Solar and wind energy advocates may hold swing vote in Pennsylvania’s divisive nuclear rescue debate

The debate over Pennsylvania’s proposed $500 million nuclear rescue package pits the natural gas and nuclear industries in an epic struggle between the state’s two energy giants. But renewable power advocates believe they hold the swing vote in a tight battle, and they want a seat at the table.

Several Philadelphia area legislators were set to introduce bills that will dramatically increase the share of solar and wind power included in any electricity sold in the state, which they say would strengthen support for green energy in the current Alternative Energy Portfolio Standards law (AEPS).

“The time is now, while you’re talking about the nuclear bill, to start talking about where do we want to be by 2030 and 2050 in terms of solar and wind in Pennsylvania, because otherwise, we’re going to be left behind,” said State Rep. Steve McCarter, (D., Montgomery), who is sponsoring a house version of the legislation.

The green-power bills would require renewable energy to make up 30 percent of all power sold in the state by 2030, up from the current law that sets a target of 8 percent by 2021. That would put Pennsylvania’s ambitions closer in line with other states that are leading the charge to reduce carbon emissions.

Solar energy would get a carve-out of 10 percent, an ambitious goal that would require a dramatic ramp-up from the current mandate, which sets a target of 0.5 percent by 2021. Three-quarters of the solar energy would come from large grid-connected solar systems, rather than residential rooftop systems.

Efforts to boost renewable energy mandates in Pennsylvania have stalled in recent years. But the composition of the General Assembly shifted leftward after the November elections. And divisions over a proposed nuclear rescue package that requires urgent action to avert a closure of Exelon’s Three Mile Island Unit 1 reactor create an opportunity for environmental advocates to leverage their power.

“We have a proposal that’s out there now on AEPS, and we’ll see if there’s an interest on the part of folks who are putting out the nuclear subsidy bill to have some kind of discussion about that,” said State Sen. Steve Santarsiero, a Bucks County Democrat who sponsored the proposal, Senate Bill 600, along with Art Hayward, a Democrat whose district includes Philadelphia and Montgomery Counties, and Tom Killion, a Delaware County Republican.

Advocates of the nuclear rescue are unlikely to encounter unified support from Harrisburg Republicans, many of whom sympathize with the natural gas industry’s call to allow power suppliers to compete unaided by ratepayer subsidies.

“They need Democratic votes, and there are enough Democrats who care deeply about environmental climate issues that I think they won’t be willing to vote for something related to nuclear that doesn’t do something meaningful on climate issues,” said Mark Szybist, a clean-energy advocate for the Natural Resources Defense Council.

Any negotiations over modifications to the Alternative Energy Portfolio Standards Act are more likely to occur closer to the June deadline legislators have set for a nuclear rescue. Exelon Generation says it will retire the 837-megawatt Dauphin County reactor, which employs nearly 700 people, if state support is not approved by June.

“It’s all about timing," said Killion, the Republican sponsor of the renewable energy expansion." Sometimes if you merge different issues that bring legislators together — somebody who may want a nuke bill but may not have been in favor of voting for an expansion of the AEPS — all of a sudden the two are combined. It’s all about math, getting the votes for passage.”

Under the 2004 AEPS act, alternative energy power generators are rewarded with an increasing number of credits each year based upon energy produced. Electric utilities and other retail power suppliers pass along the costs to consumers in their electric bills.

The consumer cost of the proposed 30-percent renewable energy mandate is unclear because the prices are market-based. In 2017, the AEPS mandate cost consumers about $122.7 million, or 0.7 percent of the statewide customer cost of electricity, according to a Pennsylvania Public Utility Commission report. The PUC estimates that costs will decrease to $103.7 million by 2017 because more alternative generators will be producing.

“The cost is what the cost is going to be,” said McCarter. “The cost to do nothing is going to be a lot more, just in medical costs and the destruction of our state from climate.”

The current AEPS assigns 18 percent of the market to two tiers of power producers by 2021. The first tier reserves 8 percent of the market for renewable producers including wind, low-impact hydro, geothermal, biogas, and wood waste, and includes a 0.5 percent market share for solar photovoltaic producers.

A second tier sets aside 10 percent of the market for alternative power producers, including large-scale hydro, waste-coal generators, and power plants that burn solid waste.

The renewable energy proposals introduced this week would increase the share of Tier I power sources to 30 percent, but would not change the 10 percent share for the second tier.

The law allows alternative power producers from outside Pennsylvania to get credits, so Pennsylvania generators actually received only 48.4 percent of the subsidies customers paid in 2017, according to the PUC. The law was changed in late 2017 to limit the solar credits to Pennsylvania producers, but out-of-state producers still qualify for other Pennsylvania renewable credits.

As with the current law, the amount of renewable energy required would increase each year, and the market price for the renewable energy credits would fluctuate, depending upon the available supply of qualifying power produced. If supply is insufficient, the price of the credits rises, and incentivizes producers to erect more wind turbines or install more solar panels.

The proposals to boost renewable energy mandates and its counterpart to subsidize nuclear industry are among several bills that would modify the AEPS. One proposal by State Rep. Jason Ortitay (R., Allegheny) would eliminate the AEPS subsidies altogether, and allow competition to determine which producers would prevail.

The nuclear rescue bills, which are now undergoing hearings, would create a third category of energy credits amounting to about 50 percent of the state’s current power demand. The bills include upper and lower limits on the price of credits, which set the annual cost to customers at about $500 million, or $3 billion over the six-year commitment that power producers would make as part of the deal.

The high cost of the nuclear subsidies, and the fact that much of the money would go to reactors that are currently profitable, has created considerable unease among legislators, according to discussions at public hearings on the proposals.

“It’s kind of a hard sell in the legislature to get them to pay a half-billion of dollars of ratepayer money,” said Rob Altenburg, director of the PennFuture Energy Center, an environmental advocacy group. “To get something that passes, there would have to be some way of scaling down that ask, whether through a means test, or just a more limited support for nuclear plants.”

But the nuclear rescue bill’s sponsors, as well as the state’s three nuclear power generators, are adamant about framing the subsidies as a reward for nuclear’s zero-carbon production, not as a financial bailout for Three Mile Island and Beaver Valley Power Station, which owner FirstEnergy Corp. has promised to shut down by 2021 without state support.

Profitability of Nuclear Power Plants in Pa.

A report estimates that profits will decline at Pennsylvania's nuclear plants in the next few years, but only Exelon Generation's Three Mile Island Unit 1 will lose money. Legislation would channel hundreds of million of dollars a year from ratepayers to rescue the plants.

SOURCE: PJM Independent Market Monitor

Staff Graphic

Environmentalists are divided over the nuclear subsidy bill — some fear the closure of even one reactor will result in an immediate jump in gas-fired production that would increase the state’s emissions of carbon dioxide and other pollutants. But other environmentalists oppose the nuclear rescues because they do not explicitly set higher targets for renewable power producers.

“What we want is a climate bill that would put the state on track to decarbonize the power sector, not just a nuclear subsidy bill," said Szybist, of the NRDC.

The renewable power industry, in tandem with environmental advocates, has embraced the call for more subsidies, and on April 10 a new group called Renewables Work For Pennsylvania Coalition held a Harrisburg rally for the bill sponsored by Santasiero, Hayward, and Killion.

Pennsylvania’s proposed expansion of renewable energy credits could rescue the state’s solar industry, which has risen and fallen over the years according to the availability of federal or state grants, said Mark Bortman, the founder of Exact Solar, a Bucks County installer.

“We call it the solar-coaster because there’s definitely been some ups and downs,” Bortman told senators Santasiero and Hayward on a tour of the firm’s Newtown offices, including a visit to its own 8.5-kilowatt rooftop system.

For buyers of solar systems, new income from the new energy credits would help offset the reduction of the 30-percent federal tax credits, which are scheduled to be phased down by 2022 to zero for residential systems and 10 percent for commercial systems.

“If the 30 percent federal tax credit goes away, the solar market in Pennsylvania will get hit really hard,” said Dara Bortman, Mark’s wife and partner in the business, which employs 14 people.

Exact Solar does about half of its installations in New Jersey, where state solar mandates are more robust than in Pennsylvania, resulting in far more solar installations (solar accounts for about 3 percent of New Jerseys’ power production, about 10 times more than Pennsylvania).