As NJ bails out nuclear industry, utility rates may go down … or up
TRENTON — If you pay a utility bill in New Jersey, price changes appear to be on the way, but whether they're going lower or higher overall is much murkier.
The Democrat-led Legislature appears set next week to take a final vote on legislation that would provide roughly $300 million in annual financial assistance to the state's nuclear power industry, costing utility ratepayers an estimated $41 a year each.
But that measure is advancing through the Legislature as the Murphy administration, through the Board of Public Utilities, is requiring electric, gas and water utilities in the state to slash rates by a combined $271 million because of the federal tax cut bill.
A closer look at what's going on:
WHY DOES NUCLEAR INDUSTRY NEED HELP?
The Public Service Enterprise Group is the state's biggest utility operator and runs three nuclear plants at two facilities in southern New Jersey. Nuclear power accounts for about 40 percent of the state's electricity production, with rest coming from natural gas and roughly 5 percent from renewable sources.
The company came to lawmakers last year and warned that its plants were in financial trouble and likely to close in two years. The closure of the plants would mean the loss of almost 2,000 jobs and leave New Jersey without a major pillar of its electricity market, say PSEG and the bill's authors.
The need for financial help is questioned by opponents of the rescue legislation, including the state's appointed advocate for ratepayers, Stefanie Brand, who points out that PSEG has not opened up its books publicly. Lawmakers say regulators could review the firm's financials before giving out a subsidy. PSEG, which backs the measure, helped draft legislation with the previous administration to shield its books from the public, according to records obtained by the Associated Press.
WHAT DOES THE MEASURE DO?
The proposal would require the state's utilities to purchase energy credits from the state's nuclear plants — operated by PSEG — estimated at a cost of about $300 million annually. Lawmakers presume those costs would be directly passed onto ratepayers, with utility bill increases estimated at about $41 a year. After a decade, the state's Board of Public Utilities, which regulates energy providers, would review the program.
BUT WHY MIGHT RATES GO DOWN?
The utility board last month announced that it took action to lower rates for electric, gas and water utility ratepayers as a result of the 2017 federal tax cut law. The new law slashed the corporate tax rate from 35 percent to 21 percent. "The Board ensures that customers will reap the benefits of lower federal taxes for utility companies," BPU President Joseph Fiordaliso said in a statement. For customers of 10 water utilities in the state, rates will go down a combined $56 million. The board also approved a $215 million reduction for gas and electric utility customers.
IF TAX CUTS ARE HELPING, THEN WHY DO WE NEED THE BILL?
That was a question on some lawmakers' minds as the legislation moved through committee. Democratic Assemblyman Gary Schaer questioned whether ratepayer subsidy would be needed because of the federal tax cuts. Democratic Assemblyman Wayne DeAngelo, who sponsors the bill, responded that regulators can review PSEG's finances before moving forward with the subsidies.
Senate President Steve Sweeney said largely the same. "We lose 39 percent of our power (and) it's going to cost a lot more than what we're talking about in a potential subsidy," he said.
(Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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