State energy regulators Thursday approved a subsidy sought by PSEG for the three nuclear plants it operates in Salem County, which is likely to raise electric bills for New Jersey homes around $40 a year for at least the next three years.

The Board of Public Utilities had to either deny the subsidy altogether or approve one set at $0.004 per kilowatt hour, under terms of a law signed last May by Gov. Phil Murphy. It could be reduced in the next three year period, assuming PSEG applies again for the subsidy to continue.

Commissioner Bob Gordon said the choices were “genuinely awful” – increasing energy costs, which he said will be particularly bad for big institutions such as manufacturers, hospitals and colleges, or hurting the environment by potentially closing the carbon-free source of one-third of New Jersey’s energy.

“In my view, the board is being directed to pay ransom, and the hostages are the citizens of New Jersey,” Gordon said.

“I believe this energy tax will lead to job losses, plant closings and will make New Jersey even less competitive than it is now,” said Gordon, who nevertheless voted for it, saying that “the economic and health risks outweighed the economic implications.”

The total cost of the subsidy is projected at $300 million a year. It applies to all New Jersey electric utilities customers, not just those of PSE&G.

BPU President Joseph Fiordaliso cited climate change as a main reason for his vote. He said the state should be reducing carbon emissions, not increasing them by risking that nuclear plants would be idled and replaced, at least in the short term, by energy from natural gas plants in Pennsylvania.

“Not only would that situation contradict Gov. Murphy’s commitment to 100 percent clean energy by 2050, it would be counter to everything I think we are trying to do as a community to mitigate the impacts of climate change,” Fiordaliso said.

“We must balance protecting ratepayers with our responsibility to the citizens of the state,” he said. “And in making this decision, I believe the board must therefore also consider other outside factors including fuel diversity, resiliency, impact on RGGI, New Jersey’s economy, increasing carbon, environmental impact and the Global Warming Response Act.”

The vote for the subsidy was 4-1. Upendra Chivukula was the only commissioner to oppose it – and was literally hissed at by an audience member while calling the approval a disgrace as he voted.

“Today, when I look at this thing, I think this is highway robbery,” Chivukula said. “These subsides are going to directly hit the ratepayers of the state of New Jersey.”

The director of the BPU’s Division of State Energy Service, Tom Walker, told the board that staff who reviewed the application determined PSE&G didn’t prove the plants were at financial risk of shutting down, as required by the law.

“The eligibility team quite frankly determined that the units are financially viable as they stand now in the current market conditions and that they were not in need of the subsidy,” Walker said.

Fiordaliso said the legislation directs the BPU to take into account operational risks and market risks excluded from the staff’s typical financial analysis.

“And that it is squarely within the board’s authority to determine the weight that should be given to these factors,” Fiordaliso said.

PSEG has said it would close the nuclear plants without the subsidy and indeed this week submitted paperwork to the federal government starting the process. That application can be withdrawn.

PSEG said in a statement it was pleased with the decision and will review the BPU’s order to better understand its impact.

“The BPU just saved the people of the State hundreds of millions of dollars in what would have been higher energy costs, thousands of jobs lost and tons of environmentally damaging air emissions,” the company said.

Jeff Tittel, director of the New Jersey Sierra Club, called it “a rip-off of the ratepayers and of the environment.”

“It’s very disappointed but not unexpected,” Tittel said. “The BPU has been the Board of Promoting Utilities for too many years, and today they just rubber-stamped the biggest corporate subsidy in state history.”

Stefanie Brand, director of the Division of Rate Counsel, said PSEG’s tactic worked – that it got the money it wanted, even though the nuclear plants are making money and financially viable.

“It was clear that at least a majority of them did not deem this rate just and reasonable, so they have now approved a rate that they have told us they don’t think if just and reasonable,” Brand said. “And I guess we’ll have to get a court to look at whether or not that is OK.”

Brand said the problem could get worse, as PSE&G has about $10 billion of requests before the BPU.

“We’re fighting them at every stage,” Brand said. “But if somebody doesn’t get the courage to say no, then I don’t know how anybody’s going to be able to do business in this state anymore.”


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Michael Symons is State House bureau chief for New Jersey 101.5 and the editor of New Jersey: Decoded. Follow @NJDecoded on Twitter and Facebook. Contact him at michael.symons@townsquaremedia.com