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Plan to bail out nuclear power plants will cost cities millions

A plan to offer a $7.6 billion subsidy to the company controlling most of New York's nuclear power plants will cost the City of Buffalo about $3.35 million in added utility costs, according to a new analysis by the Alliance for a Green Economy.

The subsidy to Chicago-based Exelon Corp. - which owns two plants and has agreed to purchase a third - is part of a larger energy plan that aims to convert half of the state's power sources to renewable energy over the next decade. It will be paid for with a surcharge added on the energy bills of New York customers for the next 12 years.

Gov. Andrew M. Cuomo has justified the subsidy by saying nuclear power is cleaner than other fuel sources, and the state needs this type of energy as it transitions from fossil fuels to renewable sources. The subsidy also aims to prevent the job losses that would come if the plants have to close. The plants - among the oldest in the country - are all struggling because of aging facilities and rising operational costs. Excelon has threatened to shut down part of its operations.

Still, that's little comfort to environmental and public interest groups, which have already filed a lawsuit arguing that the state overstepped its authority by trying to regulate energy prices. The suit argues that all of the state's utility customers will pay the cost of bailing out the struggling plants.

Previous studies have put the potential impact on residential customers at $2.3 billion. The new study by the alliance now projects the cost for the state's six largest municipalities at about $220 million.

“These are sizable increases to city budgets, and yet municipalities weren’t warned ahead of time or provided an adequate opportunity to comment on these looming rate hikes," said Jessica Azulay, who conducted the analysis. "We performed these calculations to help cities and towns start to understand how this will affect their budgets, but unless the governor changes the policy, local governments won’t have a choice about where these energy dollars go. They will be forced to subsidize dirty and dangerous nuclear plants rather than have the opportunity to spend these funds on their own clean energy programs."

The alliance came up with the figure using a formula based on the number of megawatt hours used by each municipality, as reported in public records. It notes that the bailout is the largest-ever transfer of wealth from the public to one corporation in the state's history.

“Cities and counties are struggling to fund basic services for New Yorkers," said Blair Horner, the executive director of the New York Public Interest Group. "To be asked to dig deeper into the pockets of their constituents so a huge, profitable energy company can keep three outdated nuclear plants open is simply unfair and wrong-headed, especially when many areas of the state will not receive little, if any, of the energy produced by the plants.”

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