Urgent issue or competition killer? House holds 1st hearing on Pa. nuclear bailout bill

Photos of the Three Mile Island nuclear power facility. January 31, 2018.
John A. Pavoncello photo

Opponents called Pennsylvania's proposed nuclear bailout bill an unnecessary competition-killer, while backers stressed House Bill 11 is bigger than any single plant.

The first of four hearings on the bill, which would add a third tier to the Alternative Energy Portfolio Standards Act of 2004 to incorporate carbon-free energy producers, was held at the Capitol on Monday, April 8. 

Such a change would allow owners of nuclear power plants to take advantage of a credit program that would bring them additional revenue.

While proponents said the issue is the nuclear energy industry in Pennsylvania, the bill's passage could prevent the imminent closure of Three Mile Island. The Dauphin County plant's Unit 1 reactor, owned by Exelon Generation, is scheduled for decommissioning in September.

A Senate version of the bill, SB 510, was introduced last week.

Panelists representing the nuclear power industry, the Pennsylvania Chamber of Business and Industry and the Citizens Against Nuclear Bailouts coalition testified at Monday's hearing.

"People supporting the legislation say that if we don't do it, our electric bills are going to go up," said House Consumer Affairs Committee Chair Brad Roae. "People opposing the legislation say if we do do it our electric bills will go up."

"Hopefully that can get clarified a little bit today," said the Republican from Crawford County.

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Democratic Chairman Robert Matzie asked proponents of the bill how much each of the state's nuclear plants needs to survive, noting media reports that TMI alone needs $500 million — the annual cost of the bill to ratepayers.

"We would not have supported this legislation if it was needs-based or a bailout," said Debra Raggio, senior vice president over regulatory and external affairs at Talen Energy.

She said it's not about what specific plants need but a proactive approach to a larger trend of plant closures.

The U.S. has closed or retired 13 plants since 2012, and industry experts say at least 20 are at risk, said former Gov. Tom Ridge. 

The Associated Press reports Ridge’s lobbying firm, Ridge Policy Group, represents a subsidiary of Ohio-based FirstEnergy Corp., which owns Beaver Valley nuclear power plant in western Pennsylvania.

But some opponents questioned the urgency of the issue.

The U.S. Energy Information Administration data shows nuclear will still be 15% to 20% of the energy fleet by 2050, said Todd Snitchler, vice president of market development at the American Petroleum Institute and a former Public Utilities Commission chairman.

And the current energy grid is balanced, with about 30% each between coal, nuclear and gas, he testified.

However, the actual EIA data notes nuclear generation had a 19% share of total generation in 2018, which will decline to 12% by 2050.

The Pennsylvania Rural Electric Association supports more than 600,000 energy consumers in Pennsylvania and New Jersey.

It jointly operates with the Allegheny Electric Cooperative, which owns a 10% share of the Susquehanna Steam Electric Station in Luzerne County, and which spokesman Steve Brame said has been a decades-long stabilizing force for the association.

Brame testified HB 11 would give the federal government and the regional grid operator time to work together on a permanent solution for the industry.

But Rep. Ed Neilson, D-Philadelphia County, challenged why the cost should then fall on ratepayers.

"Should our taxpayers have to foot the bill for the feds to do their jobs?" he asked.

Climate at risk: Glen Thomas, president of GT Power Group — which advises clients in electricity regulatory issues — said there's a huge disconnect between the bill and proponents' testimony.

Proponents argued keeping plants online is essential to prevent climate change, which two-thirds of Pennsylvania voters think the state should be doing more to address, according to Ridge, citing a recent Franklin and Marshall College poll.

More:Exelon spent millions in lobbying after announcing TMI closure

More:Cap-and-trade emissions: An unrecognized consensus in Pennsylvania?

A recent Clean Jobs for Pennsylvania coalition statewide survey of 500 voters showed 75% supported adding nuclear to the Alternative Energy Portfolio Standards Act.

But more than half of the energy sources included in the act produce carbon, Thomas said. 

"This state is ready for a carbon discussion," he said, but it can be done in a way that doesn't destroy the marketplace.

The bill is a competition killer, Thomas said, because though the cheapest energy can still be bought on the market, those producers that are subsidized can afford to offer it at lower prices.

Rep. Sheryl Delozier, R-Cumberland County, asked if competition is so important, why subsidize any energy providers?

AARP spokeswoman Desiree Hung testified that supporting a nuclear power bill in Pennsylvania would not necessarily even support the state because its plants supply energy to 12 other states through the regional grid.

Subsidies should be considered on a regional basis, she said.

Hung also noted four of Pennsylvania's five nuclear plants are profitable and will remain so for at least five years.

Cost to taxpayers: Pennsylvania plants had more than a billion dollars in collective profits last year, said Steve Katz, a spokesman for Citizens Against Nuclear Bailouts. He said supporters' arguments are based on a false premise that the entire industry is going away.

More:After 40 years, Three Mile Island meltdown looms large

"They're making over a billion dollars," he said. "They're not going anywhere."

The next hearing, on Monday, April 15, will have panelists representing electric power generators and resources.

After a week's break, hearings will resume the next two Mondays — April 29 and May 6.

The April 29 hearing will represent electric utilities, suppliers and consumers as well as organized labor interests; the May 6 hearing will represent regulators of the electric market and industry.

— Editor's note: This article has been corrected to note the Pennsylvania Rural Electric Association does not own a 10% share of TMI. It jointly operates with the Allegheny Electric Cooperative, which has a 10% share of the Susquehanna Steam Electric Station in Luzerne County.