Governor wants Pennsylvania to join greenhouse gas reduction program

(Reuters) - Democratic Pennsylvania Governor Tom Wolf asked Republican lawmakers on Tuesday to authorize the state to join a program to reduce greenhouse gas emissions in several Northeastern U.S. states, according to a report from the Associated Press.

An analyst at Height Capital Markets in Washington said on Wednesday that discussion on the market-based Regional Greenhouse Gas Initiative (RGGI) was likely related to a nuclear bailout deal, that would provide subsidies to prevent reactors from retiring.

The governor’s office, however, said Wolf did not talk to lawmakers about a nuclear bailout on Tuesday and that the AP story came from state fiscal year-end budget negotiations, which Wolf was not commenting on.

Height Capital Markets said momentum to join RGGI is gaining in Pennsylvania but noted it was unclear at this point whether the Republican-majority legislature would be willing to authorize joining RGGI in exchange for nuclear subsidies.

Legislators in Pennsylvania have been working on a plan to subsidize nuclear power to keep reactors from retiring.

Pennsylvania’s nine nuclear reactors provide thousands of jobs and most of the state’s non-carbon emitting generation.

In recent years, electricity prices have been depressed by cheap natural gas from shale fields, including the Marcellus in Pennsylvania, and increased use of renewable power. This has made some nuclear and coal plants uneconomical, and forced generators to shut several units over the past five years.

Joining RGGI would create additional costs for several power companies that operate coal plants in Pennsylvania, like FirstEnergy Corp’s bankrupt FirstEnergy Solutions unit.

FirstEnergy Solutions said it could shut its 2,490-megawatt (MW) Bruce Mansfield coal plant and the 1,808-MW Beaver Valley nuclear plant in Pennsylvania in 2021 unless the state or federal government finds a way to provide more money for the facilities.

One megawatt can power about 1,000 U.S. homes.

FirstEnergy Solutions said it has not seen the details of Wolf’s RGGI proposal but said it “applauds (the governor) for continuing the conversation about carbon free energy generation ... (and) looks forward to remaining part of the discussion and greenhouse gas reduction solution.”

A nuclear bailout plan, however, did not come soon enough for Exelon Corp’s Three Mile Island plant, the site of the worst nuclear accident in U.S. history in 1979. Exelon said in May it would shut the one reactor operating there on Sept. 30.

The state’s other reactors are operated by Exelon at Limerick and Peach Bottom and privately held Talen Energy at Susquehanna.

Height Capital Markets expects Pennsylvania legislators will resume negotiations on a nuclear bailout in the autumn and noted Wolf’s comments appear to be an early public nod to negotiations occurring behind the scenes.

Reporting by Scott DiSavino; editing by Jonathan Oatis and Marguerita Choy