1.3.18: New Economic Study Shows PSEG New Jersey Nuclear Plants Slated To Remain Profitable Through At Least 2021, Subsidy Money Would Go To Shareholders

For Immediate Release: January 3rd, 2018

NEW ECONOMIC STUDY SHOWS PSEG NEW JERSEY NUCLEAR PLANTS SLATED TO REMAIN PROFITABLE THROUGH AT LEAST 2021, SUBSIDY MONEY WOULD GO TO SHAREHOLDERS

THIRD-PARTY STUDY CONDUCTED BY ENERGYZT DEMONSTRATES PSEG PLANTS POISED FOR HIGH REVENUE AND MASSIVE RETURNS ON INVESTMENTS, ADVISES AGAINST NUKe BILL

 

Trenton, NJ - The NJ Coalition for Fair Energy today released a third-party economic analysis demonstrating the massive financial success of PSEG’s Salem and Hope Creek nuclear stations (as well as their positive projections for the coming years), and concluding that a proposed subsidy for the plant is fundamentally unwarranted.

The analysis, performed by Energyzt Advisors, LLC (Energyzt) shows that “Hope Creek and Salem have always generated extremely profitable returns for its owners,” whether from the first half of their initial license period where the plants “consistently earned a regulated utility return on equity above 10 percent,” up to the present moment where “lucrative hedges... locked in energy prices of $40 to $50/MWh for nearly all of the output of the plants” have benefited the company. The report also confirms that both plants “have always been profitable and will continue to be so through at least 2021,” thanks to a mixture of variables which includes favorable hedges and market prices.

“There are a number of market changes underway that will ensure higher revenues for Hope Creek and Salem over the mid-and long-term,” the report states. “These market changes include: New Jersey participation in RGGI, the Department of Energy’s Notice of Proposed Rulemaking (NOPR) to reward ‘resiliency’ for certain power plants such as nuclear units, [and] PJM’s proposal to revise pricing formation rules in energy markets.” The report adds that “no legislative action is required at this time to support the New Jersey nuclear units.”

“Energyzt’s research is both illuminating and comprehensive, but at bottom conclusive,” said Matt Fossen, spokesperson for the coalition. “In about fifty pages, the study uses extensive data, records, and financial information to show that PSEG’s New Jersey plants have long been profitable, and will remain secure for years to come. No one has ever said that the plants don’t matter, but we do believe that massive ratepayer-assistance should only be awarded only on the basis of a demonstrable need. This study patently disproves PSEG’s scare tactics, and proves once and for all that there is no need to pass a proposal which will cost at least $300 million per year.”

Energyzt’s study was authored by Tanya Bodell, a veteran energy policy expert and the organization's executive director. She recently testified at a joint hearing by the Senate Environment and Energy Committee and the Assembly Telecommunications and Utilities Committee on the question of nuclear subsidies, where she reiterated many of the points made in the study. There she also responded to research done by The Brattle Group which claimed that failing to pass a PSEG subsidy would raise rates and destroy the state’s economy. She offered several rebuttals to these arguments, including the fact that “the study does not account for negative economic impacts of potential out-of-market support, including higher energy costs in the event subsidies are not required to keep the plants operational, and the risk differential between uncertain benefits versus certain costs,” while adding that the research is merely “a summary report. It does not include the detailed backup or description of assumptions required to reproduce the results. Without any basis for ensuring that the results can be tested, the conclusions should not be relied upon.”

“The Brattle Group report is inadequate and incomplete,” Bodell summarized.  “It should not be relied upon to make any decision regarding support for the New Jersey Nuclear Power Plants.”

Swaths of data had already attested to PSEG’s plants’ financial health. Company officials are on the record saying the plants are and will remain through at least 2019, while Ralph Izzo, PSEG’s CEO, has reiterated elsewhere that both plants are undeniably “in the black.” Further evidence shows that the company has earned over $753 million in net income in 2017 alone. As such, the majority of New Jersey residents also disagree with giving a PSEG an energy tax-funded subsidy. One survey showed that “69 percent of voters oppose the state legislature giving a financial subsidy to a nuclear power company that would be in addition to the revenue that company already receives from New Jersey customers.” Another, by the Rutgers Eagleton Center for Public Polling, demonstrated that 75% “are not interested in subsidizing already profitable nuclear power companies.” Several reports have shown that subsidizing the plants will cost New Jersey ratepayers over $300 million per year, equalling a $35 increase on their energy bills at least.

“While we know Trenton is not done with the bill at hand, the truth is this issue should’ve been put to bed long ago,” concluded Fossen. “The debate over PSEG has been intense, yet in recent weeks we’ve seen more and more confirmation that neither the time nor circumstances warrant giving into their demands. This study says as much in plain words, and reminds everyone that we must continue to stop the PSEG energy tax.”

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The report was compiled by Energyzt, a global collaboration of experts in the energy field, using publicly available information gathered from Virginia based Dominion’s quarterly reports and other public sources.  For further information on Ms. Bodell, see: http://www.energyzt.com/bodell.html.

About Tanya Bodell: Tanya Bodell is the Executive Director of Energyzt and oversees advisory services. For nearly 25 years, Ms. Bodell has provided business advice and expert support to energy clients, interacting extensively with executives and senior management of energy companies, and adding value through development of business strategy, expert insights, and transaction support.  Ms. Bodell regularly speaks and writes articles on industry topics as a regular columnist for Pennwell Publications’ Electric Light & Power, offering bi-monthly insights on economic, policy and business dynamics impacting energy markets. She has a M.B.A. from the Massachusetts Institute of Technology, a M.A. in Public Policy from the University of Chicago, and a B.A. in Mathematical Economics from Pomona College.