Can Nuclear Bailouts and Electricity Markets Coexist?

Can Nuclear Bailouts and Electricity Markets Coexist?

June 27, 2017

Recent financial bailouts of nuclear reactors in New York and Illinois highlight the conflict between states’ environmental goals and the integrity of electricity markets.  As more states weigh subsidies, debate over their market impact and legality expand.

In 2016 Illinois and New York became the first states to provide direct subsidies to the nuclear power industry, with the goal of keeping economically uncompetitive reactors operating within their borders.  The states deemed the nuclear plants, which generate electricity without producing carbon dioxide, as critical to their efforts to limit greenhouse gas emissions that contribute to global warming.

Yet the bailouts proved contentious in the two states, and the controversy over subsidies is now spreading to a handful of other states weighing similar bailouts.  Opponents object to subsidies cost, and argue that they may discourage investment in other new forms of generation, such as natural gas and renewables. And the very legality of the bailouts is now being reviewed in court.

In this episode, Christina Simeone, the Kleinman Center’s Director of Regulatory and External Affairs, and David Cherney, an energy industry advisor in the Energy & Utilities Practice at PA Consulting Group, will examine the roots of nuclear’s financial woes, and the widening debate around nuclear power’s role in decarbonization of the electricity sector.

Christina Simeone is Director of Policy and External Affairs at the Kleinman Center for Energy Policy at the University of Pennsylvania. She is a past Director of the PennFuture Energy Center for Enterprise and Environment.  She also worked for the Pennsylvania Department of Environmental Protection and was Policy Director at the Alliance for Climate Protection.

David Cherney’s work at PA Consulting Group spans public policy analysis, energy infrastructure investment, and utility strategy.  He has also worked as an Adjunct Professor in Public Policy at the University of Denver’s Josef Korbel School of International Studies and as a Teaching Fellow at Yale University.


 

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