The US environment and electrical supply system measurably improved yesterday. That is something worth celebrating.
The New York State Department of Public Service (NYSDPS) took a small, but significant step forward yesterday. By a vote of three yeses and one concur, the commissioners decided to implement a clean energy standard that includes zero emission credits for nuclear plants that are struggling in a market where the wholesale prices are too low to cover their fixed costs.
The value of the ZECs will be administratively determined based on a calculation involving the published “social cost of carbon.” The result will be a requirement for all load serving entities in the state to purchase a number of ZECs that will be determined by their proportional share of the New York retail electricity market.
Two load serving entities, the New York Power Authority (NYPA) and the Long Island Power Authority (LIPA) are not within the jurisdiction of the New York State Department of Public Service, but they have agreed to voluntarily participate in the program.
Initially, the ZECs will be priced at $17.48 per MWh. When combined with the wholesale price of electricity — currently about $39/MWh in the New York market — the ZECs will provide nuclear plant owners with a total revenue of ~ $56 per MWh. That is the minimum level that owners say they need in order to keep the plants running under the current regulatory and taxing regime.
There are provisions in the order that seek to ensure that all of the current plants in New York continue to operate and provide roughly the same amount of electricity that they have been supplying for the past several years.
The ZECs will phase out if the wholesale price of electricity rises above $39/MWh. The ZEC price is scheduled to slowly increase if wholesale electricity prices do not rise. The program is planned to last a total of 12 years, in two six-year tranches. Each year, there will be a staff review to check for unintended consequences and to recommend minor adjustments. Every three years, there will be a more significant review of the program.
I had the opportunity to attend the NYSDPS public meeting at which this precedent-setting order was presented, discussed and approved. There were at least 100 people there who traveled varying distances to physically express their support for the portion of the order that will help struggling nuclear plants survive.
They carried signs, staged a rally at the entrance to the NYDPS office spaces, and sang the “Battle Hymn of the Atom.” Following the meeting we gathered in the plaza area of the state office complex for photos and a toast with non-alcoholic champagne.
Aside: That part brought back some great memories of formal dinners in King Hall, the dinning facility at the Naval Academy, where we used the same kind of bubbly grape juice for toasting. End Aside
Though many of attending supporters had a direct, personal interest in the continued operation of the plants due to either employment at the facilities, employment of family members at the facilities, or residence in the immediate vicinity of the facilities, there was also a significant contingent of pro-nuclear activists from as far away as California who showed up to celebrate New York’s history-making action.
It was the first time that a US state forthrightly recognized the economic and environmental value of operational nuclear power plants and chose to provide bankable support designed to reward the plants for that value at a time of financial stress.
The NYSDPS and its staff had done their homework and determined that the nuclear power facilities that provide 26% of their electricity and about half of their emission free electricity were simply too big and too important to the power system to be allowed to fail due to temporary market conditions. That phrase might be a condemnation in some cases, but it is a harsh reality in this case.
If New York had followed California’s lead and decided to toss an anchor to their nuclear plants instead of providing a lifeline, the power would have kept coming, but it would have been dirtier and more expensive. Closing the plants would have made it impossible to achieve the often stated goal of 50% clean energy by 2030 or by any other date.
The commissioners did not have an easy decision. They recognized that they were not going to win any popularity contests no matter what they decided to do. They and their staff processed thousands of written to public comments, some of which resulted in modifications to their original course of action.
They stated that they knew there were some people who would never agree to accept any action that acknowledged the reality that operating nuclear power plants produce electricity with virtually no negative environmental effects and no CO2 emissions, but they determined that the overwhelming evidence supporting those facts could not be ignored.
The NYSDPS and their hard-working staff deserve a great deal of credit. So do the people at Environmental Progress, Upstate Energy, the IBEW locals, and all of the other people who achieved a rather brilliant compromise that will keep valuable facilities running and providing benefits to all of us in the form of power that helps to keep hydrocarbon fuel prices in check and does not pollute the atmosphere.
This summary would not be complete, however, without expressing some reservations. It is the nature of compromise that no one gets everything they would like. In this case, the NYSDPS commissioners made statements during the meeting that reminded me how much people really want to believe that unreliable, weather-dependent energy sources can eventually provide the power needed to operate a modern society.
It also reminded me how much people want to believe that there is magic in the world that will enable a non-starter like off-shore wind to be a significant contributor to the New York State power generation mix. You do not have to be a technical expert to pull out a map that illustrates the constrained nature of New York’s “off-shore” physical resource, especially if you have any understanding of the vital importance of the ocean shipping, fishing, recreational boating and tourism uses that those off-shore resources already support.
Anyone who lives in the area and pays attention to the weather should know that the wind usually takes a vacation during the times when power demand is highest – those hot, muggy, days when people outside are dying for a slight breeze to provide a little relief. I’m not a New Yorker, but I once spent a week on a sailboat in New York harbor and on Long Island Sound during Op-Sail 2000. I loved the liberty and the air-conditioned bars and restaurants, but the sailing and sleeping were miserable.
The people who’ve convinced even the talented and experienced people who serve as NYSDPS commissioners that there is a future for off-shore wind in New York need to be both complimented and condemned for their skills in the snake oil sales racket.