that the nuclear units are even more profitable.”
She also noted since the issue of subsidizing nuclear power plants was first being discussed in Pennsylvania in 2016, the price of electricity has increased by 30 percent. [The implication being still some nuclear power plants cannot compete in the wholesale electricity markets.]
“For ratepayers, this is the worst of all worlds-- higher market prices impacting their energy bills and high subsidies paid on top of that whether needed or not.”
McCloskey repeated her testimony from the Senate last week that putting a price on carbon-- if that is the ultimate goal of the state’s policy decision-- is compatible with a competitive electricity market.
“Market mechanisms, such as setting a price on carbon or establishing a cap-and-trade program such as by joining the Regional Greenhouse Gas Initiative are two possible approaches.
“In the long term, market mechanisms should result in the most efficient and least cost solutions to achieving our goals ,as well as foster innovation.”
In response to questions, McCloskey added if Pennsylvania did put a price on carbon, the ratepayers throughout the PJM system would help pay the cost in contrast to the proposal in House Bill 11 where Pennsylvania ratepayers would pay for the entire $500 million of the program.
McCloskey said she could not agree with the statement that if nuclear power plants close electricity prices will go up because the competitive market will respond to provide the least cost power to ratepayers.
She added, electricity prices would also go up if some of the measures the Federal Energy Regulatory Commission have been talking about go into effect.
Shelby Linton-Keddie, Assistant Small Business Advocate, Office of Small Business Advocate at the Public Utility Commission, said, “The proponents of House Bill 11 argue that passage of this bill will level the playing field for nuclear generators, properly value low or no-carbon emissions and save jobs. The OSBA respectfully submits that House Bill 11 will do none of those things.
“Rather, if passed in its current form House Bill 11 would be an unprecedented legislative mandate in favor of nuclear generation; it would thwart electric competition; and it would add an additional $3 billion dollars to the bills of 5.8 million Pennsylvania consumers.
“Furthermore, although Exelon asserts that Three Mile Island (TMI) may cease operation on June 1, House Bill 11 will not, by objective analysis, do anything to save the fate of TMI.”
[Note: Exelon said if House Bill 11 is not passed by June 1, TMI will close. Also note, Exelon told the April 10 hearing held by the Senate it choose not to allow TMI to participate in the program New Jersey recently adopted to aid its nuclear power plants even though it was eligible because they thought New Jersey’s instate power plants would have have an advantage.]
“If House Bill 11 passes in its current form, small business owners may be forced to absorb these increases personally, pass through these increases to their customers, delay pay raises for workers, or delay hiring new workers.
“Any of these results cut into a small business’s bottom line, which could cause a stall or decline in small business growth across the Commonwealth. Such a decline would seriously impact the Commonwealth’s economy.”
In response to a question about whether prices would increase or decrease if action was taken on House Bill 11, Linton-Keddie said she did not have a answer beyond the fact ratepayers will be paying $3 billion more for their electricity over the next 6 years.
Stu Bressler, Senior Vice President of Operations and Markets for PJM, said if uneconomical power generation [presumably like some nuclear plants] are kept in the competitive electric market then electricity costs cannot help but go up and no matter the outcome of House Bill 11, the debate over pricing carbon emissions will continue.
In his presentation, Bressler noted PJM’s competitive wholesale market for electricity has provided Pennsylvanians more than $2 billion in savings over the last 5 years, an electricity system that is reliable and robust with a mix of fuels and energy technology all at the lowest reasonable cost.
Bressler said PJM recognizes and respects Pennsylvania’s prerogative to adopt environmental protection and other policies and recognizes those policies play a role in determining the assets and fuel mix in its part of PJM.
Bressler noted in June 2018, the Federal Energy Regulatory Commission issued an order, in response to a complaint, that found its competitive capacity market has become “untenably threatened by out-of-market payments provided or required by certain states for the purpose of supporting the entry or continued operation of preferred generation resources that may not otherwise be able to succeed in a competitive wholesale capacity market.”
In response, PJM filed a proposal to FERC that if approved would allow a state, by legislation, to carve itself and the load it would serve out of the PJM capacity auction and effectively have its own capacity system as directed by the legislation.
In response to a question about whether prices would go up if House Bill 11 were or were not passed, Bressler said if the bill was passed, the competitive market would no longer provide the signals necessary to tell uneconomical power generation [presumably like some nuclear power plants] when to exit the market.
If uneconomical power generation is kept in the market, he said, you could not help but see prices go up because it is contrary to a competitive market.
“No matter the outcome of House Bill 11, the debate over carbon emissions and the potential to assign a price to them will continue. While PJM will not be the one to implement a carbon price, we stand ready to help you understand how carbon pricing can integrate with the wholesale markets to the benefit of Pennsylvania.”
Gladys Brown Dutrieuille, Chairman, Public Utility Commission, said more than a few important things at the hearing--
-- Impact On Grid: PJM has said the retirement of Three Mile Island and Beaver Valley will not adversely affect the reliability of the wholesale electric grid, although Beaver Valley will required upgrades to transmission systems totaling about $180 million. In a statement released by Commissioners on April 22, they said based on information provided by the PJM Market Monitor, only TMI is clearly financially troubled at this time.
-- Impact On Electricity Prices: A 2018 Penn State University study found if the generating capacity of Three Mile Island and Beaver Valley were replaced with natural gas-fueled generation, which is the likely outcome, wholesale energy prices would decrease in a range of 9 to 24 percent each year over the next 3 years.
-- PUC Costs: The cost to the PUC for administering House Bill 11 would be at least $2.5 million annually and no funding mechanism is provided in the bill and the timeframes for taking actions assigned to the PUC in the bill do not provide sufficient time to perform the tasks assigned.
In response to a question from the Committee, Chairman Brown Dutrieuille said under the present competitive electric market website, she does not believe there is a choice from a supplier to allow customers to choose a nuclear-power only option like there is with traditional renewables.
See also the testimony the Chairman gave in the Senate and the text of a statement put out by the Commission on April 22 on Senate Bill 510, the companion to House Bill 11.
David Althoff, Director of the Energy Programs Office at DEP, presented remarks similar to the testimony he gave in the Senate last week, including specific recommendations like--
-- Increase AEPS: Increasing Alternative Energy Portfolio Standard Tier I targets to 30 percent by 2030, with a 6 percent solar carve out, and then increasing to a 50 percent Tier I target by 2050.
-- Maintain Nuclear Plants: Implement a policy to maintain nuclear generation at current levels, whether through zero emissions credits, inclusion in the AEPS, or some other mechanism, butt DEP is officially neutral on the bill.
-- Cap-And-Trade: Limit carbon emissions through an electricity sector cap-and-trade program.
-- PA Solar Futures Plan: Recommendations in Pennsylvania’s Solar Future Plan presented 15 strategies to increase solar generation to 10 percent of in-state electricity consumption by 2030. Some of those strategies include increasing the AEPS solar carve out, explore grid modernization, and enable community solar.
At the conclusion of the hearing, Rep. Robert Matzie (D-Beaver), Minority Chair of the Committee, said whether the Committee takes action on the bill or not remains to be seen.
[Note: As of now, the House is scheduled to be in session May 7, 8, 13, 14 and 15 and the Senate May 7 and 8 before the June 1 deadline established by Exelon for final legislative action before it said it would decide to close Three Mile Island.]
In a press release following the hearing, Rep. Matzie said, "While the testimony and dialog from these public hearings has been extremely helpful, our inquiry remains incredibly complex, and it’s complicated by the fact that we’re dealing with issues ordinarily addressed by federal agencies. What’s clear, however, is that we need to move slowly and judiciously to ensure that any decision reflects the best interests of Pennsylvania’s working families."
In a press release following the hearing, Rep. Matzie said, "While the testimony and dialog from these public hearings has been extremely helpful, our inquiry remains incredibly complex, and it’s complicated by the fact that we’re dealing with issues ordinarily addressed by federal agencies. What’s clear, however, is that we need to move slowly and judiciously to ensure that any decision reflects the best interests of Pennsylvania’s working families."
Rep. Brad Roae (R-Crawford), Majority Chair of the Committee, said one of his takeaways from the hearings is Three Mile Island is not economically viable and would close anyway with or without this bill. And, a lot of employers like low prices for electricity.
Both Chairs said, again, this is the most complex issue they have faced.
Click Here to watch a video of the hearing. [When posted.] Click Here for copies of written testimony. [When posted.]
Rep. Brad Roae (R-Crawford) serves as Majority Chair of the Committee and can be contacted by calling 717-787-2353 or sending email to: broae@pahousegop.com. Rep. Robert Matzie (D-Beaver) serves as Minority Chair and can be contacted by calling 717-787-4444 or sending email to: rmatzie@pahouse.net.
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