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What’s Going On in New York?

The Good, the Bad, and the Nonsensical Approach to Nuclear

Michel Lee

In January 2017, two actions took place in New York that could significantly affect the energy system and policy of the state. The first was the signing on January 9th of an agreement to close the Indian Point nuclear plant. The second was the filing on January 13th of a lawsuit seeking to overturn a massive nuclear power subsidy program established by an August 1, 2016 order of the New York Public Service Commission.

If the closure of Indian Point proceeds according to the articulated plan, and the nuclear subsidy scheme is rolled back, New York has a once-in-a-generation opportunity to rapidly advance towards a truly clean energy economy. So far, the closure of Indian Point, which has already operated past its original license term, appears to be progressing according to schedule, with full shutdown expected by April 2021. However, the ability of solar, wind and other renewables to rapidly grow in New York – and even in other states – depends largely on the outcome of the lawsuit. This is because “Tier 3” of the Commission’s order distorts the energy market to the extreme disadvantage of renewables.

Begun as a “Proceeding on Motion of the Commission to Implement a Large-Scale Renewable Program and a Clean Energy Standard,” the scheme morphed suddenly and dramatically into a $7.6 billion corporate welfare package, with virtually all the money going to a multibillion conglomerate, which runs the state’s four aging upstate nuclear reactors. Tier 3 forces NY to prop up uncompetitive industrial facilities that generate the most toxic waste product on the planet for twelve years, no matter what dangers emerge or how great the opportunity to move towards clean generation is. It forces every ratepayer in NY to subsidize these old reactors and restricts consumer choice. Astonishingly, it actually prevents individuals, businesses, and municipalities from buying 100% renewable power – even if they are willing to pay more for clean energy.

Tier 3 also delivers more than twice as much in funding for these four legacy reactors as the order provides to all new renewable forms of power combined.

Thus, companies struggling to gain a foothold in the NY energy market by providing renewable power must duke it out against all the others seeking clean energy credits as well as against low-cost gas. Meanwhile, nuclear power is completely elevated out of the messy market competition process.

Bizarrely, NY ignored all the research mapping out how the state could transition to a clean energy-based system. NY did not even bother conducting a study of how rapidly renewables could scale-up with greater funding and policy support. The order provides no incentives whatsoever to promote efficiency, demand-side initiatives, or decentralized resource development – in other words, the very tools essential for giving the electric system the flexibility and agility needed to go green.

Nuclear power is supremely ill-suited to combat climate change. But we will leave that argument for another day. Here, let’s just focus on the absurdity of the argument that the best way to combat climate change is to divert $7.6 billion of public money away from clean energy. Notably, Exelon is now busily promoting NY’s Tier 3 as the “model” for other states.

And this is where the gravest danger lies. The Commission did not only deliver a windfall profit to a $33 billion megacorporation that now has even more power to dominate multi-state energy markets. The Commission adopted the PR conceit that we must remain in the 20th-century paradigm whereby powerful companies with big fuel-based operations run the show.

As things now stand, Tier 3 places a substantial financial burden on school districts, municipalities, small businesses, hospitals, non-profits, and cash-strapped families, without providing the benefit of investment in the system and technologies needed for a sustainable future. Tier 3 shackles NY to nuclear power for over a decade more, with no escape clause.

At the outset we mentioned the closing of Indian Point, and there’s a bit more good news. There is one route out, and it is being led by a group of environmental nonprofits and a small farm. That’s the lawsuit. It’s brought in the form of a so-called “Article 78” action, which challenges the Commission’s disregard of state-mandated procedure and its arbitrary and capricious action. The case is a David vs. Goliath battle – but recall that David won that one.

Michel Lee, an attorney, is a senior policy analyst with Promoting Health and Sustainable Energy (PHASE).

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