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Legislative Fix Can End Cuomo’s Nuclear Bailout

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

For public officials across the country, micromanaging energy supplies and prices is a favorite pastime. New York State is certainly no exception, as shown by the recent kerfuffle over the bailout of three nuclear power plants in upstate New York. A group of lawmakers led by Governor Andrew Cuomo are intent on keeping these upstate nuclear power plants open, despite years of unprofitable operations. Under the scheme proposed last year, utilities would be forced to buy energy credits indirectly from the Exelon Corporation. These excess costs will be passed onto ratepayers, leaving households with a $7.6 billion bill payable to a Fortune 100 company.  Despite Cuomo’s recalcitrance, the state legislature has taken notice and will try to fix Cuomo’s mistake.

A Bill introduced by Sen. Tony Avella (D-Queens) aims to do just that, calling on the Department of Public Service (PSC) to “repeal any electric rate increase on downstate residents” that goes toward upstate nuclear plants.” Avella’s bill, currently in committee, stands athwart of big nuclear’s agenda by relieving communities not served by nuclear from any surcharge. The legislator correctly notes that “the vast majority of New Yorkers aren’t even getting their power from these old nuclear plants.” But Avella is battling a powerful alliance between the Cuomo Administration and corporate cronies.

Cuomo and allies claim that nuclear power plants are an indispensable part of the future power grid due to a low carbon emission profile. In their view, the closure of two major nuclear plants would exacerbate New York State’s reliance on natural gas. While natural gas is in turn less carbon-intensive than coal-fired generation, relying on natural gas would still result in too much carbon for the governor’s taste. The current energy standard on the book requires that New York generates half of its electricity via carbon-neutral sources by 2030, an unworkable feat absent considerable taxpayer and ratepayer subsidies. If nuclear power plants really are pivotal to a low-carbon future, then why not keep the nuclear-fired Indian Point plant open? Closing the plant by 2021, as the governor currently plans to do, would leave a gaping 2000 megawatt hole in the state’s electrical grid that would surely be filled by high-carbon sources.

Taking this inconsistent approach and coddling upstate plants will cost the average ratepayer $25 dollars per year, according to the state’s Energy Research Development Authority. The surcharge for New York companies is expected to be far greater, resulting in pass-along price hikes for household essentials. The corporate welfare racket also wounds local governments forced to pay higher energy costs. While the MTA’s expected $11 million increase in liabilities is a miniscule portion of system revenue, the system has been hemorrhaging cash for years.  The authority will likely need to hike subway fares a few cents over the already large planned increase, to the detriment of working class commuters. Ridership rates can dip after even small fare increases, leading to more cars on the road and increased carbon emissions as the result. In other areas of public administration, increased expenses from the bailout will impede essential governmental functions. The New York City Housing Authority will see a $500,000 uptick in energy costs, funds that could have provided a year’s worth of monthly rent vouchers for forty families.

But a plethora of unintended consequences won’t put a stop to Governor Cuomo’s pro-corporate welfare agenda. Faced with an administration beholden to special interests, legislators in Albany must work quickly to rally around Senator Avella’s bill. 

In the long run, though, only comprehensive energy policy reforms will prevent drive-by corporate rackets from robbing ratepayers blind. Kyboshing New York’s Clean Energy Standard (CES) would allow utilities to choose the cheapest and most reliable sources of energy, rather the sources deemed acceptable by bureaucrats in Albany. While many environmental advocates see these standards as necessary for a low-carbon future, this needn’t be the case. Utility solar has become cost-competitive with fossil-fuel generation sources, even absent federal subsidies. Allowing market forces to work will force power generators to innovate, leading to energy possibilities we can’t even fathom today. Ratepayers across the empire state deserve innovation driven by choice, not shakedowns by CEOs and their friends in government.

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