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Upstate nuclear plants, including the Nine Mile Point and FitzPatrick facilities in Oswego County, would be eligible for millions in subsidies under a plan proposed today.

(Michael Greenlar)

SYRACUSE, N.Y. - State utility regulators today released a proposal to subsidize Upstate nuclear plants with annual payments totaling an estimated $482 million a year.

The proposal from the Public Service Commission staff seems likely to please nuclear plant operators, who say their facilities deserve subsidies for providing carbon-free power, and to infuriate anti-nuclear advocates who want more resources devoted to wind and solar.

The public has a brief opportunity to comment -- until July 18 - an indication that the PSC is likely to rule on the proposal at its Aug. 1 meeting.

Exelon Corp., which owns three of the four Upstate nuclear reactors, recently told the commission that the oldest two facilities might close unless subsidies were approved by September.

The proposal unveiled today recommends that the PSC sign 12-year agreements with nuclear operators, as Exelon had previously recommended.

The subsidies would be set administratively by the PSC. According to estimates provided in the proposal, the subsidies would start at $17.48 per megawatt-hour for the first two years and rise gradually to $29.15 per MWH in years 11 and 12.

At the expected combined output of 27.6 million MWH for the Upstate nukes, the total cost would be up to $482 million a year during the first two years, rising to $805 million per year for the final two years.

Those estimates appear to anticipate the continued operation of the FitzPatrick plant, which is scheduled to close in January 2017. FitzPatrick typically accounts for more than 20 percent of the Upstate nuclear output.

The subsidies are based on wholesale electric prices of about $39 per MWH. If future prices rise above that level, as the PSC staff expects, the subsidies will decrease commensurately.

The PSC staff argues that the cost, which would be borne by utility ratepayers, would be dwarfed by the benefits of preserving reliable sources of carbon-free electricity. The staff proposal estimates that continued operation of the nuclear plants provides benefits of at least $2.5 billion a year, including the societal benefit of preventing additional carbon emissions plus other positive impacts such as jobs and property tax payments provided by the nukes.

Nuclear operators have complained that wholesale electric prices are too low in Upstate New York to sustain the cost of operating nuclear plants. Entergy Corp. announced last fall that it would close the 850-megawatt FitzPatrick plant in Scriba in January 2017.

Exelon told the PSC last month that the 620-megawatt Nine Mile 1 reactor in Scriba and the 580-MW Ginna nuclear plant in Wayne County might close next year too unless subsidies are approved soon. Nine Mile 1 is scheduled to be refueled next spring, a $55 million expense Exelon might forego if the plant is still losing money, company officials said.

Anti-nuclear advocate Jessica Azulay, of the Alliance for a Green Economy, said her group plans to request an extension of the comment period. "It's a very short amount of time to deal with a very substantive policy change,'' she said.

Azulay said the prospect of signing 12-year contracts with nuclear plants would be costly and would hinder New York's development of innovative renewable energy options.

"Nuclear is going to become more and more outdated,'' she said. "Why we would lock ourselves into this old technology just makes no sense.''

In Oswego County, the staff proposal is likely to be met with cheers. A coalition of labor leaders, politicians, and economic development officials called Upstate Energy Jobs has lobbied intensively for subsidies to support nuclear power.

According to a study by The Brattle Group, paid for by Exelon and Upstate Energy Jobs, the four nuclear power reactors in Upstate New York are responsible for $3 billion in economic activity and nearly 25,000 jobs.

Entergy officials late Friday said they were studying the PSC proposal and would comment soon. Exelon officials said they were reviewing the details, and reiterated that subsidies are vital for Central New York nukes.

"A clean energy standard must be implemented immediately to avoid premature retirement of the upstate nuclear facilities,'' said Maria Hudson, speaking for Exelon.

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PSC staff proposal by Tim Knauss on Scribd