Courtesy Office of New York State Assemblywoman Amy Paulin

Sep. 14, 2016:  Members of the New York State Assembly, including James Brennan from Brooklyn, Amy Paulin from Westchester County, Jeffrey Dinowitz from the Bronx, and Charles Lavine and Stephen Englebright from Long Island, sent a letter to Audrey Zibelman, chair of the New York State Public Service Commission, saying that the commission's order forcing downstate electric customers to pay nearly 60% of the electric rate increase to bailout the Exelon Corporation and keep four upstate nuclear units, was unfair. 

They said there was no way downstate electric customers used 60% of the output of the nuclear reactors and that the amounts should be reduced. Electric generation in the NYC-Westchester service territory, and purchases of electricity from other sources, account for the overwhelming percentage of the use of electricity there. Long Island's situation is similar--the overwhelming percentage of its power does not come from upstate New York.

They also said that the commission's cost review of the Exelon Corporation's finances was concealed from the public in a May 16 order (see May 16, 2016, Protective Order, Case 16-E­0270), meaning that the public does not know how much money Exelon really needs to keep the nuclear plants in business or how much profit the company will get. The coalition of assemblymembers called on the commission to unseal the records so the public can see the commission's cost reviews of the company's finances.

They also expressed concern about why the largest of the nuclear units covered by the order, Nine Mile Two, which generates about 40% of the total output produced by four upstate units (Note: Indian Point was not included in the decision), was given funds in the bailout since the Exelon corporation just refueled the plant in April of 2016.

Exelon had filed notices to close R.E. Ginna and Nine Mile One, and the Entergy Corporation had filed notice to close Fitzpatrick, but no formal closure notice occurred for Nine Mile Two. In fact, the company did mention revenue increases for the R.E. Ginna unit, retroactive to April of 2015, in recent public statements. Without a publicly transparent cost review, and in light of the recent refueling of the unit, the assemblymembers asked that payment should be removed from the commission's order.

Finally, the assemblymembers also expressed concern that in creating the subsidy, a formula was created that contemplates escalating payments to Exelon based on the projected increase of the social cost of carbon, which could amount to as much as a 10% increase every two years through 2027 and the extension of the payment to 2029. As a result, the assemblymembers asked the commission why Exelon's costs should be blocked from public review when it is being given a government-directed and government-administered price subsidy.

While the coalition of assemblymembers supports the state's goal of achieving 50% of its electricity from renewable sources of energy by 2030 and the commission's formulation of a purchasing plan to reach that goal, they sent the letter for the purpose of raising the questions and concerns discussed above.

"The commission created a nuclear subsidy that will be paid for by customers across New York State through a rate increase. We are concerned that this rate increase is disproportionally unfair to downstate customers, who will be required to pay for energy that they don't use. I urge the commission to review the order and make sure that the rate increase isn't unfair to downstate energy customers," stated Assemblymember Jim Brennan, chair of the assembly committee on corporations, commissions, and authorities.

Assemblywoman Amy Paulin, chair of the committee on energy, said, "While I agree that keeping the upstate nuclear plants in operation is necessary to ensure New York meets its greenhouse gas emissions targets, it is simply unfair that downstate utility customers, who already pay the highest prices in the state, are being forced to pay for such a large share of the subsidy to support power that they are not served by. The PSC should adjust the way the payments are distributed so that it is more equitable for downstate customers. I am also troubled by the lack of transparency in the cost study of the nuclear fleet and request that the information be made available to the public--who will be responsible for the $965 million cost of the program."

"Long Island has one of the highest electric rates in the nation due in large part to assuming the total costs of the shuttered Shoreham nuclear plant. To further burden Long Island and downstate ratepayers with an additional rate increase to cover 60% of the upstate nuclear subsidy is unfair and unreasonable. The Public Service Commission must ensure that the burden of rate increases on downstate utility consumers be more equally aligned with the benefits and unseal the record of the cost review for the upstate nuclear plants so that the basis for the amount in subsidies Exelon is receiving can be opened to public examination," stated Assemblymember Englebright, chair of the assembly committee on environmental conservation.

Assemblyman Jeffrey Dinowitz, chair of the assembly committee on consumer affairs and protection, said, "The Public Service Commission's long-term goal of achieving 50% of New York's electricity from renewable sources of energy by 2030 is a noble one and has my full support. In addition, as New York takes necessary steps to drastically reduce its carbon footprint, I understand the need to prevent the sudden closure of our state's nuclear plants and subsequent loss of jobs.

"However, I strongly object to the implementation of a rate increase to subsidize nuclear power at the cost of the taxpayers, especially when 60% of that subsidy will be on the backs of downstate utility customers. What the Public Service Commission must do is clear: conduct its due diligence in ensuring that the burden of rate increases on downstate utility consumers is accurate; eliminate the gratuitous subsidy for the Nine Mile Two plant; and lastly, unseal the record of the cost review for the entire nuclear fleet, because the public has a right to know why a utility company is receiving such a large benefit at their expense. I sincerely hope that the Public Service Commission acknowledges our concerns and responds accordingly."

"To expect energy users downstate to pay an inflated electric bill to bail out a failing business that does not provide them any power is absolutely illogical," said Assemblyman Lavine. "The fact that the commission's cost review was sealed from public scrutiny is dubious and leaves the mind to wonder how this company squandered the resources it was given. I echo the sentiments of my legislative colleagues for the commission to reconsider this rate increase as the fairness of the arrangement is definitely questionable and creates an undo financial burden on the downstate energy consumers we represent."

Pictured here:  New York State Assemblywoman Amy Paulin.

Photo courtesy Office of Amy Paulin