How Pennsylvania’s Nuclear Subsidy Would Affect Customers and Utilities

Pennsylvania, as the second largest nuclear-power-producing state, is looking for legislative help to keep its five nuclear power plants operational for the upcoming years.  Neighboring states such as New Jersey and New York, along with Illinois and Connecticut, have already implemented similar bills for their respective nuclear fleet.  Ohio is currently investigating a similar bill as well.  As electricity prices have remained low due to cheap natural gas and the increased use of renewable sources, the costs of running nuclear power plants have become uneconomical.  Two of the five plants are scheduled to shut down earlier than anticipated with Three Mile Island near Harrisburg closing fall of 2019 and Beaver Valley near Pittsburgh intending to close ahead of its original 2021 date. 

Currently, about 42% of all power used by consumers within the state come from a nuclear source.  It also accounts for 93% of Pennsylvania’s carbon free electricity.  State Representative Tom Mehaffie introduced a bill this week that would help compensate the state’s nuclear facilities in an effort to keep them running.  This new bill will expand the state’s Alternative Energy Porfolio Standard, creating a third tier to the state’s renewable energy standards.  Mehaffie states the bill will costs rate and tax payers around $500 million in total, but it would be less than the $4.6 billion it would cost the state in higher electric bills, lost jobs, tax revenue and other factors should the facilities close.  A standard residential customer would likely see an increase of about $1.80 per month with the bill approved or $2.50 a month increase with nuclear plant shutdowns. 

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Details have not been finalized but an early version of the bill has nuclear listed under the Tier III alternative energy source. 

Zero-emission energy derived from:

• Solar photovoltaic and solar thermal energy
  • Wind power
  • Low impact hydropower
  • Geothermal energy
  • Nuclear fission

By 2021, utilities in Pennsylvania would have to purchase Tier III alternative energy credits that equal  50% of the total electricity sold in the service territory.  The first year of compliance would begin on June 1^st, 2019 with prices determined by the average of Tier I futures prices for the current year and the two subsequent years after.  The total amount of credits will ultimately be established by the Public Utilities Commission. 

The bill will have to be signed in rather short order as Exelon, the owner of Three Mile Island, is already preparing to begin shutdown procedures.  It is yet to be determined if these increased costs will be pass through on the supply side or a part of the overall delivery fee.  The deadline for a decision is currently set for June 1, 2019. 

Staying on top of regulatory changes is crucial for your bottom line.  Regulatory charges on your bills add up and should be planned for when implementing energy budgets.  With a tool like watchwire, you can track all billing line items, like these regulatory charges, so you can audit, report, and run trend analyses for your portfolio.  Reach out to EnergyWatch today to learn more.

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