On March 7, Andrew Place, a Commissioner on the Public Utility Commission, circulated a paper address policy alternatives for Pennsylvania's nuclear power plants.
The paper-- Analysis Of Pennsylvania Nuclear Plants and Available Policy Alternatives-- represents his view of the issue and not the Commission's.
“Experts agree that single unit reactors such as TMI [Three Mile Island] are uneconomic, and industry and plant specific data validate this conclusion. However, the conclusions around the economics of Beaver Valley are less straightforward.
“Some studies indicate that Beaver Valley is economic, and that the closure of TMI may not necessarily be followed by additional nuclear power plant closures.
“Nevertheless, through the extent of closures is debated, there is a substantive risk of the loss of some carbon free generation in Pennsylvania.
“This paper outlines the reasons for the energy transformation in Pennsylvania and offers market analysis and impacts of potential solutions.”
Some of the conclusions outlined in the report include--
-- “Pennsylvania nuclear generation plants provide 39% of PA’s electricity generation. TMI and Beaver Valley account for 26% of its nuclear generation.
-- “Single-unit reactors, such as TMI, are at an economic disadvantage and will continue to be in the future.
-- “If TMI were to retire prematurely no new network transmission upgrades would be required. However, Beaver Valley, should it retire in 2021, will require an acceleration in an estimated $182 million in incremental transmission investments.
-- “PJM’s recent analysis indicated that even with the announced retirements the PJM system is reliable today and will remain reliable into the future.
-- “If energy efficiency goals were increased by 1% of statewide usage per year, the lost emissions reductions for each plant could be replaced in 5 and 11 years, respectively.
-- “At the current annual rate of increase in Alternative Energy Portfolio Standard (AEPS) Act Tier I resources, it would take Pennsylvania 12.6 years to replace the lost carbon free electricity from TMI, and an additional 28.4 years to replace Beaver Valley.”
The paper analyzes 10 policy options--
-- Option 1- No State Intervention: “Absent further cost support for further out-of-market payments for Beaver Valley, it appears that the loss of zero-emissions generation may be limited to TMI under this scenario.” “In conclusion, if the policy choice is to prevent backsliding on carbon emissions this is not a very viable option.”
-- Option 2- Replace Nuclear Retirements With Renewables & Energy Efficiency: “...Existing Tier 1 (AEPS) resources currently offer a lower cost solution to replacing emissions-free generation from TMI.” “Energy efficiency also presents a “net benefits” solution to replacing emissions free generation, but also will take a number of years to replace both nuclear units.”
-- Option 3a- Expand AEPS Act To Include A Nuclear Generation Tier: If the goal is to retain all Pennsylvania nuclear power plants, “total market costs would range from $700 million to over $1.1 billion per year.”
-- Option 3b - New Tier (AEPS) Wherein Other Resources Qualify: The approach would create a new zero-emissions category “Tier Y” open to all zero-emissions resource and would set the value of carbon at the market cost of marginal emissions-free resource. “Market prices for Tier Y resources would be very volatile, as the supply/demand balance could shift substantially if even one nuclear power plant retires. It could take a number of years for market prices to stabilize-- absent some type of additional market intervention (i.e. administrative price caps or Tier Y quantity adjustment.”
-- Option 4- Zero Emission Credit Program: A targeted nuclear support program could be targeted to those plants that can demonstrate a long-term financial need to compensate the nuclear unit for its environmental and health benefits. The paper said estimated payments to TMI under this option would be between $60-$90 million per year.
-- Option 5- Establish a Carbon Market: The paper notes there are no recognition of the cost of carbon emissions in the PJM markets. Looking at an Illinois Social Cost Of Carbon model estimated the cost of carbon would be $16.50 per MWh. Also mentioned were the existing carbon markets like the Regional Greenhouse Gas Initiative.
-- Option 5a- Establish a Carbon Market for Pennsylvania: The paper notes Pennsylvania could establish its on carbon market like California has done. “Such a market would have most of the same advantages and disadvantages of RGGI. It would provide more state control of all design elements of the carbon market.” “Using California’s carbon allowance market price, currently valued at $17.15 per metric ton of CO2. This translates into an electricity market price of $6.3 to $7.4 per MWh based on the 2017 average generator emissions rate in Pennsylvania and PJM, respectively.”
-- Option 5b- Link with the Regional Greenhouse Gas Initiative: “Linking with RGGI would provide several benefits including providing an additional boost to Pennsylvania’s four dual-unit nuclear power plants-- likely sufficient enough to keep these units profitable. However, it would be insufficient to keep TMI from being retired at current carbon market prices.”
-- Option 5c- Establish a PJM-wide Carbon Market: “An extensive state compact that established a carbon price for all PJM states would provide a more cost-efficient solution to carbon emissions abatement.” “Such a mechanism could address a meaningful level of competitive inequities across electricity markets, and commercial and industrial businesses relative to other options, such as a state-level carbon, price, or RGGI membership.”
-- Option 5d- Participate in a National Carbon Market: “Of course, a national carbon market would be the most efficient solution for achieving carbon emission goals. It would also resolve most competitive industry industry inequities, other than imported goods, which would otherwise need to be addressed by tariffs or similar adjustment mechanisms. However, while most competitive market inequities are resolved by a national carbon market such legislation is unlikely to render TMI economic.”
NewsClips:
Letter: Reject Bailouts Of The Nuclear Industry - Rep. Ortitay
Op-Ed: Why Should Electric Customers Subsidize Nuclear Generation? - President Of PPL
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