Court Support for U.S. Nuclear Subsidies Could Deliver Big Win for Renewables
Two U.S. court decisions last month, giving New York and Illinois the authority to subsidize their nuclear programs, could actually be a big win for state governments intent on expanding their use of renewable energy and energy storage.
The New York ruling “is a significant win for the nation’s largest nuclear fleet owner Exelon, which has been struggling to keep its money-losing power plants operational amid weak electricity demand and low energy prices,” Greentech Media reports. But it also “marks the third time in less than a month that a federal court has affirmed states’ authority to favour certain clean energy resources in their supply mix—which could influence how states across the nation set renewable energy targets and credit programs in the years to come.”
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In the third case, an appeals court upheld a district court decision that threw out a challenge to Connecticut’s energy procurement program and renewable portfolio standard.
In New York, a coalition of predominantly coal and natural gas utilities argued unsuccessfully that state nuclear subsidies violated federal electricity market rules and put out-of-state power producers at a disadvantage. District Judge Valerie Caproni “ruled that New York’s zero-emissions credit (ZEC) program does not intrude on the Federal Energy Regulatory Commission’s jurisdiction over wholesale electricity markets and that it is constitutional for states to take action on climate change,” Greentech notes. “Putting ZECs on equal footing helps to reaffirm states’ rights to support various types of energy resources—which could prove useful as new legal challenges arise.”
The New York and Illinois courts both “talked about how they were not able to legally distinguish between ZECs for nuclear plants and renewable energy credits under state programs,” said Ari Peskoe, senior fellow in electricity law at the Harvard Law School Environmental Law Program Policy Initiative. “I think that was an important point. Courts were aware that if ZECs were impermissible, it was going to lead to challenges to all other state programs, and I don’t think they wanted to go down that path.”
New legal challenges to the nuclear rulings “are already on the way,” Greentech notes, with an NRG spokesperson saying the Illinois decision “would effectively strip FERC of its authority to regulate wholesale markets, would harm ratepayers, and threaten FERC’s ability to put in place rules protecting competitive electricity markets.” Energy analyst Rob Rains agreed that “we’re on an inevitable course, potentially as high as the Supreme Court, of determining how much state support for specific generating assets is lawful.”