New York’s environment progressed one step forward
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.
Congrats a good step, though WCBS-Newsradio (Shoreham killer and Indian Point butchers like WCBS-TV) here in NYC in a curt news blurb asserts is that the commissioners simply recognized that we are “currently stuck” with our (NY’s) NPPs to “temporarily” comply with emissions standards and that they’ll be phased out soon as new gas lines are in play and because the voted standard doesn’t exempt closing NPPs just from the “unsettled” waste issue. WCBS-Newsradio also smugly implies that the vote in no way implies any new NPPs will “ever” be built in NY and NJ just like CT due local county and prefecture NPP operation bans like what’s happening in Japan. The thing here is that the press knows it has fear on its side to exploit. So be interesting to see how this hurtle is tackled.
Good work!
James Greenidge
Queens NY
Good news. At this point getting a level playing field or at least sort of with wind/solar is the only strategy that has any hope.
And it will only be effective at the moment at the state level.
James,
That hurdle is education. The concept of intermittents not being capable of replacing base load is fairly easy to explain to lay folks but it takes a few sentences and unfortunately the public’s attention span is limited to the number of characters in twitter.
Getting the media on board, and surprisingly the NY Times was on this issue, to explain that wind/solar require giant jet engines (nat gas plants) ramping up and down as the wind blows may help.
Be prepared for the new buzz word defense for intermittents, “Storage”. I’ve already encountered it and can easily debunk it but it takes more than a twitter reply.
It would be better that the NAFTA countries agree on a CO2 tax. I believe Canada is thinking of doing so.
This is where the nuclear industry should be lobbying hardest.
The “social cost” of CO2 has recently been estimated at $220/ton. Taxed at that price, power from a NG plant emitting 500 gCO2/kWh would cost an extra 11¢/kWH; power from a CCGT emitting 330 g/kWh would go up by 6.6¢/kWh.
How many nuclear plants would start construction ASAP if power from NG went up a minimum of 6.6¢/kWh?
Need to show the land area required by Pumped Storage, i.e., water, then air in underground caverns or even bladders in the bottom of the ocean/Great Lakes. Then Batteries. How many warehouses for the state-of-art batteries for just 10% of the NYC load? Storage for several days, rather than just fluctuation balancing like those facilities that presently exist. To my knowledge all of the Duke Energy PS facilities will only provide backup over night and not much longer. Www industcards com/ps-usa will provide you with examples/
The bill introduces some SERIOUS subsidies for renewables. I’m kind of wondering what the further manipulated market will look like in 5 years? Is it cleverly written to exert significant financial pressure on Indian Point in the near future?
While policies which give nuclear tangible credit for it’s non-emitting nature are clearly the right thing to do, I find the statement that these *existing* nuclear plants need 56 $/MW-hr to operate to be alarming. I’d always been taught that nuclear is cheap to operate, once built, and that the cost was more like ~20 $/MW-hr. How much of that cost is the taxes that Rod mentioned? If true, this is a sign that while fair policies are clearly justified, they may not be enough. The industry needs to do something about ever-escalating costs. Yes, it will involve fighting back, on the regulatory front.
“The commissioners….. recognized that they were not going to win any popularity contests no matter what they decided to do.”
This statement points to one of the reasons why our speaking out and becoming politically involved is so important. It lets these agencies know that there are dedicated, politically active people on the pro-nuclear side as well. Not too long ago, the above statement was NOT true. The knew that they would “win the popularity contest” (and face no measurable backlash) if they went with the anti-nuclear side. This would often cloud/bias their decisions. Now, we are balancing out the anti-nuclear forces. Who knows, if the agencies know they will face political backlash whichever way they rule, they might do something completely different and make their rulings based on what’s the right thing to do. Or at worst, they will tend to take “compromise” positions.
@Cory Stansbury
I cannot see any hope of having enough renewables, whether subsidized or not, built inside of the grid constraints associated with the NY metro area to threaten the profitability of Indian Point.
There isn’t much available land, the resources are poor and what land is available is far more expensive than land in the Mohave desert, Iowa, West Texas or upstate New York.
The inside scoop I received while in New York was that pressure from the governor on Indian Point will subside. He probably won’t start saying he supports its continued operation, but he will stop claiming that it is unsafe and that it needs to be shutdown as soon as possible. It will be interesting to continue tracking the plant’s relicensing proceedings.
My wild and unsubstantiated prediction is that Exelon and other competitors will seek to purchase the plant once it has received its licensing renewal. Entergy has announced that it is returning to being a pure regulated monopoly utility and exiting the merchant plant ownership business.
@Jim Hopf
Plant owners have not made their full financial computations public. However, the $56 per MWh number certainly includes continuing to pay the full accessed tax burden. The school systems and public agencies in the local community that benefit from those tax payments were strong supporters of the proposal.
I’m sure that it also provides some profit margin; that is not only necessary to make it worth the executive management time required to continue operating a nuclear plant, but also to provide resources to cover unexpected expenditures.
OK, so it’s just the typical local taxes that such industrial facilities pay, not some special nuclear tax (ala Sweden). I think I’ve heard such special nuclear (or spent fuel) taxes being proposed in New England as well.
@Jim Hopf
As far as I know, it’s the typical local property and business taxes. They might be a bit higher than average in the US because the facilities are in New York, not because they are nuclear.
$56/MWhr is pretty high. I’ve seen the internal numbers for all of Exelon’s sites, but the specifics are confidential. This article’s numbers jive with everything I’ve seen internally … http://www.chicagobusiness.com/article/20150822/ISSUE01/150829956/exelons-case-for-how-poorly-its-nukes-are-doing
~$35/MWhr total to generate for a well performing dual unit site. ~$15/MWhr for fuel according to a very basic back of the envelope (80-100 million / yr for fuel). Most of the remaining costs are driven by maintenance, long term capital improvements, and operating staff. A dual unit site is likely to have 700-1000 people working with average salaries in the high 5 figures. The security force is going to be a large part of that staff and capital burden, which is rough because they aren’t really adding appreciable value to the core business, just increasing overhead (not to say they aren’t necessary or whathaveyou, I’ll let Rod make those sweeping statements!). Maintenance costs don’t really need explanation. Capital costs I could get into, but basically replacing obsolete parts is a big expensive enterprise and Nuclear is feeling the withdrawals as we work through replacing 70s-80s era equipment with ‘modern’ equivalents because spare parts are increasingly not manufactured, or don’t meet today’s standards for reliability.
All of that cost is prior to congestion pricing which is a big deal in the Midwest, but not as problematic in New York. Congestion fees are adding $9-$10 / MWhr to the basic price to generate.
Darned east coaters, can’t even spell “mojave”. You right coasters are simply anti-literacy.
“It will be interesting to continue tracking the plant’s relicensing proceedings.”
What will be more interesting is seeing how the mainstream media treats this development. Will they ignore it? Treat it as a betrayal of the people’s health and environmental security? (Thats my bet.) One thing you can count on, is that it will not be reported on using scientific facts as the basis of the reporting. My prediction is that if it is addressed at all, it will be on the opinion pages, and some of the usual suspects, NE’s adversaries, will be doing the writing.
Hmph. Real pain for sham friends, and sham champagne for real friends? Someone missed the memo.
@poa
Apparently the line between mojave and mohave is quite a bit further west than your comment implies.
http://arizonaoddities.com/2009/06/mojaves-vs-mohaves-which-is-correct/
While the desert in California is, indeed, the Mojave Desert so I was guilty of misspelling, there are places in Arizona like Mohave County, Mohave Mountains and Mohave Valley. That excuses my online spell checker; it isn’t designed to verify proper use of words that exist in its underlying dictionaries.
@EP
Among real friends, fake champagne can be a celebratory beverage. It’s the fellowship and the shared sentiments of the toasts that count, not the buzz from the beverage.
Besides, as the grape growers in the Champagne region aggressively remind competitors, there is only one place in the world where true Champagne can be produced. Almost all of what most people call “champagne” is fake.
Someone is ignoring the Brotherhood of the Shared Buzz.
Maybe so, but the science is getting out there, slowly, and the anti-science zealots have been either distracted or OD’ed on something.
Explaining the benefits of advanced nuclear technology minus the geek speak has done a tremendous amount of good.
To Rich
Here are some good resources that I’ve found for that:
http://physics.ucsd.edu/do-the-math/2011/11/pump-up-the-storage/
http://physics.ucsd.edu/do-the-math/2011/08/nation-sized-battery/
The site is pretty good – except for its cover of nuclear issues.
Have read several of his “Do-the-Math” blogs and found most of them revealing the truth about the absurdity of Renewables.
Not mentioned about PS is that many (all?) of the PS reservoirs are either restricted from recreational use or in areas making access prohibited. Lived near a small one that allowed fishing on the reservoir and downstream of the dam. Took my boys there for bass fishing one day and towards evening heard the warning siren. Had parked a little closer to the outfall stream (river) than I should have. By the time I got the kids in the Jeep, remembered to engage the front wheels and got out of the grassy area that got flooded from out fall just made it out in the nick of time. Several years later the power company fenced off the lower area completely.
The idea of many dams will have the same problem as the Columbia River EPA restrictions. Flow is limited to historical pre dam flows and is restricted or even dumped to meet these flow goals. Causes Columbia Nuclear Station to cut back and limit when they doe refueling outages – thus the reason for their lower than average Power Factor for a NPP – wasting 10 -20% of their fuel costs. Can’t do a refueling outage during flow restriction months. Thus they need to do it when the Hydro plant can dump water through the turbines.
@Rich,
“…intermittents not being capable of replacing base load…”
Considering the developments in Germany, >1GW P2G in 2022 with fast further expansion thereafter, that is wrong.
Especially since US also has enough cavities in the earth to store the gas for winter or years.
Pumped-storage facilities cannot compete in Germany though they may still be competitive in the US market, for the time being.