Nuclear subsidies: bailout or rescue? 

Not too long ago, Upstate New York's three nuclear power plants were on the verge of shutting down. They simply could no longer sell their electricity for enough to cover the cost of generating it.

This April, however, electricity consumers in New York will begin paying to keep those plants online while New York makes an aggressive push to boost renewable energy production. The plan, which is part of the state's new Clean Energy Standard, spans 12 years and will cost state electricity consumers at least $7 billion.

For the average household with Rochester Gas and Electric service, the subsidy charge will be roughly $30 a year for the first five years of the plan, according to estimates from the Public Utility Law Project of New York, a nonprofit consumer advocacy organization.

Whether this plan is a rescue of necessary power sources or a galling corporate bailout is largely a matter of perspective. But it is safe to say that the subsidy program is controversial.

The state faces a couple of lawsuits over the plan. Some fossil fuel plant owners are suing the state in federal court, arguing that subsidy plans interfere with New York's competitive electricity marketplace. And last week, a coalition of statewide groups and Hudson Valley region organizations, residents, and government officials filed a lawsuit in Albany County Supreme Court. Their complaint touches on consumer rights, energy market, environmental, and procedural issues.

Also, several state environmental and public interest groups have launched the Stop the Cuomo Tax campaign. They want to build public pressure for Governor Andrew Cuomo, who pushed for the Clean Energy Standard, to reverse course on the nuclear subsidies.

"We can't have the sort of socialization of risk, where the public takes on all the economic risk for private corporations, but then they get all of the profit when times are good," says Jessica Azulay, program director at Alliance for a Green Economy, a renewables advocacy group that wants the state to phase out nuclear power.

The plan's supporters, however, stress its economic and employment benefits, as well as its role in cleaning up New York's energy grid and maintaining reliable electrical service.

The International Brotherhood of Electrical Workers Local 97 reiterated its support for the plan in comments sent in November to state utility regulators. The plan recognizes "the cost-effective, zero-carbon attributes of New York's nuclear power generators," the submission says.

A group of 172 elected officials in Wayne, Oswego, and Jefferson counties also wrote regulators to show their support. The three nuclear facilities in or near their communities — Ginna, Nine Mile Point, and FitzPatrick, respectively — provide many jobs and generate substantial tax revenue, the officials say.

Exelon, the company that owns Ginna in Wayne County and Nine Mile Point in the Oswego area, employs 1,400 people between the two plants. The plants have a $266 million payroll and pay $47 million in local taxes.

But the arguments around New York's nuclear plants do have one thing in common: all sides tend to oversimplify some of the realities concerning nuclear power.

The Clean Energy Standard and its nuclear provision are, ostensibly, about climate change. The state has several policies meant to slash carbon emissions from New York's power plants.

The standard requires electric utilities to get half of their power from renewables by 2030. But New York's nuclear plants provide large amounts of zero-emissions power — they generate roughly 30 percent of the state's electricity — and Cuomo says that they can help keep statewide carbon emissions down during the transition. (It's not clear what happens to the plants and their workers once the subsidies expire and the clean energy transition is complete.)

But the Upstate plants have operated in the red for the last few years. New York's competitive energy marketplace favors plants that can deliver lots of power cheaply, which means that natural gas plants can undercut nuclear facilities.

Cuomo and others say that if the state stands by and lets carbon-free nuclear plants close before additional renewables are brought online, that natural gas plants would fill the energy gap, which would lead to a spike in carbon emissions. Cuomo proposed the nuclear subsidy, which takes the form of energy credits that utilities must buy, for exactly that reason. His idea is to compensate the plants for the added value of their carbon-free power, thereby making them viable in the short term.

Exelon was happy enough with the plan that it's buying the FitzPatrick nuclear plant in Oswego from Entergy, a competitor that planned to shut the facility down. The company says that it'll put $200 million into Ginna and Nine Mile Point as a result of the Clean Energy Standard.

"Approval of the Clean Energy Standard makes New York a true leader in terms of support for zero-emissions energy, including both renewables and nuclear," Exelon CEO Chris Crane said in an August press release.

In practical terms, all of New York's nuclear subsidies will go to Exelon, since the company already owns two of three Upstate plants and it's in the process of buying the third. (The Entergy-owned Indian Point plant isn't eligible for the supports.)

AGREE's Azulay says that the subsidy plan is an unprecedented transfer of public wealth to a private corporation. She also pushes back on the idea that nuclear energy is safe and clean. The plants do have a smaller carbon footprint than fossil fuel facilities, but they have other environmental impacts. They use massive amounts of water for cooling and also have the potential to leak radiation from reactors or spent fuel, which is stored on site, she says.

The subsidies would be better spent on more investment in renewables and efficiency programs that lead to long-term reductions in energy use, Azulay says. Even when nuclear plants close, they still have to keep substantial parts of their staff for the decommissioning process, she says. And investing in renewables and efficiency would create new job opportunities, Azulay says.

Some communities and utilities have already had to figure out what they'd do if a nearby nuclear plant closes. When Exelon said a few years ago that it might close Ginna, Rochester Gas and Electric advanced a transmission project to replace the plant's electricity; the utility expects to complete the project in the spring.

Azulay cites plans to close down Indian Point as another example where government leaders and power providers found ways to replace a nuclear plant's power.

Cuomo and other state leaders have, for many years, tried to shut the plant down, since they see it as a safety threat to New York City. Entergy agreed to close the plant by 2021, and officials plan to replace its electricity supply with ongoing transmission and efficiency projects, as well as with hydropower.

"That just shows that it can be done," Azulay says.

Entergy pledged to find workers jobs at other plants and the state has promised to help workers find new jobs in the state's power industry, says a press release from Cuomo's office. The state also promised to assist with retraining employees to work in the renewables field.

Plant owners tend to reduce a plant's workforce gradually during the closure process. They also retain some employees for the decommissioning process, though those workers represent a fraction of an operating plant's staff.