Junk Plants Hope Creek, Salems and Beaver Valleys (5 plants) On The Chopping Block

Did the recent downgrade of Hope Creek come from the financial pressures.

Junk Plants Hope Creek, Salems and Beaver Valleys on the Chopping Block

March 7, 2017

Tom Johnson
Posted with permission from NJ Spotlight

CEO tells energy analysts 'We are not saber rattling. We are not bluffing'

Public Service Enterprise Group is continuing to make the case that it needs help to keep its fleet of nuclear power plants afloat, this time to a roomful of energy analysts.

Chief executive Ralph Izzo said yesterday that if the plants are not economically feasible to operate, the company will not continue to keep the units in service, a prospect that could occur within three years. Nuclear provides nearly half the electricity used by customers in New Jersey.

"We are not saber rattling. We are not bluffing. We are not trying to be alarmists,'' said Ralph Izzo, who also serves as chairman and president of PSEG, telling analysts at the company's annual investors' conference at the New York Stock Exchange. "We will not operate those plants long term if they are not earning their cost of capital.''

The nuclear sector has been rocked by early plant closings across the nation, battered by low-price natural gas, which has made it difficult for the nuclear units to compete. Some states, including Illinois and New York, have approved generous subsidies to keep nuclear plants afloat, an option being pursued by PSEG with legislators, regulators, and policymakers at the state and federal levels.

PSEG Power, a subsidiary, operates three nuclear units at its Artificial Island complex in South Jersey and also owns part of Peach Bottom in Pennsylvania. For months, the company has been talking with officials about economic conditions.

Currently, PSEG Power invests $100 million in new capital each year at its nuclear plants. Even with hedges in place to reduce financial risk, the plants are not earning their cost of capital, according to PSEG. As those hedges roll off, the plants could go cash-flow negative, Izzo said.

While the company is talking with state and federal officials about the problem, as well as with PJM Interconnection, the grid operator, officials indicated a solution at the state level is most likely…