NUCLEAR ENERGY AND FEDERALISM

Nuclear energy is the new black when it comes to renewable sources of electricity, even as it has existed in America for more than 40 years.

For a time, nuclear energy was chastised as an environmentally friendly source of electric power because of the risks that were revealed by the nuclear plant meltdown in Chernobyl in late 1986, followed by a similar incident at the Fukushima Daiichi plant in 2011.

However, as solar and wind power have been either insufficient or still prohibitively expensive, nuclear energy has started to get into the good graces of the alt-energy movement, as there has been a push for more nuclear power plants to eventually replace coal-powered plants.

While there is a federal agency called the U.S. Department of Energy, most nuclear power plants fall under state regulation and lawmaking, because nuclear plants generally generate electricity only for consumers inside the state; anything that goes outside state lines is considered interstate commerce and thus are subject to federal regulation.

This is mentioned because, while most nuclear plants do provide power to residents of their state, some electrical power is bought and sold in a domestic and/or international marketplace, which means that electrical power is subject to regulation and state’s rights don’t apply. There has been some federal legislation passed that helps the feds regulate and monitor that energy marketplace and the distribution of that energy.

With those differences, how are energy credits handled? Are they a federal matter, or do they fall within state jurisdiction? After all, are these credits considered separate from the energy and are the transactions such as should be regulated like energy in a marketplace?

That question is in the appeals process after the states so New York and Illinois introduced programs designed to subsidize and support nuclear energy plants to produce electrical power with no greenhouse-gas emissions (GGEs). While on paper these seem promising, the nuclear-energy industry has filed suit, claiming that the state programs violate federal law – but brings up the question as to whether federal law even applies in these cases.

The question specifically boils down to what New York and Illinois call Zero Emissions Credits (ZECs), which are similar in ways to Renewable Energy Credits (RECs), which are approved by the Federal Energy Regulatory Commission (FERC). These credits, similar to ZECs are sold to FERC, and electric companies buy them to encourage them to provide electricity with as few GGEs as possible.

However, ZECs are treated as separate from the power the plants generate, in that these SECs are sold to the state regulatory agency at a certain price, and then electric companies in the state are then supposed to buy a proportional number of ZECs according to its percentage of sales statewide.

Federal law refers to the power itself being sold in a marketplace as having federal oversight – but there is nothing in the act regarding energy credits that are sold within a state albeit through a marketplace.

The nuclear industry wants federal law to dictate these credits and wants the state regulations to be voided based on Supremacy Clause of the U.S. Constitution. Are energy credits, not the energy itself, subject to federal oversight when they aren’t power and they are bought and sold in a state marketplace like what New York and Illinois have set up? These are going to be the bellwethers for future policies that maybe proposed in other states, so the results of these lawsuits could have large implications in the alt-energy movement.