Clean Nuclear Energy Handed Decisive Win In U.S. District Court
In July 2017, District Court Judge Manish Shah, U.S. District Court of Northern Illinois, handed a decisive victory to nuclear energy supporters and plant owners in a case that challenged Illinois’s right to choose the mix of fuels used to produce power inside its borders.
The plaintiffs opposed the “Future Energy Jobs Act” recently passed by the Illinois legislature and signed into law by the governor. That statute awards Zero Emission Credits (ZEC) to three specific nuclear generating units (two at the Quad Cities station and one at Clinton).
The ZECs could be worth as much as $235 M each year. That additional revenue is designed to be sufficient to allow the owner – currently Exelon – to continue effectively operating the units despite unprofitably low prices at their respective power delivery points. A provision in the law requires the computation of a “Price Adjustment” based on realized wholesale prices over the course of each year.
The price adjustment can reduce or eliminate the value of the ZEC if electricity market prices rise to a level at which the plants are profitable without the subsidy payment.
This provision was inserted to keep the program from charging ratepayers to provide unnecessary levels of support that would only serve to provide a more lucrative return to stockholders.
The plaintiffs in the case were the Electric Power Supply Association–a national industry association for competitive electric power producers–and Calpine Corporation, Dynegy Inc., Eastern Generation, LLC, and NRG Energy, Inc.–all of which are independent power producers.
Their filing sought to invalidate the ZEC program, claiming that it is preempted by the Federal Power Act and that it violates the dormant commerce clause. They also claimed that the program denied them the equal protection of federal laws governing the wholesale electricity markets, in violation of the Fourteenth Amendment.
Part of the case made by the challengers to support their claim that Illinois was improperly interfering in auctions governed by federal rules was the fact that the “Price Adjustment” clause made the value of the ZEC dependent on the market price. Exelon lawyers argued that a fixed ZEC that was independent of the market price wouldn’t help the plaintiffs. It would only harm customers who would be paying higher market prices and still pay extra for clean energy.
Judge Shah ruled that the plaintiffs had no standing to challenge the ZEC simply because its value was linked to the market prices determined in auctions government by rules established by the Federal Energy Regulatory Commission (FERC). In addition, there is no direct link to daily auction prices; the adjustment looks back and is computed by averaging prices over a lengthy period of time.
He also ruled that claims relating to the commerce clause prohibiting states from discriminating against out of state suppliers wasn’t valid since the ZECs would be available to suppliers outside of the state if there were any entities that qualified. He ruled that the state’s law does not attempt to preempt federal law since states have a long recognized right to control retail electricity rates and the fuel mixes used to generate electricity in their state for environmental or other reasons.
He recognized that ZECs are similar in structure and goals as renewable energy credits (RECs) which have withstood previous legal challenges, have been accepted by FERC and are in widespread use in a number of states.
Using Judge Shah’s words (page 33):
I conclude, however, that the ZEC program falls within Illinois’s reserved authority over generation facilities; Illinois has sufficiently separated ZECs from wholesale transactions such that the Federal Power Act does not preempt the state program under principles of field preemption.
He dismissed the case with the following conclusion.
Defendants’ and Exelon’s motions to dismiss are granted. The plaintiffs’ claims are dismissed in part for lack of subject-matter jurisdiction and in part for failure to state a claim. The plaintiffs’ motions for a preliminary injunction are denied.
A similar challenge to a state ZEC program is pending in New York.
Wise ruling.
The comment god seems to find the above too short. I always thought that a warranted “well done” was appropriate.
Very good news.
Few Americans know much about “the dormant commerce clause”, but it is actually the reason that the Constitutional Convention met in the first place. States were giving favorable treatment to their own farmers and industries at the expense of other states. The economic chaos needed to be addressed. By reserving to the Federal government the authority to regulate interstate commerce, the states are (by implication, that is why it is the “dormant” commerce clause) limited in regulating interstate commerce.
The New York ruling has also been issued, and it’s another win for nuclear and the ZEC programs. I’m curious to see if this makes other states that have been sitting on their behinds (Pennsylvania, Connecticut, etc.) actually take a step back and apply the ZEC style program to save their nuclear units, or will they succumb to pressure from the natural gas producers and let them die for the sake of “unreliables.”
I wrote about Judge Caproni’s decision for Forbes this morning. That article will eventually appear here as well.
OT, but Ars Technica’s Sean Gallagher has a nice write up on NS Savanna.
Notable here is that technically New York State is “also” committed to a energy “mix” even as it’s hell-bent on phasing nukes out. A very hollow toothless “victory”
My main mention here comes from the police blotters of a violent altercation of a passenger on the Long Island Railroad with an embittered Entergy worker complaining about the imminent shutting of Indian Plant who didn’t like the passenger shouting “You all got what you deserved because you didn’t FIGHT!”
Have we heard this tale before?
BTW, to show popular web services attitudes towards nuclear, Goggle up nuclear on Google and check out the “about this result”‘ summary list which starts off with “What is the point of nuclear power plants?” No other energy source is cited off like that. And schools reference this stuff.
James Greenidge
Queens NY
Heres something I have been saying here for a few years now. Because of it, I am called a troll, left wing, anti-nuclear, blablablahblah…
Everytime I say public perception is your biggest hurdle, Rod invariably jumps in and tells me I have it wrong, that I don’t speak for John Q. Meanwhile, the obnoxious jacka*ses coming from the far right consistently accuse me if being “anti-nuclear” because I point out that your messaging sucks, that your adversarial “us against them” BS is self destructive, and that having blustering bigots post racist screeds, and push BS alt right conspiracy theories about “the left”, hardly contributes to the credibility of this site.
Read it and weep…
An excerpt…
“Nuclear power’s public image problem is biggest hurdle to building enough nuclear power plants to stymie global warming, according to a new study published Thursday by the University of Pennsylvania.”
http://dailycaller.com/2017/07/27/study-biggest-factor-holding-back-nuclear-power-is-public-perception/
I don’t know which is more pathetic … the number of insults (e.g., “obnoxious jacka*ses,” “blustering bigots”) that this person obsessively-compulsively tosses out with every other comment or how he whines, moans, and bitches, without pause, that he is somehow always the victim.
Instead of wasting so much time on a site that he insists has no credibility, why doesn’t this person seek some professional help for his personal problems? This is a case that is begging for therapy.
Wrong. Every time you say public perception is our biggest hurdle you say WE are responsible for it, putting the lies of the oil-financed propagandists including Hermann Muller, FoE, Sierra Club, NRDC, Arne Gundersen, Helen Caldicott and all the rest on OUR shoulders.
We reject your accusations as we reject theirs. They are lies. We bear no responsibility for them, or you.
@Jon Hall
You think most of us didn’t already recognize that the biggest hurdle nuclear energy development must overcome is public perception?
You and I simply disagree on ways to change the public’s perception.
Rod you can’t have it both ways. On many occassions you have argued against my point of views regarding an over-riding negative opinion of NE held by the public. So too have many of the commenters here, abrasively, and obnoxiously. To deny it is disingenuous. And you may disagree with how to change public perception, but the results of this poll pretty well demonstrate that what is being done doesn’t work. Yet I have NEVER seen a strategy laid out here that recommends change and honestly addresses what a constructive PR effort might look like. This constant litany of “us against them”, and declarations of victimhood at the hands of the left, the regulators, the environmentalists, the politicians, and the renewable advocates, ain’t working. Whining and sniveling, shifting blame, pointing fingers, might feel good, but it sure isn’t helping you advance your cause.
Until you guys wise up, and join efforts and messaging with the renewable crowd, the public is just going to continue to view NE as an environmental threat, rather than an environmental solution. And you need to muzzle the “EPs” and the “Brians” amongst you. They’re your worst enemy as far as PR goes. The public sees renewables as an answer, not as a question. When you constantly berate and belittle renewables, you just paint yourself as being anti-solution to a global emergency that the public, and the scientific community, accept as real.
The public knows almost nothing about NE except what it’s been fed by various interests. Do you ask WHO those interests are and WHAT they want? You do not.
If you weren’t simply trolling and trying to demoralize pro-NE forces, you would at least listen on that issue. You do not.
Looks like it worked in Illinois and New York to save a bunch of plants. Counter-lawfare in California may still work.
The “renewable crowd” is financed by fossil-fuel interests. It is deliberately aimed at destroying nuclear energy, because nuclear energy is THE primary threat to fossil fuels. Hydro can’t do it. Wind can’t do it. Neither PV nor CSP can do it. Nuclear can. (continued)
Why do you think oil baron Jay Precourt financed Mark Z. Jacobson? Why do you think an ARCO boss bootstrapped Friends of the Earth, when the motto of the Sierra Club was still “Atoms Not Dams”?
Stop demanding that we submit nuclear energy to its sworn enemies.
So long as a majority of those who think it is “liberal” or “environmentalist” to oppose nuclear, so long will the nations where they vote fail to solve both global warming and even mere air quality issues.
Russia, India, and China do not have these problems. India and China especially have enough coal and probably “natural” gas to know that the stuff is filthy.
This is an example of where one govt intervention requires a second govt intervention. A better result is obtained if the first intervention is eliminated.
The Renewable Portfolio Standards is shutting down nuclear plants. RPS requires utilities to purchase a percentage of their electricity from renewable providers. Even though unreliable energy is often worse than no energy, utilities must purchase it from renewable suppliers. Then because natural gas, a jet engine bolted to the floor, is the only energy source capable of reacting quick enough to the vagaries of the wind and sun, mandated use of renewable leads to technologically driven use of natural gas.
Nuclear has a high capital cost and a low fuel cost, so it needs to be used 24/7 365 days per year to get efficient use of the asset. The govt mandated renewable/natural gas combination eliminates the 24/7 use of nuclear thereby destroying its cost competitiveness.
The ZEC subsidies for nuclear keep nuclear in the game. A much better soln would be to end the RPS and let the power sources compete.
Or include nuclear and other zero-emission power sources as “renewable” under all RPSs, with all the transmission priorities, credits and such as apply to the latter.
That’ll fix ’em. The screaming would be wonderful to behold.
@E-P
That is the perfectly adequate solution chosen by the Chinese. There is some movement in this direction in the U.S. Unfortunately one of the most visible people quoted using renewable to refer to nuclear has probably used up any political capital he once had on extraneous issues.