Business, environmental, and consumer advocates are urging lawmakers to reject a nuclear power development proposal that could raise monthly electric bills by as much as $55. (Stock photo by Joe Sohm/Getty Images)
An unusual coalition that includes business groups, environmental activists, and New Jersey’s ratepayer advocate is urging lawmakers to reject a legislative proposal that would see residents pay for the construction of a new nuclear power plant years before it begins sending energy to the grid.
The bill, introduced last month during the final weeks of the Legislature’s current session, would add a mandatory charge on every ratepayer’s electricity bill to cover 5% of the projected construction costs of a to-be-constructed nuclear plant generating at least 1,100 megawatts of electricity.
The measure’s opponents warn that the bill, sponsored by Sens. Bob Smith (D-Middlesex) and John Burzichelli (D-Gloucester), would shift risk from the plant’s developers to residents who could ill-afford further rate increases after a steep hike this summer that will be followed by another price spike next June.
“There are going to be people after this bill who aren’t going to be able to afford their electric bill,” Brian Lipman, director of the state’s rate counsel division, which advocates for utility customers before the state’s energy regulators, told the Senate’s energy committee Monday.
The advanced nuclear development charge would add between $22 and $55 to residential ratepayers’ monthly bills, Lipman said, and consumers would likely pay that charge for at least a decade before a nuclear plant actually comes online. Lipman called that framework unprecedented.
The plan would lead some to pay as much as $6,600 over the next decade for a plant that will not have produced any electricity.
As written under the current version of the bill, ratepayers would pay those subsidies in perpetuity.
“I don’t think any of us intend that this credit is something that’s going to be paid by our grandchildren for, say, the 80-year expected life of the facility,” said Abe Silverman, an energy research scholar at Johns Hopkins University.
The committee advanced the bill in a 4-1 vote. Sen. Parker Space (R-Sussex) voted no.
Though New Jersey’s ratepayers fund utilities’ infrastructure investments through their utility bills, utilities are only permitted to recoup the cost of their investments after projects go into service.
Industrial and commercial customers who use large amounts of power and almost exclusively procure their electricity from off-grid third-party suppliers would face far steeper costs, said Steven Goldenberg, counsel for the New Jersey Large Energy Users Coalition.
“When Brian says that the average residential ratepayer will see the rates increase $55 a month, that is huge,” Goldenberg said. “But when it gets translated to my people, we’re talking five figures every month.”
Board of Public Utilities President Christine Guhl-Sadovy, the only person to speak in favor of the bill during Monday’s committee hearing, argued that private firms need subsidies to secure U.S. Department of Energy loans that could cover as much as 80% of a nuclear project’s costs.
Energy markets could not support private investment in new nuclear plants despite recent and looming price rises, she said, at least not without ratepayer support.
“Even conservative estimates for load growth make a strong case for building new nuclear generation. We have a responsibility at the BPU to ensure reliable and affordable utility service. If the state does not invest in new generation, electricity will continue on the path of being unaffordable,” she said.
Opponents said the risk to ratepayers is too great.
Provisions in the bill would allow developers to seek and obtain, as-of-right, ratepayer dollars to help pay for cost overruns not exceeding 20% of a project’s forecasted costs, and developers are permitted to seek ratepayer funds for larger increases with approval from the Board of Public Utilities.
The state would be hard-pressed to deny requests for larger cost overruns, especially those that come years into a project’s development, Silverman said. Those requests would put regulators in a difficult position: Pay more, or kill a project for which ratepayers have already supported with hundreds of millions — or even billions — of dollars.
Nuclear plant cost overruns aren’t unheard of, and they can be significant. Two nuclear units completed in Georgia in 2023 saw their cost balloon from a projected $14 billion to a realized $31 billion. Some estimates peg the cost as high as $37 billion. The units went online more than six years behind schedule.
The Georgia plants’ construction was the first the country saw in decades. Guhl-Sadovy argued the lessons learned there would prevent similar overruns in New Jersey.
“A lot of mistakes, I think, were made and recognized, and changes have been made,” she said. “We would not anticipate those kinds of cost overruns.”
The bill would not require developers of a project completed on time to fully return the ratepayers’ investment. Though the bill mandates developers return at least some revenue to ratepayers, it would allow the Board of Public Utilities to negotiate how much.
There are going to be people after this bill who aren’t going to be able to afford their electric bill.
– Brian Lipman, director of the state’s rate counsel division
Some detractors warned against imposing additional costs on ratepayers before the state studies what types of energy generation best fit its needs.
Others warned New Jersey wouldn’t see the full benefits of cost reduction from subsidized new generation because that power would be sold on PJM Interconnection’s 13-state grid, spreading its benefit to states outside of New Jersey.
There’s no guarantee that subsidized nuclear plants could even participate in PJM. The U.S. Supreme Court found a 2011 New Jersey program that sought to underwrite the construction of new gas plants by guaranteeing they earn a set amount in energy markets unconstitutionally infringed on federal regulatory authority.
“This bill does almost the same thing,” Lipman said in written testimony provided to the committee.
Others cautioned the bill should not move before Gov.-elect Mikie Sherrill takes office.
Energy policy was a major focus of her campaign, and adding $55 in fixed monthly costs could doom her pledge to freeze energy rates once she’s inaugurated on Jan. 20.
“I don’t think that we should be working, moving forward on comprehensive reform or any kind of major investment in new generation in front of Mikie Sherrill taking her seat,” said Dena Mottola Jaborska, executive director of New Jersey Citizen Action. “She did make this a signature issue in her campaign, and I do feel like six weeks is not enough time.”
It’s not clear whether the bill will reach Gov. Phil Murphy’s desk before he leaves office, or if he would sign it if it does.
The bill had no Assembly companion as of Wednesday, and the Senate version did not appear on the agenda for the Senate Budget Committee’s Monday meeting.
Sen. Bob Smith (D-Middlesex), the bill’s prime sponsor, appeared to suggest the measure could see changes.
“Is this a controversial bill? Yes. Do we have any solutions for the future of New Jersey? Not really. Has the discussion started? Yes, it has,” he said.
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