Despite robust growth in earnings, the head of New Jersey’s largest power utility told Wall Street analysts he’d make good on his pledge to close the state’s remaining nuclear power plants unless lawmakers agree to a surcharge to keep them profitable.
And that surcharge would come in the form of higher utility bills for customers across the state.
Ralph Izzo, the chief executive of Public Service Enterprise Group, said the company set aside $276 million to account for the cost of closing the Salem and Hope Creek nuclear plants without a surcharge that would cost the typical household $31 to $41 a year. Industrial and commercial users would pay far more, with some estimates pegging their increases at more than $1 million a year.
Izzo rebutted claims by environmentalists and other critics of the proposed subsidy that PSEG, the parent company of Public Service Electric & Gas, was bluffing in its threat to close plants that accounted for more than half of the company’s power output last year. Without a bailout, the South Jersey facilities are projected to lose money by 2020, which Izzo has said would compel him to replace them with more profitable— but greenhouse gas-emitting— generators that use natural gas.
“At the risk of stating the obvious, all of our shareholders know that we will do what is right by our fiduciary responsibilities regardless of the New Jersey’s action,” Izzo told Wall Street analysts.
Debate over the future of nuclear power in New Jersey, and the cost to households and businesses, has raged since December, when lawmakers considered and then shelved a bill that would allow a rate increase if approved by the Board of Public Utilities.
As Republican Chris Christie handed off the governor’s office to Democrat Phil Murphy last month, lawmakers added provisions boosting solar and wind power. Environmentalists continued to complain that the legislation was an unfair handout to a non-renewable power source, and rival power companies bankrolled an ad campaign claiming that a profitable PSEG was enriching itself at ratepayers’ expense.
PSEG released information to investors showing that the company’s earnings have increased despite the struggles of its nuclear plants. Its net income increased by 77 percent last year over 2016, while the company boosted its dividend to shareholders by 4.7 percent.
Wall Street analysts pressed Izzo on whether he expected New Jersey lawmakers to ultimately approve the rate subsidy, and the executive repeated that he had a “high degree of confidence” that they would.
“My high degree of confidence in the ultimate outcome is matched by my uncertainty over the timing,” Izzo said.