FERC debates impact of wind PTC, transmission on nuclear fleet

Source: Hannah Northey, E&E reporter • Posted: Friday, May 16, 2014

Members of the Federal Energy Regulatory Commission today disagreed about just how large an effect wind production tax credits are having on the U.S. nuclear fleet.

Commissioner John Norris said the wind production tax credits that have drawn the ire of nuclear giant Exelon Corp. are a “distraction” that is not productive to the larger conversation about what’s challenging nuclear units.”I have concluded that negative pricing is having a very small impact on the nuclear fleet,” Norris said at the commission’s monthly meeting in Washington, D.C. “It certainly would not pass a ‘but for’ test. That is to say, I do not believe that ‘but for’ negative pricing, the currently troubled nuclear units would be economic.”

Norris said the focus of negative pricing has revealed a different problem that needs to be addressed — the need for more transmission to relieve bottlenecks where nuclear and wind energy are both adversely affected.

“It appears that negative pricing occurs in transmission-constrained generation pockets,” he said, adding that FERC’s efforts like Order 1000 and planning activities will help ease those constraints.

Norris said his comments today constituted an “update” to his statement last month that American Wind Energy Association presented “compelling” information that wind production tax credits are not a major factor in making nuclear power uneconomical (Greenwire, April 17).

Commissioner Philip Moeller decided to keep the debate rolling.

“I don’t think negative pricing is a distraction, but an important part of the debate,” Moeller said. “Just a production incentive, whether it’s good for society or not, does heave impacts on competitive markets. I would hope that’s still part of this discussion.”

The fate of the wind PTC has been a thorny issue in the energy industry, with utility Exelon arguing that the PTC allows wind power producers to sell into competitive markets at negative prices, undercutting its fleet of nuclear reactors.

Moeller in the past has expressed concern about the effect of the wind PTC on energy markets and said the “debate is ongoing.”

AWEA released a report in March that asserted Exelon had overstated the extent to which negative pricing occurs and said those situations can be blamed on factors other than the PTC, such as transmission bottlenecks. The association also argued that wind’s ability to reduce electricity prices is a boon for consumers.

Exelon has questioned the premise of the AWEA study, saying it relied on day-ahead prices in the markets it studied rather than using real-time price data where negative pricing was more visible. Exelon officials have also said they support efforts to promote wind energy, as long as such incentives do not undercut the value of nuclear, which provides baseload electricity without carbon dioxide emissions.