Lawsuit challenges New York's nuclear power plant subsidies

Oct 20, 2016

A group of energy companies and power plants are challenging New York's recently approved Clean Energy Standard (CES), which aims to reduce harmful carbon dioxide emissions in the state by subsidizing financially distressed nuclear power plants, including the FitzPatrick and Nine Mile Point plants in Oswego county. The plaintiffs in the case say the state has overstepped its legal boundaries.

The lawsuit alleges that New York's Public Service Commission (PSC) is infringing on the federal government's right to regulate energy markets that affect multiple states. The right to regulate interstate commerce is constitutionally designated as a power of Congress, referred to as the commerce clause. And because the markets, or auctions, where energy prices are determined in New York do include participants from out of state, the plaintiffs allege that the state has intruded on that exclusive authority.  

The lawsuit goes on to claim other consequences from the subsidies, such as giving nuclear power plants an unfair advantage in the marketplace that could drive away other energy companies and therefore drive up prices that energy consumers pay each month.

"This would harm other generators, including the Plaintiffs, because the lower auction prices will result in lower revenues," the lawsuit reads. "In the long term, with non-subsidized generators forced to exit the market, lower prices will deter potential new generators - including generators of renewable sources of energy - from entering the market. The result will be reduced supply and increased prices for local utilities, and thus for the homeowners and businesses that they serve."

In a statement, PSC Chair Audrew Zibelman called it a "frivolous lawsuit" and the "fossil fuel industry’s playbook to deny and thwart actions to combat climate change."

Zibelman said the state is fully within its rights to protect the environment and therefore, the welfare of its citizens. 

"This challenge to New York’s authority is a challenge to the 29 states that have taken similar actions to encourage renewable energy development," Zibelman said in a statement. 

The lawsuit says states are permitted to offer financial assistance to certain types of renewable generators, but no such allowance exists for nuclear plants. 

The nuclear subsidies, called zero-emission credits (ZEC), are intended to keep facilities like the FitzPatrick Nuclear Power Plant in Oswego County online as New York moves toward its ambitious 2030 goals for dramatically cutting carbon dioxide emissions and boosting renewable energy sources.