Going nuclear: Should Somerset ratepayers provide subsidies?

May 4, 2019

Subsidies to the nuclear industry are a point of controversy in Pennsylvania. In April, the subject came before the state House Consumer Affairs Committee when a hearing was held on legislation to provide $500 million per year to support the state’s nuclear industry.

The legislation, known as House Bill 11, will be the subject of many hearings before it’s considered for a vote. The bill would classify electricity from nuclear energy as an alternative energy source, along with solar energy and wind power. Some in the area have argued that the government shouldn’t get involved, while others have advocated for involvement on the basis that it keeps rates stable for local residents.

State Rep. Carl Walker Metzgar, R-Somerset Township, couldn’t be reached for comment. But state Sen. Pat Stefano, R-Bullskin Township, has a strong opinion on the matter.

“I don’t believe as a government that we should be picking who the winners and losers are,” Stefano said. “In many ways, the nuclear plants are profitable. And they’re projected to be for the next several years. . . . My point of view is that every industry, every plant has its lifecycle. As they age, you have to put money into them. You can’t keep coming back for money. We didn’t subsidize the coal plants. And we shouldn’t subsidize these. We should rely on market forces.”

Stefano said he believes in a free market approach to most, if not all, industries. He believes that means keeping the government out of industries to let natural competition determine who succeeds.

The Pennsylvania Energy Consumer Alliance, an advocacy group that states on its website that it pushes for sensible energy policies for all consumers, pointed out in a news release that the nuclear industry made $680 million in gross profit in 2018.

“It is important to emphasize that the funds identified in House Bill 11 to pay to the nuclear industry would go to the owners of these nuclear plants — Exelon’s shareholders, Talen’s investors and the First Energy Solutions creditors — from ratepayers,” alliance President Michael Peters said. “Ratepayers would be forced to use money from their business and household budgets to create a funding stream for nuclear plant owners. The ratepayers and consumers who will be forced to give handouts are businesses and residents in each of your home districts.”

FirstEnergy Solutions Corp. is an unregulated subsidiary of FirstEnergy Corp., which provides electricity to Somerset County through Penelec. The company couldn’t be reached for comment.

Rus Ogburn, Somerset Rural Electric Cooperative general manager, said the nuclear industry helps keep electric rates low in Somerset County.

“The 11,000 Somerset REC members in the county own part of the Susquehanna Nuclear Plant in Pa., which provides reliable, low-cost electricity day in and day out,” Ogburn said. “Early closure of nuclear plants would have a huge impact on our rural communities. ​Nuclear power has meant stable rates for our rural consumers for many years, and we are encouraged the Legislature is talking about its future.”

Gov. Tom Wolf’s spokesman J.J. Abbott said the governor believes we need a robust conversation about our energy economy, including the future of the nuclear fleet. He said that Wolf empathizes with the working families and communities supported by these facilities that are threatening to shut down. Further, nuclear energy plays an important role in Pennsylvania to prevent greenhouse gas emissions that contribute to air pollution and climate change. All of these factors must be strongly considered in any legislation, Abbott said.

“At the same time, any solution to ensure the sustainability of nuclear facilities should have a fair cost-benefit ratio for consumers and be done with transparency from operators seeking assistance,” Abbott said. “Gov. Wolf continues to engage with the General Assembly on what solutions may be possible and what level of support there will be for different approaches.”