PSE&G’s Rick Thigpen: Decarbonize or Face the Consequences

It's really a pleasure to be here. This is obviously a great conference. I want to thank BIA for this conversation. I want to share some thoughts about where Public Service is coming from in terms of navigating this transformation to a cleaner energy future, as well as dealing with some of the political realities that come with it, including demographic change, equity, and affordability - two very important issues, and I don't want to leave either one off the table. So having said that, I'm going to start with talking about climate change. The impacts of climate change certainly are right in front of us, and not everybody seems to be willing to accept them, but we've seen the raging wildfires in the west, we've seen the heat waves in the Pacific Northwest, and we all recently lived through Hurricane Ida. The hurricanes and the flash flooding is something that none of us will ever forget in our state. So the question really should be no longer whether or not we should address climate change, but how are we going to do it, and what are we going to do about the carbon emissions that have disrupted global climate patterns, and of course, how rapidly do we need to act, and what is the cost of inaction? So Public Service recognizes - and I'm sorry, before I go forward, any Public Service customers here? Oh, come on, there we go. All right, I was gonna say I know we have a few in here. And did anybody have the same as I did, have their grandmother say "Turn out the lights, would you own stock in Public Service?" Anybody else hear that? Okay, just curious. Public Service is recognized for decades that climate change is a real phenomenon that impacts our planet. And this summer's report from the Intergovernmental Panel on Climate Change really has settled once and for all that human influence is helping to warm our globe. And this IPCC report also makes very clear some of the steps we need to do to limit global warming to one and a half degrees Celsius, to avoid some of the worst consequences of climate change. The takeaway from this message is really unequivocal: the warming will continue until we decarbonize the world economy, and our choice is clear: decarbonize or face the consequences. And Ida gave us a little taste, as well as Superstorm Sandy, what those consequences are.

And you know, the consequences to face are not small in any regard. Right. So far this year, 538 people have died from America's climate disasters, more than twice the number of deaths from 2020. Total property losses due to infrastructure damage are up over a hundred billion dollars so far, and Hurricane Ida is apparently the most expensive among them, over 60 billion dollars. And in response to this and other stimulus, the Biden administration is calling for the decarbonization of the power sector by 2035. And clearly, the effects of climate change are also likely to contribute to an increase in air pollution, leading to respiratory problems, cardiovascular health problems, asthma, and hay fever, etc., etc. So as a result of this reality and being downwind from fossil fuel generators to our west, New Jersey has an aggressive climate change and clean air policy of its own, focused on the transition to cleaner energy. And that's certainly about pursuing the rapid development of renewables. We've talked a lot about offshore wind. I see solar's on the agenda today. Phasing out fossil generation by 2050, I believe, is our current standard. Adapting the electric grid to accommodate these changes with distributed energy resources, electrification of transportation, and retaining existing carbon-free resources in the state. And of course, from our point of view, that first and foremost is nuclear. So thanks to the clear and compelling evidence that climate change is real, what's also changing, what should give us all hope for the future, is that a majority of the public in our state now supports the transition to a clean energy future. But none of us should think that the politics will end there. And making this transition with an eye to equity is something that we have to all keep in mind. And what are the policy changes that have to be considered as we try to make this transition more equitable than many people believe the past has been? And as some people say, necessity is the mother of invention. And I want you to know that a new Public Service is being born. What you may not have realized is that Public Service has, over the past decade, been transitioning our business to face the climate realities and deal with the realities of climate change. We have a vision at Public Service; we call it "Powering Progress" to help our customers use less energy. Hear that? To help our customers use less energy, to ensure that the energy they use is cleaner, and to deliver it more and more reliably, which the pandemic has only accelerated. I'll ask one more time: raise your hand if you work from home now. So that number is growing. You know, commercial reliability standards are the highest standards, and we've previously focused on downtown commercial districts for the highest standards of reliability. But increasingly in the future, commercial reliability is going to include residential reliability. So that's another part of the upgrade that's going to be necessary in order to just simply deal with the changes that are happening in our society. We realized, as a clean energy infrastructure company - and I want you all to remember Public Service as a clean energy infrastructure company - it is also our responsibility to help lead the charge in New Jersey by helping to make a necessity of fighting climate change a virtue, by creating jobs and by supporting workforce development initiatives, paying attention to equity as we create new opportunities to meet the needs of the future, as we help to modernize our energy infrastructure to meet the needs of all of our residents and businesses, both for today and tomorrow. We want you to see our company as a company helping to shape a brighter future in New Jersey by being committed to sustainability and by doing it equitably. Over the summer, Public Service announced its new climate vision for net-zero emissions by 2030. The new PSEG climate vision is one of the first and most aggressive net-zero 2030 visions set by any large utility in the country. And there are three basic goals: zero carbon from generation, net-zero carbon from utility operations, and a commitment to advocate for policies consistent with economy-wide decarbonization. So the Public Service of tomorrow will not be the Public Service our grandparents used to talk about. And just last week, we joined the UN's Race to Zero campaign, a global compact intended to build momentum around the shift to decarbonize the economy ahead of COP 26, the working group established to implement the Paris Climate Accords. The intent is to send governments around the world and here at home a resounding signal that businesses, cities, regions, governments, and investors are united in meeting the Paris goals and creating a more resilient and inclusive economy for the future. As a clean energy-focused infrastructure company, our commitment falls into two distinct buckets: first, to decarbonize the energy sector and the economy to help address the root causes of climate change, and second, to modernize our energy infrastructure to help our state, our customers, and our communities be more resilient against the impacts of climate change that are already here. And here's some of what we're doing to accomplish these goals. When it comes to generating electricity, we've taken a number of steps. We are exiting from the fossil fuel generation business, including the retirement or sale of our coal power plants and all of our remaining gas generation assets. We've also begun to commit significant investment dollars to support development of the growing East Coast offshore wind industry. We have an exciting new role as a partner to the Danish offshore wind giant Ørsted's 1,100-megawatt Ocean Wind 1 project off the coast of Ocean City, New Jersey's first offshore wind project. We are continuing the exploration of new investments in offshore wind generation and transmission in and around the state. You heard Chris talk about that a little bit. And we are working with the Economic Development Administration to develop the New Jersey Wind Port, which you talked about in Salem County, that will serve as a marshaling hub and that will help make New Jersey a leader for the entire East Coast wind industry. But the single most important thing that we can do, and the reason I'm here today, is to preserve the existing carbon-free energy resources we already have: the Salem and Hope Creek nuclear power plants in Salem County, the second largest commercial nuclear campus in America and one of our state's economic crown jewels and premier clean energy assets nationwide. Today, existing nuclear plants already play a significant role in our present-day energy portfolio, providing 20% of our nation's electricity, but about 50% of our carbon-free electricity. And that is critical to addressing climate change. Obviously, in New Jersey, Salem and Hope Creek provide about 36 to 37% of the state's electricity. So all of you use some of our products no matter where you live in the state of New Jersey, and about 90% of the carbon-free power that's currently generated in New Jersey.

Salem and Hope Creek are also responsible for 1,600 direct jobs and about another 3,000 indirect jobs, as well as contributing over a billion dollars to our state's GDP. Without these nuclear power plants and the carbon-free baseload power they generate, it will be virtually impossible for New Jersey to reduce its carbon footprint or achieve its clean energy goals in an affordable fashion. Allowing these plants to close will also export over 4,000 jobs out of our state, over a billion dollars in economic activity, and about 40 million dollars in tax revenue out of our state. Without a national price on carbon, one of the many political realities we're struggling with, nuclear power's economic struggles are real and they continue all across the country. To date, 11 reactors in 10 states have retired early, mostly due to economic conditions. Another eight have announced plans to retire prematurely, while 16 reactors that were at risk of closing prematurely, including PSEG's Salem and Hope Creek nuclear plants, remain in operation because states stepped in to compensate them for the carbon-free power they provide. So let me not forget to say thank you to New Jersey for helping keep Hope Creek and Salem nuclear power plants alive. We are pleased that the Murphy administration recognized that the premature retirement of these plants would lead to a large increase in fossil fuel generation and emissions. All that would do is lead the state to backslide on decarbonization progress that it has made so far, and then all of our conversation today would be about how to get back to where we were before those plants closed. When a nuclear power plant is forced to retire prematurely, as many plants in competitive markets have done in recent years, we know that carbon emissions begin to rise almost immediately because the lost nuclear generation is replaced with the least expensive resource under current market conditions, which in most cases is natural gas. The lesson is quite clear. In New Jersey, for instance, when Oyster Creek nuclear power plant retired a few years ago, carbon emissions in our region rose by 3 million tons in the first 12 months. The state of New Jersey does clearly recognize the value of its existing nuclear fleet as it pertains to climate change. The analysis conducted by our BPU and the Rocky Mountain Institute clearly supports the fact that the existing in-state nuclear power fleet is crucial to meet the state's goals under the EMP and a cost-effective transition to a carbon-neutral supply. New Jersey's lawmakers and our regulators have already provided significant help in the form of zero-emission certificates, or ZECs. Some of you might have heard something about that, both in 2018 and again just this year. But even that may not be enough to ensure the long-term viability of our nuclear plants, considering what's going on in our country.

Earlier this year, congressional lawmakers in the House of Representatives have approved language, it's called a nuclear production tax credit, sponsored by Congressman Bill Pascrell from Paterson, and in the Senate co-sponsored by Senator Booker, that would provide a federal lifeline for the nation's merchant nuclear power plants, of which we have three in our state, shoring up nuclear power for the long term and finally providing national support for what is truly a national energy resource. The fate of this provision is tied up in the reconciliation package that is currently being negotiated between the House and the Congress. Those politics are beyond our control, but it's worth watching that reconciliation package has something in it for New Jersey, and people should not forget that. And special thanks to Congressman Pascrell as well as Senator Booker. It's imperative that nuclear power plants do receive federal support for their carbon-free attributes, because the absence of a price on carbon is a federally created reality. The problems we experience in New Jersey are created by the federal government, and it makes it appropriate for the federal government to step in and play its role to solve this problem.

But so having said that, from the world of Public Service, that is not all. For more than a century, PSEG has played a major role in the design, development, construction, and caretaking of New Jersey's energy infrastructure. And moving forward, we are making modernization of that aging infrastructure to meet the needs of our clean energy future our company's top priority, in order to help reduce climate-harming emissions. And it's really an essential part of the journey for New Jersey if it's going to reduce its greenhouse gas emissions, like we are committed to, and like is in the best interest of our state. Not only are we modernizing our gas system, as Steve just talked about, we have the nation's largest network of cast iron and unprotected gas steel infrastructure under our streets, and the need to modernize it for whatever the future holds is absolutely essential. Our Energy Strong program, responding to Superstorm Sandy, and helping to raise our stations, many stations never took water, built during the administrations of Roosevelt and Eisenhower, but they took flooding during Superstorm Sandy, and we've seen that trend continue. So we've raised them, and we found that reliability has been significantly increased by taking preemptive measures to ensure that electric distribution infrastructure is protected from the rising waters that are happening along our inland waterways and along our coastline, of which New Jersey is blessed with enormous amounts. I believe about 130 miles of coastline, plus another 83 miles of coastline along the Raritan Bay and the Delaware Bay. So we are especially susceptible to climate change in the future. And then the thing that I haven't mentioned enough, perhaps most importantly, is energy efficiency. Right, everybody's grandmother was right: turn out the lights when you leave a room. We Americans are energy hogs. We consume far too much energy per capita for our standard of living than most people around the world. That is beginning to have an increasingly difficult impact on our environment and ultimately on the fate of our globe. We, Public Service, who make a living on selling energy, recognize that the smartest way to fight climate change is to get you to reduce your energy consumption. And what better way to create jobs all across the state, in communities that have been left behind by our economy, than to hire young people to be trained to do energy efficiency work all across our state? There is no wisdom to leave anybody out of the challenge of energy efficiency because they don't have the money to pay. That doesn't make any sense in the challenge of climate change and will be forsaking opportunity to provide much-needed economic stimulus in areas that are going to help make our state more prosperous in the future. So we are very proud of our role in energy efficiency. And then of course, electrification of transportation, which is quite a far-reaching journey, and the need for advancing our infrastructure to meet the electrification of transportation is quite important.

So in conclusion, in addition to the climate-focused investments I've discussed, we've taken a number of steps during the past year to continue to push our commitment. Next month, I want you to know our chairman, Ralph Izzo, is going to the COP over in Scotland to participate with world leaders in discussing the ways to reduce Scope 1, Scope 2, and Scope 3 emissions. Historically, we've taken the all-of-the-above approach to supplying energy, and we have to include energy efficiency in the all-of-the-above approach. But none of this great progress our state has made to combat climate change can be made without protecting and preserving our nuclear power plants. We are extremely pleased we have a gentleman in the position of being the state Senate president who understands the importance of this issue, who gives it a powerful voice. But no one should doubt for a second that this is in the best interest of New Jersey, and preserving nuclear properly is a smart move for us to fight climate change and move forward into the clean energy future. And to make that clean energy future affordable to all residents, we need to include nuclear. And I just finished by using the words I've said several times: we have to pay attention to equity so that we leave no one behind as we move forward together. I want to thank you all for listening, and I will take questions or be thrown off by Ray, depending how he feels about it.

Well, so the truth is nuclear politics are quite challenging, and there is a conversation about next-generation nuclear. Many people continue to be afraid of some of the elements of nuclear operations. We feel very proud for New Jersey, we have a long record of safety, but some continue to be concerned about nuclear waste. The word that I want to add is innovation. And the world of innovation is bringing new technologies to the table. They're talking about smaller modular nuclear reactors and improving the technology. I believe that nuclear has a place in that future, but I believe that as we're exploring offshore wind and solar and hopefully reducing our energy consumption, that we're going to continue to find innovative ways to meet that and have an all-of-the-above approach, with a new all-of-the-above that doesn't include fossil fuels. And I just want to mention the last thing is, you know, about 80% of our energy consumption is fossil fuels. Everybody, this is a big deal. This transition, we got a lot of work to do. And that's one of the reasons why accepting nuclear as a necessity to stay around is one of the important challenges, because we have a journey to get there. And I'll just mention, I just read the other day that France is now beginning to look toward building new nuclear power plants, as is England.