N.Y. nuclear plants’ subsidy challenged by natgas users

Companies operating natural gas-fired power plants in New York are challenging a new state subsidy put in place to keep the state’s nuclear facilities online, Kallanish Energy learns.

Earlier this week, a coalition of power plant owners sued the New York State Public Service Commission in federal court over a multi-billion-dollar, 12-year program approved in August as part of Governor Andrew Cuomo’s Clean Energy Standard.

The program establishes increasing goals for carbon-free electricity to help combat climate change. As part of the directive, four upstate (outside New York City) nuclear plants in April can begin charging customers a premium — a so-called Zero Emission Credit (ZEC) — unavailable to owners of power plants fueled by natural gas, oil, coal, wind or sunshine.

In the first two years of the program, that subsidy could be worth $965 million, according to the public service commission, while the natural gas lawsuit estimates the cost 25% higher, at more than $1.2 billion.

Owners of nuclear plants have been under increasing financial pressure as electricity prices have dropped with the price of natural gas, reflecting a supply glut.

The commission crafted the nuclear subsidy to stave off potential nuclear plant closures.

Through the 12 years of the ZEC program, the subsidy could be worth $7.6 billion, the lawsuit claims.

Supporters of the subsidy said it protects upstate jobs and tax revenues, but commission Chairwoman Audrey Zibelman called the lawsuit frivolous and “right out of the fossil fuel industry’s playbook to deny and thwart actions to combat climate change. The Supreme Court has repeatedly upheld the rights of states to protect their environment for the welfare to citizens.”

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