By Michael Mariotte

New York is striving to implement one of the most aggressive renewable energy strategies in the nation. Yet at the same time, Gov. Cuomo wants to bail out the upstate and uneconomic FitzPatrick and Ginna reactors–which would only slow the deployment of renewables and would cost NY ratepayers billions.

Last week, we let you know about New York’s new proposal to subsidize most of the state’s existing nuclear reactors. And we promised you a more in-depth piece after we had a chance to digest the idea. So here you have it: It’s a really bad idea.

There’s a lot more to say, of course, but it’s good to start there and not lose sight of the big picture. As a reminder, here are the basics of what the state’s utility regulators are proposing: New York will establish a renewable energy standard to reach 50% renewable energy by 2030—this could be even better and the state still seems to be underestimating its renewable energy and efficiency potential, but YAY! At the same time, it’s packaged with a massive subsidy to nuclear power plants, to try to prevent four of the state’s six nuclear reactors from closing during that time.

If the proposal ends up being implemented as the state’s Public Service Department is proposing, it could end up costing New Yorkers from $2 billion to $6 billion by 2030. And that is just the extra cost of subsidies, above and beyond the market price of electricity. Between buying the reactors’ electricity and paying subsidies, New Yorkers would spend a total of at least $18 billion on the four reactors, rather than on renewables and efficiency. And that is assuming the reactors’ operating costs don’t rise, and that the state wouldn’t need to guarantee them a profit margin to continue operating.

The wide range of our estimate is because the cost of the subsidies would depend on two factors:
• The cost of operating the reactors, which is rising. That is the main reason the industry is pushing so hard for subsidies.
• The market price of electricity, which is hard to predict over so long a period.

The gap between nuclear costs and energy prices could very well get wider by 2030. On the one hand, reactors are getting more expensive to run as they get older, and New York has some of the oldest and most uneconomical reactors in the world. Nuclear operating costs have been going up by about 5% per year on average for over a decade now.

On the other hand, energy prices have been trending lower in New York and around the country for nearly a decade, even with occasional spikes. That trend is not likely to reverse as renewables and efficiency ramp up: energy efficiency reduces demand and market prices, the cost of renewables is very stable in the long run but is expected to continue declining, and volatile fossil fuel prices will have less and less of a role in determining energy prices. If nuclear costs and energy prices …read more

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