Federal subsidies for wind energy are “glutting” the nation’s electricity markets and forcing nuclear power plants to close prematurely, the U.S. Chamber of Commerce will tell the Senate Finance Committee on Tuesday.
Karen Harbert, the head of the Chamber’s Institute for 21st Century Energy, will testify before the Finance Committee hearing aimed at examining the nexus between tax policy and the nation’s energy mix.
Harbert will argue that the wind production tax credit, or PTC, from the 1990s has been successful in ramping up the amount of electricity produced from wind turbines from a very low number to providing as much as 4.7 percent of the nation’s power mix. But it is doing it at the expense of the 20 percent of electricity that comes from the nation’s nearly 100 nuclear power plants.
“Nuclear generation provides nearly 20 percent of total U.S. generation and the nuclear fleet operates in excess of a 90 percent capacity rate, by far the highest of all sources,” Harbert said in prepared remarks obtained by the Washington Examiner. “More importantly in the context of the PTC, nuclear generation provides more than 60 percent of all emissions-free generation, making it the king of emissions-free energy.”
She said the wind credit causes a phenomenon called “negative pricing” by filling the market with more electricity than it can use. That causes nuclear reactors to generate electricity at a sizable loss, while the PTC keeps wind power in business.
“In these cases of negative pricing, wind generators are often able to pay the grid operator to take wind-generated electricity,” Harbert argued. “It is not often a business can pay its customers to take its products, but wind generators are able to recoup a profit on the back-end thanks to the PTC.”
“However, in pushing prices negative, every other generator also is forced to pay the grid to take their respective electrons or power down, but they are not made whole via the PTC,” she said. “Not only does this harm other generators like coal and gas, but it specifically hurts nuclear.”
She also said the federal wind credit, even without the effect of negative pricing, is harming the grid for nuclear power by depressing the wholesale rates managed by the regional grid operators that Washington oversees.
“Even when prices are not negative, the PTC-induced wind generation is glutting many power markets, depressing wholesale power rates,” she explained. “While these lower wholesale rates rarely result in lower retail rates paid by end-users, they are artificially distorting some power markets and Regional Transmission Organizations (RTO) making a significant number of nuclear reactors much less competitive,” Harbert said.
Eight reactors are now “either closed or are scheduled to close” in seven states due to the increased financial stress, and as many as 17 are vulnerable to premature closure, she said.
Her testimony underscores the fact that Exelon, the largest nuclear utility in the country, recently announced it will close two plants in Illinois.
Harbert notes nuclear plants have closed, or are likely to close, in Illinois, California, Massachusetts, New Jersey, New York, Vermont and Wisconsin.
Ben Zycher, a senior scholar with the conservative American Enterprise Institute, also will testify at the hearing as will Steve Miller, CEO of Bulk Handling Systems, and Susan Kennedy, CEO of Advanced Microgrid Solutions.
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