(Reuters) - New York state energy regulators on Monday approved a plan to pay several upstate nuclear power plants up to $965 million over two years to keep the reactors in service and meet the state's carbon reduction goals.
The New York Public Service Commission (PSC) approved the proposed Clean Energy Standard, which requires that 50 percent of the state's power will come from clean and renewable sources of energy by 2030, including nuclear power.
The subsidies are part of an effort to keep the nuclear reactors, which produce almost no emissions, operating at a time of low prices for power as well as for natural gas, an alternative generator fuel.
New York's plan could provide a model for the rest of the country to save the struggling nuclear industry while reducing carbon emissions.
Several nuclear plants in New York and across the country may have to shut over the next few years because power prices are lower than reactor operating costs due to ample supplies of cheap gas from shale fields.
PSC staff estimated the economic and environmental benefits of keeping the reactors in service at about $5 billion over the first two years of the program, for a net benefit of about $4 billion since the cost of the nuclear subsidy was calculated at up to $965 million.
Reactors eligible for the program include Exelon Corp's Ginna and Nine Mile Point Units 1 and 2, and Entergy Corp's FitzPatrick.
"We could not possibly replace those nuclear units if they were to shut," PSC Chair Audrey Zibelman said during a question and answer period before the vote. Zibelman said the energy lost would almost certainly be replaced by fossil-fired, carbon producing power plants.
Entergy, which has said it would shut FitzPatrick in 2017, is in discussions with Exelon for the potential sale of FitzPatrick. The companies have said those discussions depend on the terms and timeliness of the state's Clean Energy Standard.
The plan included only the upstate reactors because prices there are expected to be too low to cover the operating and other costs of those plants.
Entergy's Indian Point Units 2 and 3 were not included in the program, at least for the first two years, because down state power prices were expected to remain high enough to cover the plant's operating and other costs, the report said.
Entergy is seeking to renew the operating licenses for the two Indian Point reactors, while New York Governor Andrew Cuomo has opposed the continued operation of the plant because it is located in the heavily populated New York metropolitan area about 40 miles north of New York City.
(Reporting by Scott DiSavino; Editing by David Gregorio)