SENATE BUDGET AND APPROPRIATIONS COMMITTEE
SENATE, No. 2313
STATE OF NEW JERSEY
DATED: †APRIL 5, 2018
††††† The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 2313.
††††† This bill directs the Board of Public Utilities (board) to establish a Zero Emission Certificate (ZEC) program. Under the bill, a ZEC is a certificate, issued by the board or its designee, representing the fuel diversity, air quality, and other environmental attributes of one megawatt-hour of electricity generated by an eligible nuclear power plant selected by the board to participate in the ZEC program.
†††† To participate in the ZEC program, a nuclear power plant is required to:† (1) be licensed to operate by the United States Nuclear Regulatory Commission by the date of enactment of this bill and through 2030 or later; (2) demonstrate to the satisfaction of the board that it makes a significant and material contribution to the air quality in the State by minimizing emissions that result from electricity consumed in New Jersey; (3) provide financial information to the board demonstrating that the plant will cease operations unless the nuclear power plant experiences a material financial change; (4) certify annually to the board that the nuclear power plant does not receive any direct or indirect payment or credit under a law of this State, or any other state, or a federal law, or a regional compact, that would eliminate the need for the nuclear power plant to retire prematurely, despite its reasonable best efforts to obtain any such payment or credit; and (5) submit an application fee to the board in an amount to be determined by the board, but which is not to exceed $250,000, to be used to defray the costs incurred by the board to administer the ZEC program.
†††† The board is to determine the price of a ZEC each energy year under the formula provided in the bill.† Within 90 days after the conclusion of an energy year, each electric public utility (utility) in the State is required to pay each nuclear power plant that received ZECs for that prior energy year for the total number of ZECs received by the nuclear power plant multiplied by the percentage of electricity the utility distributed in the State as compared to other utilities in the State.
†††† The board is to order the full recovery of all costs associated with the utilityís procurement of ZECs through a non-bypassable, irrevocable charge imposed on the retail distribution customers of the utility in the amount of $0.004 per kilowatt-hour.† This charge may be reduced by the board if certain conditions are met as specified in the bill.† Excess monies collected by utilities through the charge are to be refunded to their customers.
†††† A nuclear power plant selected by the board to participate in the program is to initially receive ZECs through the end of the first energy year in which the plant was selected, plus an additional three energy years thereafter, and then is subject to review by the board triennially for renewed eligibility for additional, three energy year periods.
†††† A nuclear power plant selected by the board to participate in the program may suspend or cease operations under certain circumstances, including circumstances in which events prevent the selected nuclear power plant from continuing operations despite the plantís reasonable efforts to continue operations.† If a selected nuclear power plant ceases operations during an eligibility period for any reason other than those specified in the bill, the plant is to pay a charge to the utilities that purchased ZECs from the selected nuclear power plant in an amount equal to the compensation received for the sale of ZECs since the boardís last determination of the selected nuclear power plantís eligibility to receive ZECs.† A selected nuclear power plant would not be authorized to lay off personnel except for employee misconduct or underperformance issues.† Finally, the bill requires the board to conduct a study to evaluate the program within 10 years.†
††††† The Office of Legislative Services (OLS) estimates that the bill may increase costs to State and local government entities that are retail consumers of electricity by indeterminate amounts annually subject to increases and decreases based on total electricity distribution by selected nuclear power plants, due to a tariff imposed at a rate of $0.004 per kilowatt hour on retail distribution customers.†
††††† The OLS estimates that this bill will increase sales and use tax revenue by up to $20.0 million.† As a result of imposing the tariff authorized by the bill, retail distribution customers will experience an increase in the retail price paid for electricity.† The amount of the retail price increase attributable to the tariff will be subject to the sales and use tax, excluding electricity purchases by certain entities and users which are exempt under the sales and use tax.
††††† Any administrative costs associated with the bill are covered in part or in whole by application fees. †If the administrative costs exceed the amounts generated by application fees, Board of the Public Utilities is able to recover costs from the electric public utility accounts established pursuant to the bill.