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Nuclear options: As advocates clash, lawmakers to consider next steps

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Pennsylvania leaders may decide soon whether to require electric ratepayers to pay more as a way to subsidize the nuclear power industry, a possibility that has fueled intense debate over the last year.

Advocates are arguing strenuously from both sides of the issue, creating groups with names such as the anti-subsidy Citizens Against Nuclear Bailouts and the pro-subsidy Clean Jobs for PA.

Amid all this, the bi-partisan Bicameral Nuclear Energy Caucus of Pennsylvania has been meeting to outline the issues and offer options for legislators to consider. The caucus’ report is due by the end of this month, perhaps as early as Nov. 29.

Editor's note

This story went to print before the caucus released its recommendations for the state's nuclear energy industry on Nov. 29. Read that story here.

“The caucus’ goal was to collect the information and compile it in a narrative form for their colleagues,” said Jake Smeltz, chief of staff of caucus member state Sen. Ryan Aument, a Republican from Lancaster County. The report will outline various options and their potential ramifications, he said, but it will not recommend what option the legislators should pick.

Smeltz, who has taken a lead in coordinating the caucus’ efforts, would not say what those options will be, except that one obvious choice would be to “do nothing.”

For opponents of subsidies, the options could end there. Some of them say they do not oppose nuclear energy – noting that some plants in Pennsylvania and nationwide remain viable and profitable – but that subsidies would unfairly support the nuclear power industry because some of its plants are failing.

“We are not anti-nuclear,” said Steve Kratz of the Citizens Against Nuclear Bailouts. “We are anti-bailout, and we are pro-free market.”

Opponents fear costs

Kratz and others argue that Pennsylvania residents and businesses have benefited from deregulation in the 1990s, which opened markets, created more competition and lowered costs for consumers. Energy producers that cannot compete will go out of business, and ratepayers should not be expected to prop up failing business models, they say.

The coalition against subsidies includes AARP and other consumer advocates, as some estimates suggest that a typical state resident will pay up to $100 more per year for electricity. Some of the strongest opponents have been manufacturers, including the Pennsylvania Manufacturers’ Association, a Harrisburg-based statewide trade group.

Kratz said another group, Industrial Energy Consumers of Pennsylvania that represents factories and other heavy users of power, has estimated that the cost of electric could rise between $500,000 and $1 million per year for industrial users, depending on the amount of the subsidy.

“This cost would dramatically impact job retention/job creation initiatives at Pennsylvania's largest employers, diminish funds for innovation, reduce investment, minimize energy efficiency efforts and generally diminish the competitiveness of Pennsylvania companies,” IECPA Executive Director Rod Williamson said in a written statement. “Pennsylvania manufacturers cannot support the profitability of nuclear plant owners.”

Supporters see benefits

Supporters of the subsidy argue that the state and nation will benefit in the long run if the nuclear energy industry gets the support it needs. In fact, Illinois, New York and New Jersey have passed some level of assistance.

Steve Aaron, president of SRA Communications and a member of the Clean Jobs for PA group that supports subsidies, said nuclear energy provides electricity with zero-carbon emissions, which will become increasingly important as the nation struggles with the effects of climate change.

He maintains that the nation needs to support all forms of energy production, so it would be counterproductive to let generations of investment in nuclear energy end with irreversible plant closures. Once a nuclear plant is decommissioned, it cannot reopen, he and others point out. The subsidies would ensure that a mix of energy production – green, fossil fuel and nuclear – remain in play. Over the long term, they suggest, prices will be lower for energy users, especially if a subsidy is designed to sunset in the future.

“Any time you eliminate competition, prices get higher,” he said. “We need to keep nuclear in the mix.”

The decision facing the state legislature is all the more important especially as it pertains to Three Mile Island, a nuclear plant south of Harrisburg. The plant’s closure, expected in 2019, will end about 675 high-paying, skilled jobs with an annual payroll of about $60 million, Aaron said.

Supporters of subsidies include local governments that would lose significant revenues and the unions that supply the skilled workforce. John Levengood, president of the International Brotherhood of Electrical Workers local 777, said about 280 of the 675 jobs at Three Mile Island are union jobs.

“We are hoping that the state of Pennsylvania will come through with something,” he said. “But if there is going to be legislation, they need to get their butts moving.”

As it is, Three Mile Island has had difficulty keeping workers. They have been taking jobs at other plants or going into other industries where highly trained electrical workers are in great demand. While Three Mile Island and a plant in western Pennsylvania known as Beaver Valley are in financial peril, he said, plants that are profitable could follow suit or start to lose their workers to states that have shown support for nuclear power. Pennsylvania also has nuclear power plants at Peach Bottom in York County, Susquehanna in Luzerne County, and Limerick in Montgomery County.

The U.S. Energy Information Administration estimates that, since 2001, the state’s five nuclear power plants have provided more than one-third of all net electricity generation in the state, making it the largest single source of generation. Nationwide, about 60 nuclear power plants operate and produce about 99 gigawatts of power, which the EIA estimates will be reduced to 79 gigawatts by 2050.

In addition to preserving energy diversity and zero-carbon emissions, Levengood added, other benefits of nuclear power must be considered. The plants were built to withstand weather events that might destroy a carbon-fueled plant or green-energy system. And they are heavily fortified to protect against terrorist attacks.

“They are as secure as an Army base,” he said.

Steve Letavic, manager of Londonderry Township in Dauphin County, noted that the Three Mile Island plant adds about $1 million per year in school, municipal and county taxes. The loss of the community’s largest employer would be devastating, but it also would not be good for the state long-term, he said.

Like Levengood and others, Letavic touts nuclear energy’s claim of having zero-carbon emissions and that the plants are important to the overall health of the nation’s electric-generating capacity.

“I do believe we will find a solution,” he said about the legislature’s work in 2019.

More competition

Levengood, Aaron and Letavic all said that the subsidies are no different than what other companies get from the government, although opponents argue that there is a difference between outright subsidies and tax credits extended to nascent industries, such as green energy.

“The feeling of our coalition is that we would like to see the playing field levelled,” Aaron said.

Opponents point out that the nuclear power industry historically has received enormous support over the years, with some of the subsidies amounting to bailouts. One example they point to is government assistance with building plants in the 1970s and 1980s. And, in the 1990s, subsidies were provided to cover investment expenses lost when the energy market was deregulated, they said.

The latest call for subsidies is yet another bailout, they maintain.

“We are always concerned if the government is picking winners and losers in the energy markets,” said Stephanie Catarino Wissman, executive director of the Associated Petroleum Industries of PA. Nuclear energy cannot compete with natural gas, which has surged in Pennsylvania in recent years because of new gas exploration that has slashed prices for consumers, she said.

She and others, said they are not opposed to nuclear energy, just to a bailout.

“We are going to need it all,” she said about the various energy sources. The plants at Peach Bottom, Susquehanna and Limerick are profitable, she said, so industrywide subsidies make little sense.

“The bottom line is that the consumers are the ones who are going to be hurt here, if there is a bailout,” she said.

Pamela Polacek, a Harrisburg-based attorney who is a member of the anti-bailout Pennsylvania Energy Consumer Alliance, agreed.

“It is not so much that nuclear energy’s time has come and gone,” she said. “Some are still profitable. A few of them are not as profitable, and they need to be in order to be a part of this market. Our group believes that we need these market forces to work.”

TMI closure in process

At Three Mile Island, the site of the nation’s worst nuclear disaster, the closing process has been started by the current owners, Illinois-based Exelon Corp., said David Fein, the company’s senior vice president of government and regulatory affairs. September 2019 was picked because that is when the plant would have needed to normally shut for refueling, he said. The company usually needs a year to order new fuel sources, he said.

The longer the legislature takes, he said, “the more difficult it becomes to reverse that decision.”

The legislative session will end in June, he pointed out.

“So, for all practical purposes, that is the point of no return,” he said. “I think there will be a robust discussion about this. At least I hope so.”

Fein said he does not know what the legislative caucus will include in its report. He said Exelon has not offered any specific recommendations but is encouraged by actions taken in Illinois, New York and New Jersey.

In New Jersey, for example, the legislature and governor approved a subsidy bill earlier this year that would cost about $300 million, according to a Reuters news report at the time. The law created a zero-emissions certificate program that will provide subsidies to nuclear plants that show they make a significant contribution to air quality and are in danger of closing within three years, Reuters reported.

“Do nothing is a choice,” Fein said. “What else they will recommend, I don’t know.”

Eric Epstein, a community activist with Three Mile Island Alert, noted the timing of the legislature’s decision – nearly 40 years since the near meltdown of TMI Unit 2 on March 28, 1979. Three Mile Island Alert formed in the aftermath to monitor how officials would handle the disaster.

Epstein said Unit 2 had only been open since 1978 and has not restarted since 1979. The near meltdown also led to closing the slightly older Unit 1, which had opened in 1974. Unit 1 did not re-open until 1985. Unit 1 is a small plant, which is why it isn’t profitable, Epstein said.

“For years I have been told to let the market work,” Epstein said. “This is a winnowing of the herd.”

If private investors want to invest in nuclear energy plants, he added, “I am not opposed to building new plants.”

While the job losses will be painful, he said, those losses are no different than when other prominent companies – such as The Hershey Co., Rite Aid Corp. or Bethlehem Steel – cut jobs or closed plants because of shifting market dynamics.

“We have sustained economic corrections before,” he said.

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