In mid-April, New Jersey lawmakers passed a bill that could raise residents’ electric bills by $300 million each year. Legislators want to use the funds to bail out two nuclear power plants owned by Public Service Enterprise Group, the state’s largest utility company.
PSEG, which operates many lucrative natural gas-fueled plants and recorded nearly $1.6 billion in profits in 2017, threatened to shut down its nuclear plants unless the state subsidized them. Utilities in Pennsylvania, Ohio, and Connecticut have threatened similar shutdowns.
Lawmakers shouldn’t give in to such extortion. There’s no valid reason to prop up uncompetitive power sources.
Nuclear firms argue the subsidies are needed to bolster national security. Since nuclear plants store their fuel on site, they’re supposedly more reliable during emergencies than pipeline-dependent natural gas plants. At least that’s what utilities say.
These claims are hogwash.
It’s a myth that nuclear and coal plants have a unique ability to store fuel on site. A report from the Brattle Group, an economic consulting firm, notes that “some natural gas-fired plants have the capacity to burn distillate oil stored in tanks on site in the event of a natural gas supply interruption.”
In any case, on-site storage doesn’t make our energy grid significantly more secure. A recent Department of Energy report concludes that a lack of on-site fuel is a “relatively infrequent cause of generator outages.”
That’s because natural gas is easy to transport via pipelines. Technicians can quickly ramp up the flow of gas to power plants if electricity demand spikes or a different generating facility has to go offline.
America has steadily increased its reliance on natural gas in recent years. In 2007, natural gas-fired plants generated 897 million megawatt hours of electricity. In 2016, they generated 1.38 billion megawatt hours — a 54 percent increase.
Meanwhile, our reliance on nuclear power has stagnated. In 2007, nuclear plants generated 806 million megawatt hours of electricity. In 2016, they also generated 806 million megawatt hours.
America now generates more power from natural gas than any other source, even coal. At least nine states derive more than half their electricity from natural gas.
These momentous shifts in the energy market haven’t caused chronic blackouts or wild price swings, as some natural gas skeptics feared. For the sake of argument, let’s pretend the naysayers are right, and that nuclear plants are uniquely indispensable. If our national security truly depended on propping up unprofitable nuclear plants to ensure a diversified electricity supply, shouldn’t the government just nationalize the plants?
After all, a government takeover of the uncompetitive nuclear sector would spread the costs evenly across all taxpayers, rather than concentrate the burden in specific states. And it would allow the government to devote adequate resources to maintenance, security, and upgrades. A for-profit company, by contrast, would have to worry about staying within budget and keeping Wall Street happy.
Shockingly, nuclear power executives aren’t keen on a federal takeover. They just want the government to shower them with subsidies.
That’s a raw deal for consumers and taxpayers. Lawmakers shouldn’t fall for the nuclear industry’s ruse.
Kerri Toloczko is a senior policy fellow at the Institute for Liberty.