Environmental Groups Join N.Y. in Support of Nuclear Credits

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By Gerald B. Silverman

Dec. 12 — New York has picked up the support of two major environmental groups in its legal fight over a plan to subsidize nuclear plants with zero emissions credits.

The Environmental Defense Fund and the Natural Resources Defense Council have joined the case in support of the state’s motion to dismiss the lawsuit challenging the credits ( Coal. for Competitive Elec. v. Zibelman, S.D.N.Y., No. 16-cv-08164, motions to dismiss 12/9/16 ).

Some $7.6 billion in credits for three nuclear plants owned by Exelon Corp. and Entergy Corp. are at stake in the lawsuit.

Strange Bedfellows

The suit is significant because of the strange bedfellows and the rifts it has caused among electric power companies and among environmental groups.

Exelon and Entergy, with a portfolio that includes nuclear plants, are pitted against the plaintiffs in the lawsuit, Dynegy Inc. and NRG Energy Inc., whose portfolios are largely natural gas, oil and coal-fired.

New York environmental groups like the Hudson River Sloop Clearwater and the New York Public Interest Research Group strongly oppose the credits, viewing them as an expensive bailout of the financially struggling nuclear plants.

The Natural Resources Defense Council said it does not support the zero emissions credit program, but disagrees with the legal claim that the state does not have the authority to make legal decisions about its electricity mix. That argument, “if successful, could create uncertainty for scores of state renewable energy policies in states across the country,” NRDC said in a statement.

State Authority

In its motion to dismiss the lawsuit, the state Public Service Commission said the Federal Power Act “preserves state authority to regulate electric generation facilities and to create and regulate commerce in the environmental benefits of those facilities.”

It said the Supreme Court’s decision earlier this year in Hughes v. Talen Energy Marketing LLC ( Hughes v. Talen Energy Mktg., LLC, 136 S. Ct. 1288, 2016 BL 123717 (2016)) does not apply to this case because the zero emission credits are “environmental attribute sales.”

The Coalition for Competitive Electricity, Dynegy and NRG sued the state in October over the credits, arguing that they are preempted by the Federal Energy Regulatory Commission and violate the Commerce Clause of the U.S. Constitution.

Splits Not Unusual

Devin McDougall, an attorney with Sive, Paget & Riesel P.C., told Bloomberg BNA that splits in the industry and the environmental community are not that unusual. There has been a historical split among environmental groups over nuclear power, he said.

In addition, he said, nuclear generator and natural gas and fossil fuel generators are “natural business competitors.”

McDougall said one of the key legal issues in the case is “at what point do these state programs start to affect interstate markets.”

To contact the reporter on this story: Gerald B. Silverman in Albany, N.Y. at GSilverman@bna.comTo contact the editor on this story: Larry Pearl in Washington at lpearl.bna.com

For More Information

The New York Public Service Commission’s motion to dismiss is available at http://src.bna.com/kHb.The lawsuit against New York over zero emission credits is available at http://src.bna.com/kHc.

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