Thursday, November 03, 2016

Why Saving New York's Nuclear Reactors is Good for Consumers & The Environment

Matt Wald
The following is a guest post from Matt Wald, senior director of policy analysis and strategic planning at NEI. Follow Matt on Twitter at @MattLWald.

Saving the reactors is good for consumers and good for the environment.

Independent analyses show that the modest payments needed to keep nuclear reactors in the state’s supply mix will mean sharply lower electricity prices, and are the cheapest way to hold down carbon emissions.

The Brattle Group, a consulting firm that specializes in energy, found that electricity in New York would cost $1.7 billion a year extra if the reactors closed. The reason is that the reactors’ output would be replaced by more expensive power.

This is inherent in the method that New York uses to set prices: a computer totals up all the available resources, ranked by price, and the level of demand. The computer, which belongs to the New York State Independent System Operator, determines which generators are needed to satisfy demand, and whatever price is asked by the most expensive generator to make the cut, that’s what all generators get.

Nuclear plants bid in very low, because their fuel costs are low. Remove a low-cost generator from the bottom of the stack, and the last plant to make the cut is sure to be more expensive.

And preserving the reactors is the least expensive way to hold down carbon emissions, according to another independent assessment, by the New York Independent System Operator’s market monitor. (A market monitor is a consulting firm hired by an independent system operator to report on how well the system is working.)

New Yorkers protested in favor of saving Upstate nuclear plants.
The 2015 report of New York’s market monitor found that saving a ton of carbon dioxide emissions by retaining a nuclear plant would cost $20 to $43 a ton; using utility-scale solar (the least expensive type) would cost $115 a ton. A new on-shore wind farm would cost $41 per ton saved.

Solar and wind have their place but they do not stabilize the system as nuclear power does, and they do not provide the tax revenue and highly-paid jobs that reactors do. They also provide electricity at times of nature’s choosing, out of sync with demand.

In addition, preserving the nuclear capacity is a hedge against interruptions in fuel supply, like frozen coal piles, or the Aliso Canyon gas storage leak, or the pipeline squeezes that have hit the northeast during polar vortices. The value of that diversity is harder to express in dollars and cents but is certainly a factor.

And one other consideration: $482 million is a lot of money, and it would certainly pay our MasterCard bill many times over. But as a share of the statewide electric bill it is small. According to the Energy Department’s Energy Information Administration, New York’s electric bill in 2013 (the last year for which complete numbers are available) was fifty times larger, $24 billion.

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