In response to an Order of the Public Service Commission (“PSC”),[1] the New York Department of Public Service (“DPS”) has submitted its Zero-Emissions Credit Program Extension Proposal.[2] The extension is widely seen as essential for maintaining the financial viability of the state’s remaining nuclear plants as they reach their license renewal decisions.
ZEC 1.0
The ZEC program was first initiated under former Governor Andrew Cuomo as support for the Upstate nuclear facilities, as the “elimination of [such] facilities, operating under valid federal licenses, would eviscerate the emissions reductions achieved through the State’s renewable energy programs, diminish fuel diversity, increase price volatility, and financially harm host communities.”[3] DPS proposed, as part of the Clean Energy Standard (“CES”), a
ZEC program creating “Tier 3” credits for those Upstate nuclear plants “facing financial difficulty.”[4] The August 1, 2016 PSC CES Order formally established the ZEC program for a twelve-year period, including a ZEC calculation methodology, with annual payments capped based on the amount of each plant’s historic contributions to the clean energy resource mix consumed by the state’s retail consumers.[5]
ZEC 1.0, as the DPS White Paper refers to the initial program, has been seen as a success, as without the program, the Ginna and Fitzpatrick nuclear facilities would have closed.[6] And the White Paper acknowledges that progress toward the State’s Zero by 40 Target under the Climate Leadership and Community Protection Act (“CLCPA”) will require a substantial amount of zero-emission resources to reliably meet statewide electricity demand by 2040.”[7] “While the Commission is pursuing programs and policies to develop renewable energy and battery storage to meet the State’s renewable energy target, these resources would be unlikely to replace any significant loss of zero-emission nuclear generation. Nuclear energy provides unique services to the grid that renewables cannot easily replicate, particularly during ‘lulls’ of wind and solar generation.”[8] According to the White Paper, the ZEC program has so far made between $462 million and $590 million in annual ZEC payments to participating facilities.
The ZEC 2.0 Proposal
Given the above, it is not surprising that DPS recommends continuation of the ZEC Program as the aging nuclear fleet approaches re-licensing. Under the White Paper Tier 3 ZECs could be sold by nuclear facilities that : (1) have an in-service date of January 1, 2015 or earlier; (2) are operating pursuant to an NRC operating license as of April 1, 2029; (3) have demonstrated the need for financial assistance to operate the facility beyond 2029; and (4) are in compliance with any other federal and state authorizations. The ZECS would operate over 11 tranches, one stub period from the current end date of April 2029 to December 31, 2029, and then in two-year increments thereafter.
The White Paper also proposed continued use of the existing ZEC formula and cost recovery methodology:
Under the cost recovery methodology, NYSERDA currently assesses each LSE [Load Serving Entity] a uniform wholesale per-MWh charge that is applied to the LSE’s actual wholesale load to calculate their monthly ZEC obligation payments beginning April 1, 2029. Each year thereafter, NYSERDA would determine, in collaboration with Staff, the dollar per MWh charge (LSE ZEC Rate) owed by each LSE for the next compliance year of the ZEC program. By utilizing the current ZEC formula methodology, the Commission can maintain an appropriate and fair value for the environmental attribute generated by the existing nuclear facilities that is independent of the actual wholesale prices for energy and capacity in the NYISO market, while ensuring that the facilities earn enough revenue to continue operating.[9]
One interesting note is that the proposal retains the requirement that only facilities that were placed in service by January 1, 2015, or earlier are eligible; thus, any new nuclear facilities that might be built pursuant to the expansion of the nuclear fleet as envisioned recently by Governor Kathy Hochul would not be eligible.[10] The White Paper notes that the eligibility criteria provide ratepayer support for ZECs for only those facilities currently contributing to the CLCPA’s goals and are providing economic and other reliability benefits.
Hodgson Russ will be following the public comments and ongoing consideration of the ZEC program renewal as it moves forward.
Disclaimer:
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[1] Case 15-E-0302, Proceeding on Motion of the Commission to Implement a Large-Scale
Renewable Program and a Clean Energy Standard, Order Adopting Clean Energy Standard
Biennial Review as Final and Making Other Findings (issued May 15, 2025) (CES Biennial Review Order).
[2] Case 15-E-0302 – Proceeding on Motion of the Commission to Implement a Large-Scale Renewable Energy Program and a Clean Energy Standard, Department Of Public Service Staff Zero-Emissions Credit Program Extension Proposal (July 31, 2025) (herein the “White Paper”).
[3] Office of the Governor of New York, Renewable Energy Letter (December 2, 2015),
available at:
https://www.governor.ny.gov/sites/default/files/atoms/files/Renewable_Energy_Letter.pdf.
[4] Case 15-E-0302, supra, Staff White Paper on Clean Energy Standard (issued January 25, 2016) (CES White Paper), at 30-31 (issued January 25, 2016).
[5] Case 15-E-0302, supra, Order Adopting a Clean Energy Standard (issued August 1, 2016)(CES Order).
[6] White Paper, supra, at 13.
[7] Id. at 17.
[8] Id. at 20.
[9] Id. at 26.
[10] Governor Hochul Directs New York Power Authority to Develop a Zero-Emission Advanced Nuclear Energy Technology Power Plant, Press Release, June 23, 2025, available at https://www.governor.ny.gov/news/governor-hochul-directs-new-york-power-authority-develop-zero-emission-advanced-nuclear-energy.