By Michael Peters
Pennsylvanians across the commonwealth are starting to receive direct mail and see headlines about the nuclear industry and its stated need for a bailout to keep its plants open. Bills in the state House and Senate would do just that.
Let’s be clear: If state lawmakers go along with this, it won’t be a bailout. It will be a handout — paid by Pennsylvania families, businesses, schools and governments through their electric bills — to some of the richest energy companies in the world. This handout will cost Pennsylvanians a half-billion dollars or more.
It won’t be the first time.
Over the last half century, Pennsylvanians have paid billions of dollars to construct plants only to then pay billions more to subsidize nuclear shareholders in the “deregulated” electric industry.
In fact, Pennsylvania has given handouts to the nuclear industry no less than three times: Pennsylvania paid for construction cost overruns in the 1970s and 1980s; offset supposed losses from electric deregulation from 1997-2010; and allowed the industry to keep its handout from deregulation when it was found that the industry made millions more in profits than anticipated.
This latest request for a handout comes at a time when the PJM Market Monitor has calculated that Pennsylvania nuclear power plants collectively made $680 million in gross profits last year. PJM, an organization that coordinates the movement of electricity through all or parts of 13 states, including Pennsylvania, sells electricity from Pennsylvania’s nuclear power plants on the wholesale marketplace.
The only plant that isn’t currently covering its marginal costs is Three Mile Island in Dauphin County, but its owner, Exelon, isn’t exactly hurting.
It is, after all, a Fortune 100 company that recently characterized its financial performance as a “record-breaking year.”
Exelon projects that it will have a $7.8-billion cash flow over the next four years, to be used for reinvestment and debt reduction. During that same timeframe, Exelon says it will invest nearly $23 billion to strengthen its existing facilities.
Things apparently are getting even better for the Chicago-based company. In looking ahead to 2019, Exelon CEO Chris Crane said he expects the company will increase its dividend to investors by 5 percent. If he gets his way, a good chunk of that 5 percent will be paid by Pennsylvania ratepayers.
Other states have taken the lead providing these handouts. A recent handout in Illinois is projected to cost customers $2.3 billion over a decade.
The nuclear industry in New York will receive up to $7 billion over 12 years — and more than 800,000 New Yorkers are already having problems paying their energy bills. Schools districts are paying surcharges totaling $8-23 million annually. A 2018 handout in New Jersey is costing customers $300 million annually.
Penn State also has weighed in on this issue. In October, a university report questioned the findings in studies that are used to support nuclear industry handouts.
Penn State found the information was flawed and cautioned against its use in upcoming public policy debates. An earlier study by Penn State professor Seth Blumsack refuted claims in the House’s version of the bill, sponsored by Rep. Thomas Mehaffie, R-Dauphin, that energy costs will increase by $788 billion if the bill fails to pass.
In fact, Professor Blumsack found that energy costs for Pennsylvania could decrease if two plants, Three Mile Island and Beaver Valley, close. Pennsylvania Public Utility Commissioner Andrew Place released his own analysis that supports Blumsack’s findings.
But that won’t deter the nuclear industry. Despite record profits, it has indicated it needs its handout in place by June.
A special interest group supporting the industry is doubling down, distributing direct mail pieces targeting state legislators across Pennsylvania. It predicts doom and gloom if Pennsylvanians don’t fork over more than a half-billion dollars to an industry that made $680 million last year. Interestingly, these special interests are from Washington, D.C.
This group won’t pay for the handout. Pennsylvania residents and businesses will.
Michael Peters is the president of the Pennsylvania Energy Consumer Alliance (PECA), which consists of businesses, manufacturers, colleges and other organizations that support pro-growth energy policies in Pennsylvania to keep energy costs at competitive levels in the national and international markets. He is the manager of Energy & Regulatory Affairs at Linde Americas, a gases and engineering company with around 60,000 employees in more than 100 countries worldwide.