States’ Lawmakers Should Reject Nuclear Subsidy Proposals

Mark Green
Posted April 11, 2017

A couple of months ago we had this post on Connecticut legislation that would subsidize nuclear power generation by guaranteeing markets for a state nuclear plant. We called it a bad idea and argued that the marketplace and consumers should determine an energy source’s viability based on affordability, efficiency and other factors, not government favoring one source over others.

That argument still applies in Connecticut, where the subsidy bill remains before the legislature, and also Ohio, which is considering a nuclear subsidy of its own. Ohio’s bills (House and Senate versions) would establish zero-emission credits for nuclear plants, benefiting nuclear in the marketplace against other energy sources.

Like Connecticut’s proposal, Ohio’s is another questionable idea, another governmental foray into the marketplace. API Ohio Executive Director Chris Zeigler:

“When the government picks winners and losers in the energy markets, Ohio consumers pay the price. Thanks to electricity markets and affordable natural gas, since 2008 Ohio’s wholesale electricity prices have decreased almost 50 percent. Subsidizing nuclear power distorts the market, increases costs to Ohioans and disadvantages natural gas generation.”

According to a Columbus Business First report, the Ohio legislation comes as lawmakers are otherwise working to end state renewable energy standards. The CBF report quotes state Rep. Bill Seitz from an energy conference in January: “It’s a very difficult issue for those of us whose natural inclination is to recognize free markets.”

Zeigler cautioned against negative impacts – to Ohio’s natural gas production and consumers – if the nuclear subsidy legislation is enacted:

“If put in place, this misguided precedent may have a chilling effect on Ohio’s ability to take full advantage of our state’s abundant reserves of clean-burning natural gas that have put Ohioans to work, and improved our state’s economy and environment. Moving forward, it’s critical that Statehouse leaders reject this imprudent legislation and focus on energy policies that benefit Ohioans, not hurt them.”

Let’s be clear: Government shouldn’t favor one energy over another through potentially harmful subsidies that could end up costing consumers. It’s worth noting that the Connecticut plant has earned at least $3 billion in profits since it was bought by its current owner and will earn millions more through 2030, according to one study. Likewise, a recent report by the New England States Committee on Electricity finds that New England nuclear plants will continue to cover costs and be profitable under a number of alternative scenarios. In any case, consumer interests should come first – generally, a strong argument against taxpayer-funded subsidies.

Instead of sending a market-suppressing signal that could chill investments in natural gas – affordable, reliable and environmentally beneficial – both state legislatures should restrain themselves and let the marketplace work.