For Immediate Release: February 8, 2018
NEW RATE COUNSEL STUDY SHOWS PSEG SUBSIDY WILL HARM RATEPAYERS, LEAD TO OVER $5B IN LOST ECONOMIC OUTPUT
ASSESSMENT CONDUCTED BY ACADIAN CONSULTING GROUP WARNS OF ECONOMIC LOSSES FROM NUCLEAR HANDOUT, CITING LESS BUSINESS INVESTMENT AND LOWERED CONSUMPTION
Trenton, NJ - A new study commissioned by the New Jersey Division of Rate Counsel shows that S. 877 - a bill which would subsidize two in-state nuclear stations owned by PSEG - would severely harm ratepayers and stifle the state’s economy.
The assessment, titled “Report on Nuclear Portion of Senate Bill 877,” was done by Acadian Consulting Group, and concluded that the legislation in question would create “an annual direct cost to ratepayers of $300,127,820” along with broader “ripple effects throughout the New Jersey economy.” Those include increased energy bills, reduced expenditures by area businesses, lowered consumer incomes as well as losses in individual spending. This, the research finds, equals an additional “$244 million per year in lost economic output,” for a grand total of $5.4 billion in unrealized economic opportunity over ten years.
“The findings of the latest research into PSEG’s subsidy bill are sobering, but unfortunately not surprising,” said coalition spokesperson Matt Fossen. “All the available evidence indicates this legislation will wreak havoc on consumers, and, subsequently, New Jersey’s economy. This by itself should convince officials to disavow PSEG’s proposal, but what’s worse is that the company is demanding this handout while the plants are rolling in money.”
The question of PSEG’s New Jersey plants’ financial health has been thoroughly debated, with swaths of data showing they remain financially intact. Company officials are on the record saying the plants are and will remain profitable through at least 2019, while Ralph Izzo, PSEG’s CEO, has reiterated elsewhere that both are undeniably “in the black.” Further evidence shows that the company earned $3 billion in gross profits during 2017 alone, while a recent study by Energyzt Advisors demonstrated that the plants “have always been profitable and will continue to be so through at least 2021.” Other reports show that PSEG will take home $850 million (of which $650 million would go specifically to the subsidiary which runs the plants) under the newly enacted federal corporate tax cut, while elsewhere the company filed for a rate hike with the New Jersey Board of Public Utilities to charge customers an additional $20 per year for $95 million extra in annual revenue.
“When it comes to the necessity of a subsidy for PSEG, the facts are clear,” continued Fossen. “Neither the company nor its plants need assistance, and by all accounts both are making windfalls. This makes the subsidy they’re asking for even worse, yet that’s still an understatement. Rewarding PSEG with unwarranted money isn’t just bad; it’s unethical in principle and unsustainable in practice.”
Acadian’s research comes on the heels of news that Exelon Corporation, another energy company which has sought nuclear subsidies, is doubling its rate of dividend growth (from 2.5% to 5%) because of recently secured handouts in Illinois and New York. The move was first announced on January 30th, and reiterated on February 7th in an earnings report. Many commentators have labeled the move a quintessential wealth transfer, and others have worried that PSEG would do the same if given a subsidy. According to Energyzt, that’s precisely what would happen, saying a subsidy for the company would - like Exelon - “simply flow to the equity investors.”
“Stopping a PSEG energy tax isn’t just about protecting consumers and the economy,” concluded Fossen. “It’s about ensuring a competitive market, and not robbing everyday people just to pad a wealthy company’s bottom line or make its investors richer. Anyone with common sense can see this, and we hope leaders in Trenton are no different.”