Expanding state aid to money-losing nuclear reactors across the eastern U.S. may leave consumers on the hook for as much as $3.9 billion a year in higher power bills.
Nuclear plant owners are seeking subsidies in Ohio, Connecticut, Pennsylvania and New Jersey after Exelon Corp. won state aid for reactors in Illinois and New York last year. Should all 28,000 megawatts of nuclear power across northeast and mid-Atlantic states win subsidies at the same level as New York, ratepayers would face an annual $3.9 billion hike, according to a report by Bloomberg Intelligence Tuesday.
Propping up nuclear reactors preserves jobs and power plants that emit no heat-trapping carbon dioxide, according to proponents including New York Governor Andrew Cuomo and lawmakers in Illinois. Operators are lobbying for the aid as historically low power prices and a natural gas glut chip away at revenue.
“The losers would be customers and rival plants,” Kit Konolige, a senior analyst for Bloomberg Intelligence in New York, said by phone. “I think there’s a good chance it will pass in Ohio, Pennsylvania and Connecticut.”
New York regulators in August approved subsidies totaling about $500 million a year for the R.E. Ginna and Nine Mile Point nuclear plants owned by Exelon, and the James A. FitzPatrick plant it is purchasing from Entergy Corp. Those payouts equal about $17 a megawatt-hour, according to Bloomberg Intelligence.
Subsequently, Illinois approved annual payouts of about $235 million for 10 years to keep Exelon’s Quad Cities and Clinton reactors open. The prospect of expanding subsidies has caught the eye of federal energy regulators, who plan to explore the impact of payouts on competitive markets.
“Studies by economists show that modest support for existing nuclear energy facilities delivers enormous net benefits for consumers,” John Keeley, a spokesman for the Washington-based Nuclear Energy Institute, said by email. “New York conducted precisely this sort of analysis.”
Exelon wasn’t immediately available to comment.
After wins in New York and Illinois, Exelon is pushing for aid for its three Pennsylvania reactors and one New Jersey plant, according to Bloomberg Intelligence. FirstEnergy Corp. needs Ohio subsidies to keep its Davis-Besse and Perry reactors open.
“It’s fair to assume that every nuclear plant is going to explore a subsidy,” Konolige said. “They’re going to say if they got in it New York, maybe I can get it in New Jersey.”