Court Opinion

ID: 4669518
Source: CourtListenerOpinion
Date Created: 2021-03-19 14:09:53.612554+00
Date Added: 2024-06-11T07:59:24.989709
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
            APPROVAL OF THE APPELLATE DIVISION

                                SUPERIOR COURT OF NEW JERSEY
                                APPELLATE DIVISION
                                DOCKET NO. A-3939-18

IN THE MATTER OF THE
IMPLEMENTATION OF L. 2018,
C. 16 REGARDING THE
ESTABLISHMENT OF A ZERO
EMISSION CERTIFICATE               APPROVED FOR PUBLICATION
PROGRAM FOR ELIGIBLE
                                          March 19, 2021
NUCLEAR POWER PLANTS,
                                       APPELLATE DIVISION

and

APPLICATION FOR ZERO
EMISSION CERTIFICATES OF
SALEM 1 NUCLEAR
POWER PLANT,

APPLICATION FOR ZERO
EMISSION CERTIFICATES OF
SALEM 2 NUCLEAR
POWER PLANT,

APPLICATION FOR ZERO
EMISSION CERTIFICATES OF
HOPE CREEK NUCLEAR
POWER PLANT.
____________________________

         Argued December 9, 2020 – Decided March 19, 2021

         Before Judges Whipple, Rose, and Firko.

         On appeal from the New Jersey Board of Public
         Utilities, Docket Nos. EO18080899, EO18121338,
         EO18121339 and EO18121337.
Stefanie A. Brand, Director, argued the cause for
intervenor-appellant New Jersey Division of Rate
Counsel (Stefanie A. Brand, attorney; Stefanie A.
Brand, Brian O. Lipman, Litigation Manager, and
Sarah H. Steindel, Assistant Deputy Rate Counsel, on
the briefs).

David Chester Apy, Assistant Attorney General,
argued the cause for respondent New Jersey Board of
Public Utilities (Gurbir S. Grewal, Attorney General,
attorney; Melissa H. Raksa, Assistant Attorney
General, of counsel; Alex Moreau, Deputy Attorney
General, on the brief).

Christopher S. Porrino argued the cause for
intervenors-respondents Public Service Enterprise
Group Incorporated and PSEG Nuclear, LLC
(Lowenstein Sandler, LLP, attorneys; Christopher S.
Porrino, Peter Slocum, Tamara Linde, Grace H. Park,
Aaron I. Karp, and Joseph Accardo, Jr., on the brief).

Steven S. Goldenberg argued the cause for intervenor-
respondent New Jersey Large Energy Users Coalition
(Giordano, Halleran & Ciesla, PC, attorneys; Steven
S. Goldenberg, of counsel and on the brief).

George C. Jones argued the cause for intervenor-
respondent PJM Power Providers Group (McElroy,
Deutsch, Mulvaney & Carpenter, LLP, attorneys;
Joseph P. LaSala, of counsel; George C. Jones, on the
brief).

Matthew M. Weissman, attorney for intervenor-
respondent Public Service Electric and Gas Company;
Cozen O'Connor, PC, attorney for intervenor-
respondent Jersey Central Power & Light Company;
and Philip J. Passanante, attorney for intervenor-
respondent Atlantic City Electric Company (Matthew

                                                         A-3939-18
                          2
M. Weissman, Gregory Eisenstark, and Philip J.
Passanante, on the joint brief).

Day Pitney, LLP, Jeanne J. Dworetzky (Exelon
Generation Company, LLC) of the District of
Columbia bar, admitted pro hac vice, and Matthew E.
Price (Jenner & Block, LLP) of the District of
Columbia and Massachusetts bars, admitted pro hac
vice, attorneys for intervenor-respondent Exelon
Generation Company, LLC (Christopher John Stracco,
Jeanne J. Dworetzky, Matthew E. Price, and Andrew
J. Lichtman, on the brief).

Carlin & Ward, PC and Jeffrey W. Mayes (Monitoring
Analytics, LLC) of the Pennsylvania, Virginia, and
District of Columbia bars, admitted pro hac vice,
attorneys for intervenor-respondent Monitoring
Analytics, LLC (Michael J. Ash and Jeffrey W.
Mayes, of counsel and on the brief).

Szaferman, Lakind, Blumstein & Blader, PC,
attorneys for amicus curiae AARP (Janine G. Bauer,
on the brief and Evelyn Liebman).

Connell Foley, LLP, and Ann Brewster Weeks (Clean
Air Task Force) of the Massachusetts bar, admitted
pro hac vice, attorneys for amicus curiae Clean Air
Task Force (Thomas S. Cosma and Ann Brewster
Weeks, on the brief).

Richard M. Pescatore, PC, and Bethany A. Davis Noll
(Institute for Policy Integrity) of the New York bar,
admitted pro hac vice, attorneys for amicus curiae
Institute For Policy Integrity (Jennifer Carlson and
Bethany A. Davis Noll, on the brief).

Sills Cummis & Gross, PC, attorneys for amicus
curiae Nuclear Energy Institute, Inc. (Peter G.
Verniero and Michael S. Carucci, of counsel and on
the brief).

                                                        A-3939-18
                         3
      The opinion of the court was delivered by

WHIPPLE, J.A.D.

      In 2007, the New Jersey Legislature passed the Global Warming

Response Act, N.J.S.A. 26:2C-37 to -68, having declared that it was in the

State's interest to reduce greenhouse gas emissions by eighty percent by 2050.

In furtherance of that goal, in 2018 the Legislature enacted a Zero Emission

Certificate (ZEC) program for eligible nuclear power plants, L. 2018, c. 16,

codified at N.J.S.A. 48:3-87.3 to -87.7 (the ZEC Act). The purpose of the ZEC

Act is to subsidize nuclear power plants at risk of closure, helping them to

remain operational despite competition from other carbon-emitting power

sources, in the interest of New Jersey's clean energy goals. The Board of

Public Utilities (the Board) administers the ZEC program, reviews

applications, and selects eligible nuclear power plants to receive ZECs.

      The Board considered ZEC applications from the Salem 1, Salem 2 and

Hope Creek nuclear power plants located in Salem County. Following an

extensive review of the applications, including voluminous confidential

financial information about the nuclear power plants' costs and revenues,

certifications that the plants would shut down in three years absent a material

financial change, as well as consideration of thousands of public comments,

the Board determined that all three applicants satisfied the five statutory

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eligibility criteria codified at N.J.S.A. 48:3-87.5(e) and should receive ZECs.

In this appeal, we address challenges to the Board's decision. Because the

Board's decision is adequately supported by the record and consistent with

both the ZEC Act's plain language and the legislative intent, we affirm.

                                       I.

      Significant ZEC subsidy costs are ultimately passed on to consumers;

thus, the New Jersey Division of Rate Counsel (Rate Counsel) appealed the

Board's decision, arguing it was arbitrary, capricious, or contrary to law for

various reasons. Rate Counsel contended none of the nuclear power plants

need ZECs to remain financially viable and therefore do not satisfy the third

statutory eligibility criterion. Rate Counsel advanced other general challenges

to aspects of the Board's findings and conclusions, asserting the Board did not

interpret certain aspects of the ZEC Act correctly, and further argued that the

Board ignored its responsibility to ensure that the $0.004-per-kilowatt-hour

charge mandated in the ZEC Act to fund the ZEC program was just and

reasonable.

      Rate Counsel was an intervenor before the Board based upon its

statutory authority to represent and protect the public interest.      N.J.S.A.

52:27EE-48(a).    Respondent     Monitoring    Analytics,   LLC    (Monitoring

Analytics), also an intervenor, is the Independent Market Monitor (IMM) for

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PJM Interconnection, LLC. 1      In its role as IMM, Monitoring Analytics

objectively monitors the competitiveness of PJM's markets.

      Numerous other stakeholders participated before the Board and in this

appeal. Respondent Exelon Generation Company, LLC (Exelon) participated

as co-owner of the Salem 1 and Salem 2 nuclear power plants with respondent

PSEG Nuclear, LLC (PSEG Nuclear). PSEG Nuclear is the sole owner of the

Hope Creek nuclear power plant and has the sole and exclusive authority to

make decisions regarding the retirement of all three plants. PSEG Nuclear

submitted ZEC applications to the Board for Salem 1, Salem 2, and Hope

Creek.

      Respondents Public Service Electric and Gas Company (PSE&G), Jersey

Central Power & Light Company (JCP&L), and Atlantic City Electric

Company (ACE), are investor-owned electric distribution companies (EDCs).

      Respondent PJM Power Providers Group (P3) is a nonprofit organization

of power providers whose mission is to promote properly designed and well-

functioning competitive wholesale electricity markets in the region served by

1
    PJM Interconnection, LLC (PJM) manages the regional, high-voltage
electricity grid serving all or parts of thirteen states including New Jersey and
the District of Columbia, operates the regional competitive wholesale electric
market, manages the regional transmission planning process, and establishes
systems and rules to ensure that the regional and in-state energy markets
operate fairly and efficiently. N.J.S.A. 48:3-51.

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                                       6
PJM. Respondent New Jersey Large Energy Users Coalition (NJLEUC) is an

association of large volume electric customers.

      We also granted AARP, Nuclear Energy Institute, Inc. (NEI), Institute

for Policy Integrity (IPI) and Clean Air Task Force leave to file amicus briefs.

                                       II.

      As a subsidy promoting nuclear power, a ZEC is "a certificate, issued by

the [B]oard or its designee, representing the fuel diversity, air quality, and

other environmental attributes of one megawatt-hour of electricity generated

by an eligible nuclear power plant selected by the [B]oard to participate in the

program." N.J.S.A. 48:3-87.4. To be deemed eligible by the Board, a nuclear

power plant must meet the following five criteria:

            (1) be licensed to operate by the United States Nuclear
            Regulatory Commission by the date of enactment of
            this Act and through 2030 or later;

            (2) demonstrate to the satisfaction of the [B]oard that
            it makes a significant and material contribution to the
            air quality in the State by minimizing emissions that
            result from electricity consumed in New Jersey, it
            minimizes harmful emissions that adversely affect the
            citizens of the State, and if the nuclear power plant
            were to be retired, that that retirement would
            significantly and negatively impact New Jersey's
            ability to comply with State air emissions reduction
            requirements;

            (3) demonstrate to the satisfaction of the [B]oard,
            through the financial and other confidential
            information submitted to the [B]oard pursuant to

                                                                          A-3939-18
                                        7
            subsection a. of this section, and any other information
            required by the [B]oard, . . . that the nuclear power
            plant's fuel diversity, air quality, and other
            environmental attributes are at risk of loss because the
            nuclear power plant is projected to not fully cover its
            costs and risks, or alternatively is projected to not
            cover its costs including its risk-adjusted cost of
            capital, and that the nuclear power plant will cease
            operations within three years unless the nuclear power
            plant experiences a material financial change;

            (4) certify annually that the nuclear power plant does
            not receive any direct or indirect payment or credit
            [from the state, federal government, or regional
            compact] . . . despite its reasonable best effort to
            obtain any such payment or credit, for its fuel
            diversity, resilience, air quality or other environmental
            attributes that will eliminate the need for the nuclear
            power plant to retire, except for any payment or credit
            received under the provisions of this act; and

            (5) submit an application fee to the [B]oard in an
            amount to be determined by the [B]oard, but which
            shall not exceed $250,000, to be used to defray the
            costs incurred by the [B]oard to administer the ZEC
            program.

            [N.J.S.A. 48:3-87.5(e).]

      The central issue in this appeal is the satisfaction of the third statutory

criterion, financial eligibility. ZEC applicants must provide the Board with

extensive financial information about the nuclear power plant,

            including, but not limited to, certified cost projections
            over the next three energy years, including operation
            and maintenance expenses, fuel expenses, including
            spent fuel expenses, non-fuel capital expenses, fully
            allocated overhead costs, the costs of operational risks

                                                                          A-3939-18
                                       8
              and market risks that would be avoided by ceasing
              operations, and any other information, financial or
              otherwise, to demonstrate that the nuclear power
              plant's fuel diversity, air quality, and other
              environmental attributes are at risk of loss because the
              nuclear power plant is projected to not fully cover its
              costs and risks, or alternatively is projected to not
              fully cover its costs and risks including its risk-
              adjusted capital.

              [N.J.S.A. 48:3-87.5(a).]

      For purposes of this subsection, operational risks include, but are not

limited to, the risk that operating costs will be higher than anticipated because

of new regulatory mandates or equipment failures and the risk that per-

megawatt-hour costs will be higher than anticipated because of a lower than

expected capacity factor. Market risks include, but are not limited to, the risk

of a forced outage and the associated costs arising from contractual

obligations, and the risk that output from the nuclear power plant may not be

able to be sold at projected levels. Id.

      Applicants must also include a certification that the nuclear power plant

will cease operations within three years unless the nuclear power plant

experiences a material financial change; the certification shall specify the

necessary steps required to be completed to cease the nuclear power plant's

operations.

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                                           9
                                                               2
      The ZEC Act contains a confidentiality provision             to protect the

information submitted by ZEC applicants and mandates procedural timelines

for establishment of the ZEC program by the Board, submission of ZEC

applications and selection of eligible nuclear plants to receive ZECs, all of

which were met. N.J.S.A. 48:3-87.5(b), (c), (d).

      The selected nuclear power plants must certify annually that they remain

eligible for ZECs pursuant to the ZEC Act's requirements. N.J.S.A. 48:3-

87.5(h)(2), (3). For the first energy year, the eligible nuclear power plant

receives a number of ZECs equal to the number of megawatt-hours of

electricity it produced in that energy year starting on the date the Board

selected it. N.J.S.A. 48:3-87.5(g)(2). For each subsequent energy year, the

eligible nuclear power plant receives a number of ZECs equal to the number of

megawatt-hours of electricity that it produced in that energy year. Ibid.

2
   During the Board proceedings, the Attorney General and the Board approved
the requests by intervenors for access to confidential information in the record,
including the three ZEC applications, pursuant to N.J.S.A. 48:3-87.5(a), upon
determining that both parties were "essential to aid the Board in making the
applicable determinations under the [ZEC] Act" and that the disclosure would
not harm competition. None of the other parties were granted access to any of
the confidential information. Consequently, the Board issued two versions of
its order, decision, and attachments thereto:         a public version and a
confidential version. Rate Counsel, Exelon, and PSEG Nuclear filed public
and confidential versions of their appellate briefs and appendices. Our
decision is based on the confidential record.

                                                                            A-3939-18
                                       10
      The ZEC Act requires the Board to determine the price of a ZEC for

each energy year:

              by dividing the total number of dollars held by electric
              public utilities in the accounts established pursuant to
              paragraph (1) of subsection j. of this section at the end
              of the prior energy year by the greater of: [forty]
              percent of the total number of megawatt-hours of
              electricity distributed by the electric public utilities in
              the state in the prior energy year, or the number of
              megawatt-hours of electricity generated in the prior
              energy year by the selected nuclear power plants.

              [N.J.S.A. 48:3-87.5(i)(1).]

      The ZEC Act further requires EDCs to purchase ZECs on a monthly

basis from each selected nuclear power plant with payment to follow within

ninety days after the conclusion of the first energy year in which selected

nuclear power plants receive ZECs, and within ninety days after the conclusion

of each subsequent energy year. N.J.S.A. 48:3-87.5(i)(2). The total number of

ZECs that each EDC is required to purchase is equal to the total number of

ZECs received by the selected nuclear power plants for the prior energy year,

multiplied by the percentage of electricity distributed in the State by the

electric public utility as compared to other electric public utilities in New

Jersey. Id.

      This purchase is funded through a charge imposed on retail customers.

N.J.S.A. 48:3-87.5(j)(1). The ZEC Act requires EDCs to file a tariff to recover

                                                                            A-3939-18
                                          11
from its retail distribution customers a charge in the amount of $0.004 per

kilowatt-hour, which reflects the emissions avoidance benefits associated with

the continued operation of selected nuclear power plants.        Following an

opportunity for comment, public hearing and the Board's approval, the revenue

collected from the charge is held in a separate, interest-bearing account used

solely to purchase ZECs. Any excess money in that account at the end of each

energy year is refunded to customers. N.J.S.A. 48:3-87.5(j)(2). The ZEC Act

also contains refund mechanisms triggered by a nuclear power plant's cessation

of operations despite having received ZECs. N.J.S.A. 48:3-87.5(k).

      In order to ensure that the ZEC program remains affordable to New

Jersey retail distribution customers, and notwithstanding the provisions of

N.J.S.A. 48:3.87.5(j)(1), the Board may reduce the $0.004-per-kilowatt-hour

charge at certain times, and under certain circumstances set forth in N.J.S.A.

48:3-87.5(j)(3)(c). For example, the Board may reduce the charge if it does

not certify any nuclear power plants for a subsequent eligibility period upon

determining that a reduced charge will nonetheless be sufficient to achieve the

state's air quality.   This would meet other environmental objectives by

preventing the retirement of the nuclear power plants that meet the eligibility

criteria established pursuant to subsections (d) and (e).

                                                                        A-3939-18
                                        12
                                       III.

      On August 29, 2018, the Board initiated the ZEC program, with a

vigorous application and review process. The Board created an Eligibility

Team (ET) to evaluate and rank the applications based upon the five criteria

set forth in the ZEC Act and stated its intent to hire a consultant to assist its

staff. It determined that after the initial three-year award of ZECs to a unit, it

would evaluate the set kilowatt-hour charge established by the ZEC Act and

modify that amount if necessary, pursuant to N.J.S.A. 48:3-87.5(j)(3).

      The Board issued orders accepting the tariffs filed by EDCs for the

recovery of the ZEC charges from their customers but directed that the tariffs

not be implemented unless and until the Board issues a final order authorizing

the EDCs to implement the ZEC program. The Board selected Levitan &

Associates, Inc. (Levitan) as a consultant to assist its staff with evaluation and

ranking of the ZEC applications.

                                       IV.

      With these procedures in place, on December 19, 2018, PSEG Nuclear

submitted ZEC applications for Salem 1, Salem 2 and Hope Creek. Applicants

each submitted a confidential application designed to elicit information that

tracked the statutory eligibility criteria, which included: I. General Applicant

Information; II. Generation Asset Information and Operation; III. Zero

                                                                           A-3939-18
                                       13
Emission Credit Justification – Financial; IV. Zero Emission Credit

Justification – Environmental; V. Impact of the Unit's Deactivation; and VI.

Miscellaneous. Section VII sought thirty-eight supplemental submissions from

each applicant, including a certification that the nuclear power generation unit

will cease operations within three years unless the nuclear power plant

experiences a material financial change.        The information sought from

applicants in Section III of the application pertained to projected costs and is

especially relevant to the issues raised on appeal.       The first category of

information sought:

            [C]ertified cost projections over the next three (3)
            energy years, including operation and maintenance
            expenses; fuel expenses, including spent fuel
            expenses; on-fuel capital expenses; fully allocated
            overhead costs; the costs of operational risks and
            market risks that would be avoided by ceasing
            operations to demonstrate that the plant is projected to
            not fully cover its costs and risks, or alternatively is
            projected to not fully cover its costs and risks,
            including its cost of capital, or alternatively its risk-
            adjusted cost of capital.

      The second category required applicants to:

            Demonstrate that the unit is financially unviable, i.e.,
            if the unit's revenue and funding outweighs the
            avoided costs expenses (operations, training,
            engineering, materials, fuel, etc.) of the unit, for each
            year through 2030.              Provide all backup
            documentation.

                                                                         A-3939-18
                                       14
      Because Rate Counsel does not contend on appeal that the applicants

failed to satisfy all of the eligibility criteria, we limit our discussion to those

aspects of the applications pertaining to the third eligibility criterion, codified

at N.J.S.A. 48:3-87.5(e)(3), financial viability.

      The applicants' cost projections included the following categories of

expenses:    labor and materials, outside services such as contractors and

maintenance, real estate taxes, support services such as accounting, human

resources, etc., fully allocated corporate overhead, spent fuel, working capital,

fuel and non-fuel capital expenditures, regulatory and other fees and expenses,

operational risks and market risks. Their revenue projections included energy,

capacity, and ancillary revenue.

      Rate Counsel asserted the applicants are financially viable without ZECs

because the applicants improperly included operational risks, market risks,

spent fuel costs, certain support service and overhead costs and certain capital

expenditures in their cost projections. Thus, we focus on these five categories

and how the Board reviewed them.

      1. Operational Risks

      For each applicant, PSEG Nuclear included "a cost of operational risk in

its financial evaluation equal to ten percent of total costs, which is consistent

with operating cost estimation rules adopted in the [Federal Energy Regulatory

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                                        15
Commission]-approved PJM tariff." PSEG Nuclear explained that the cost of

operational risk for each plant included potential regulatory mandates,

equipment failures and attendant outages for repairs.

      Addressing regulatory mandates, PSEG Nuclear asserted that nuclear

plants are subject to stringent safety- and security-focused regulatory oversight

by the United States Nuclear Regulatory Commission (NRC), and can face

significant unseen regulatory requirements at any time, such as recent orders

issued by the NRC after a 2011 "nuclear event" in Japan that required all

United States nuclear plants to upgrade their facilities. These upgrades cost

Salem 1, Salem 2 and Hope Creek approximately $105 million.             Security

requirements after the September 11, 2001, terrorist attacks cost Salem 1,

Salem 2 and Hope Creek approximately $140 million.

      PSEG Nuclear cited unexpected expenditures in 2008 at Salem 1 of

approximately $266 million.      In addition, PSEG Nuclear asserted that the

cumulative impact of even relatively modest capital projects required to

address unforeseeable equipment failure issues can be significant.       It also

asserted that unexpected outages for repairs not only increase the total unit

costs but can also dramatically increase the per-megawatt-hour cost, and that

such outages can be prolonged.

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                                       16
      2. Market Risks

      For each applicant, PSEG Nuclear included the cost of market risks in its

projections at a rate of $4.2/megawatt hours for Hope Creek and Salem 1, and

$4.3/megawatt hours for Salem 2. PSEG Nuclear divided its market risks into

two categories:     forced outage risk and price volatility risk.         In each

application, PSEG Nuclear explained that forced outage risk is:

            that actual generation will fall short of forecasted
            generation, resulting in lower than expected revenues
            or a mismatch between previously contracted sales
            and actual generation so that the generation owner will
            have to "cover" its contracted sales during outages by
            purchasing energy in the spot market at prices
            potentially much higher than the contracted price – or
            hedged price.

It further explained that price volatility risk is the risk that the forecasted

generation output from the nuclear power plant may not be able to be sold at

projected prices – or forward prices.

      To assess each applicant's market risks, PSEG Nuclear utilized an energy

risk modeling software application, Lacima Analytics. It explained how it

used the same software application, inputs, and modeling approach that it uses

in the ordinary course of business to assess market risk for its entire portfolio.

In keeping with its normal business practice to assess and manage portfolio

market risk at the ninety-five-percent confidence level, PSEG Nuclear used

that same level to assess the cost of market risks in each application.

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                                        17
      3. Spent Fuel Costs

      Spent fuel costs arise from a charge imposed by the United States

Department of Energy (DOE) on nuclear plants for the costs of fulfilling its

legal obligation to dispose of the nuclear fuel used to generate power. Because

this charge was most recently assessed at a rate of $0.955 per megawatt-hour,

that rate was used in each applicant's cost projections.

      When the federal Yucca Mountain Nuclear Waste Repository was

defunded, this fee was suspended, at which point PSEG Nuclear ceased

accruing for that expense in its financial statements.      It explained that it

nonetheless included spent fuel costs in its cost projections because DOE still

has a legal obligation to dispose of nuclear fuel and will need to pay for the

costs of whatever that ultimate solution is through a fee on nuclear generators.

      4. Support Services and Overhead Costs

      For each applicant, PSEG Nuclear included support services and fully

allocated overhead in its cost projections, which represented:

            [A]ccounting, legal, communications, procurement,
            human resources, information technology, treasury
            and financial, investor relations, stockholder services,
            real estate, insurance, risk management, tax, security
            and claims, corporate secretarial and certain planning,
            budgeting, forecasting services, and general
            administrative expenses and other corporate overhead
            costs.

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                                        18
      5. Capital Expenditures

      For each applicant, PSEG Nuclear included fuel and non-fuel capital

expenditures in its cost projections. It described fuel capital expenditures as

the fuel capital expenditures associated with refueling outages and non-fuel

capital expenditures as spending on long-lived plant equipment required to

maintain safe and reliable operations.

      The Board considered comments from Rate Counsel, Monitoring

Analytics, P3 and NJLEUC, among others, on the applications, along with

reply comments from PSEG Nuclear and others. Rate Counsel contended the

applicants' financial projections overstated costs and understated revenues.

The comments also focused upon the $2.9 billion in "stranded costs"

previously paid by ratepayers for the nuclear units as a result of electric public

utility deregulation in 1999 and asserted that the Board was required to

determine not only whether a ZEC is warranted, but also whether the rate set

forth in the statute is just and reasonable.

      The comments pertaining to overstated costs and understated revenues

echoed the findings of Rate Counsel's experts, who submitted two

certifications.   First, a certification from Andrea Crane, president of the

Columbia Group, Inc., a consulting firm specializing in utility regulation,

primarily addressed the applicants' overstated costs. A certification from Bob

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                                         19
Fagan and Maximilian Chang of Synapse Energy Economics (Synapse), a

consulting firm that provides economic and expert advice to public interest

clients on electricity matters, primarily addressed the applicants' understated

revenues.

      These experts both criticized the methodologies used by PSEG Nuclear

to assess the financial viability of each plant and conducted independent

assessments in which they eliminated the assumption of operational and

market risks from the financial projections. With those categories excluded

entirely, they opined that each plant would be financially viable for the next

three years and that, therefore, none of the applicants qualified for the ZEC

program.

      Rate Counsel argued PSEG Nuclear's financial projections pertaining to

costs for each applicant were flawed because the methodologies used for

forecasting operational and market risks were speculative and unverifiable, and

because PSEG Nuclear included capital expenditures as "costs" and included

improper and inflated operational costs such as spent fuel, support services,

and overhead costs. Rate Counsel and Crane acknowledged that PSEG

Nuclear's estimates may be the best indicator of expected future costs but

nonetheless maintained that this approach placed an unreasonable burden on

ratepayers.

                                                                        A-3939-18
                                      20
      As to PSEG Nuclear's market risks methodology, Rate Counsel and

Crane asserted that it virtually guaranteed the claimed "cost" will cover all

contingencies despite the fact the ZEC Act does not provide for ratepayers to

be guarantors for all possible contingencies relating to market risks. They

urged the Board to consider the history of these deregulated units and the fact

that they have earned profits significantly higher than anticipated since

deregulation occurred approximately twenty years ago.

      Rate Counsel and Crane also argued the cash flow approach utilized by

PSEG Nuclear violates a basic accounting principle that costs which provide a

benefit over multiple years should be recovered over a multi-year period. The

cash flow approach burdens ratepayers by funding one hundred percent of

capital expenditures for these supposedly unregulated entities, but provides no

right to benefit from any excess returns on those investments.

      Rate Counsel and Crane objected to the inclusion of spent fuel costs

since the spent fuel charge for Yucca Mountain was suspended in May 2014.

They also claimed that the variable portion of the support services and

overhead costs which PSEG Nuclear included was inflated and it was unlikely

that most of these costs will go away if the nuclear units are shut down.

      Citing the Synapse certification, Rate Counsel contended that PSEG

Nuclear understated each applicant's energy price projections and capacity

                                                                            A-3939-18
                                       21
price projections and failed to account for other sources of revenue. They

argued recent actual energy prices were higher than those projected by the

applicants and that the applicants failed to look at future natural gas prices,

which are generally viewed as a good indication of where future energy prices

will fall, and failed to analyze the price impacts if only one or two of the units

shuts down, rather than all three.

      In further support of its objection to the ZEC program, Rate Counsel

discussed the 1999 enactment of the Electric Discount and Energy Competition

Act (EDECA), N.J.S.A. 48:3-49 to -98, which mandated the restructuring of

the electric and natural gas industry in order to lower prices through

competition. Overall, Rate Counsel contended that the historical impact of the

EDECA and the restructuring process on ratepayers should be considered by

the Board in connection with the ZEC applications.

      During restructuring under the EDECA, electric companies divested

most of their generation fleets but continued to transmit and deliver power to

customers.   The divestitures created "stranded costs" because the value of

some plants on a utility's books was higher than what the electric utility

received when divesting its asset. PSE&G had divested its ownership share of

Salem 1, Salem 2 and Hope Creek to its affiliate. Rate Counsel asserted that

the affiliate assumed the risks of ownership and operation of the nuclear plants

                                                                           A-3939-18
                                       22
as part of this transaction, which allowed it to earn unregulated returns on the

assets being transferred. According     to   Rate   Counsel,    PSE&G      already

recovered approximately $2.9 billion in stranded costs from ratepayers, which

included costs from the nuclear plants and other fossil fuel plants that it

divested.

      Finally, Rate Counsel's comments also addressed the reasonableness of

the $0.004-per-kilowatt-hour charge mandated in the ZEC Act, claiming the

Board has an obligation to determine not only whether a ZEC is warranted, but

also whether the rate set forth in the statute is just and reasonable pursuant to a

different statute, N.J.S.A. 48:2-21(b).      It criticized the Act for failing to

explain how the charge was calculated and contended that the Board should

interpret the ZEC Act in pari materia with N.J.S.A. 48:2-21(b), a public

utilities statute concerning ratemaking. Rate Counsel further contended that

unless the Board finds that a nuclear plant's application demonstrates that the

$0.004 rate is just and reasonable, the Board must either deny the ZEC in its

entirety or approve some lesser amount.

      Monitoring Analytics's comments echoed Rate Counsel's assertions of

overstated costs, understated revenues and that none of the units required

subsidies. P3 agreed with Rate Counsel and Monitoring Analytics that the

applicants' nuclear plants are highly profitable and do not need ZECs. It also

                                                                            A-3939-18
                                        23
noted several pending PJM market reforms that could lead to additional

revenue for the applicants, asserting that if New Jersey rejoins the Regional

Greenhouse Gas Initiative (RGGI), power prices will increase and nuclear

units will make an additional thirty to seventy million dollars a year in profits.

P3 maintained that abandoning the competitive market, and awarding

unnecessary ZECs, will make New Jersey's high electricity rates even higher

and agreed with Rate Counsel and Monitoring Analytics that, ultimately, the

Board should reject the ZEC applications.          To support its position, P3

submitted a sworn affidavit from its expert, Paul M. Sotkiewicz, PhD,

President and Founder of E-Cubed Policy Associates, LLC, and former Chief

Economist in the Market Service Division of PJM Interconnection, LLC.

      NJLEUC also contended that the ZEC program will have a detrimental

effect on large businesses in the State, which consume a much greater number

of kilowatt hours of electricity than residential customers. Based upon a poll

of its member businesses, it argued that the average cost of the ZEC program

to large businesses will be $570,000 per year.

      On April 17, 2019, the ET, which consisted of Board staff, New Jersey

Department of Environmental Protection (NJDEP) staff, and the Board

consultant, Levitan, submitted three memoranda to the Board that addressed

each applicant's eligibility for ZECs. The ET submitted two other documents

                                                                           A-3939-18
                                       24
with each memorandum that it had reviewed, incorporated, and relied upon to

support its recommendations: the Application Eligibility Report from Levitan,

and a memorandum from NJDEP addressing the applicants' environmental

eligibility under the second statutory criterion.

      The ET found all three applications were complete, and based on the

submitted applications, each applicant had satisfied the first, fourth, and fifth

statutory criteria since: (1) each unit was licensed to operate beyond 2030; (2)

each unit has not and was not currently receiving any other subsidies; and (3)

each applicant paid the requisite application fee. Thus, the ET determined that

eligibility for ZECs came down to the environmental and financial

determinations, the second and third statutory criteria.

      Overall, the ET found that the closing of each unit would require the use

of substitute capacity resources to supplement PSEG Nuclear's committed

energy in the three-year ahead capacity market and that solar and wind energy

resources could not replace the base load from the nuclear units.

Consequently, the supplemental energy would most likely come from natural

gas-fired plants within PJM and quite possibly from its own inventory.

NJDEP agreed in its memo that, within the three-year study period,

replacement generation would come from existing fossil-fuel-fired facilities.

                                                                          A-3939-18
                                        25
      The ET determined that closure of Salem 1, Salem 2, and Hope Creek

will have a negative impact on air quality in New Jersey based on increased

emissions, including harmful emissions, from electric-generating sources, and

will not significantly and negatively impact New Jersey's ability to comply

with 2020 Global Warming requirements, but may make New Jersey's ability

to comply with 2050 Global Warming requirements more challenging and

would likely make New Jersey's ability to comply with ozone air quality

standards more challenging.

      However, the ET agreed with Rate Counsel, Monitoring Analytics, and

P3 that a unit's avoidable costs is the proper focus of the evaluation of the

unit's financial viability under the ZEC Act. It noted that in other proceedings,

the Board has supported a net avoidable cost rate as an appropriate measure of

a generator's competitive offer into the markets.

      The ET excluded one-half of projected labor costs, one-half of projected

non-labor costs and all projected spent fuel costs from PSEG Nuclear's cost

projections for each applicant. It cited Levitan's analysis and concluded that

because the cost of handling spent fuel is not a true cost that is incurred, it is

not a cost that would be avoided by ceasing operations. After making various

adjustments to the applicants' cost projections, the ET concluded that all three

                                                                           A-3939-18
                                       26
units would operate profitably through May 2022 and would therefore not need

to cease operations within the next three years.

      The Board did not agree and on April 18, 2019, determined that the

applicants had satisfied the ZEC Act's eligibility criteria to receive ZECs. In

Sections I and II of its comprehensive decision, the Board summarized the

matter's background and procedural history. And in Section III, the Board

summarized the commenters' respective positions, along with PSEG Nuclear's

reply thereto.

      In its decision, the Board outlined the eligibility process, incorporated

the majority of the ET's findings, and summarized the ET's determination on

the applications.     The Board analyzed the ET's six key determinations

pertaining to the third criterion, financial eligibility, as follows:

             [1] The market and operational "risks" included by
             PSEG [Nuclear] (and Exelon as part owner for Salem
             1 and 2) in the applications should be excluded.
             These "risks" are planning projection tools used by the
             applicant and are not true "costs" that would be
             incurred by PSEG [Nuclear] beyond their normal
             [operating and marketing] costs. These "risks" are not
             costs that can be avoided by ceasing operations
             because they are not incurred. . . .

             [2] Staff determined that evaluating whether a unit is
             covering its avoidable costs with revenues is the
             appropriate approach to assessing whether the unit has
             met the financial criterion under the [ZEC] Act, based
             on staff's interpretation of the [ZEC] Act. . . .

                                                                        A-3939-18
                                         27
            [3] The spent fuel costs . . . are based on an unrealized
            and unpaid fee established in a DOE order for future
            storage as spent fuel. PSEG [Nuclear] demonstrated
            that these costs have not been historically paid or
            accounted for in historical finances since 2014. In
            summary, the spent fuel cost is not in effect, is not an
            avoidable cost, and should also be excluded from the
            financial analysis.

            [4] Avoided costs by shutting down the units would
            not be as simple as zero labor and materials savings.
            The units must be maintained by personnel, at
            approximately a [fifty percent] level for five to seven
            years, until all decommissioning is completed and all
            spent fuel is secured. Because one-half of the unit's
            projected labor and non-labor costs are avoidable, they
            should be considered at this level in the financial
            analysis.

            [5] The Board has traditionally used a net avoidable
            cost rate method to measure a generator's competitive
            offer into the markets.

            [6] Levitan and staff concluded that, if the above
            referenced questionable costs such as risks and spent
            fuel . . . along with other adjustments – are removed
            from the financial projections, the units are financially
            viable as they stand.

The Board also noted the ET considered factors beyond the five main criteria

of N.J.S.A. 48:3-87.5(e), including, in part, fuel resilience, fuel diversity, and

PJM market changes.

      The Board concluded that the Legislature was clear and specific

regarding the criteria according to which the applicants were to be evaluated,

and said criteria included consideration of operational and market risks as per

                                                                           A-3939-18
                                       28
the ZEC Act's plain language. The Board found that the ZEC Act required an

applicant to demonstrate that the nuclear power plant is projected to not fully

cover its costs and risks and that "risks" as defined in the ZEC Act included

"operational risks, [such as] operating costs higher than anticipated," along

with "market risks, [such as] market energy and capacity price volatility." The

Board cited numerous cases in support of its plain language interpretation of

the ZEC Act and recognized it may not, under the guise of interpretation, give

the statute any greater effect than the statutory language allows.

      The Board further found that the ZEC Act required it to consider other

outside factors and legitimate policy goals of the state such as fuel diversity,

resilience and the impact of nuclear power plant retirement on RGGI, New

Jersey's economy, carbon and global warming. While the Board acknowledged

the ET's finding that closure of the three nuclear power plants may have a

relatively small impact on fuel diversity, the Board found that it was also

important to consider that the nuclear power plants in New Jersey currently

supply the equivalent of thirty-two percent of our power needs.

      Concerning the environmental impact of closure, the Board found that

neither solar nor offshore wind energy had the capacity to replace the loss of

base load from the nuclear units.      As a result, replacement power would

increase carbon, which is in contravention of the state's stated goal of carbon

                                                                         A-3939-18
                                       29
reduction, and New Jersey would become reliant on fossil fuel plants to make

up for the loss of zero-emission capacity over the next three years.

Consequently, the Board concluded that if the plants retire, it would likely be

more difficult for New Jersey to meet its obligations to reach the state's goal of

one-hundred percent clean energy by 2050.

      As to the economic impact of closure, the Board addressed Levitan's

conclusion about potential for negative resultant economic impact to the

region. It explained that Levitan's economic impact analysis was based on a

report concerning the Indian Point Nuclear Station in Westchester County,

New York, an area with different demographics and a different economy than

Salem County. According to the report, the relative impact of plant retirement

in Salem County would likely be much greater compared to Westchester

County and result in direct job loss not only to employees of the units but also

to the ancillary businesses in the area. The Board concluded Salem County

cannot afford this type of potential economic loss and that there are not enough

employers in the county to support the layoffs from the closing units.

      Ultimately, the Board concluded had the ET and Levitan considered the

two risk factors as well as the other externalities, and had they reviewed the

financial filings as submitted by the applicants, the plants would have been

deemed eligible to receive subsidies, as a matter of fact.            The Board

                                                                           A-3939-18
                                       30
determined that Salem 1, Salem 2 and Hope Creek were eligible to receive

ZECs and directed the EDCs to submit final tariffs consistent with its order. 3

This appeal followed.

                                        V.

      On appeal, Rate Counsel argues that the Board's decision is arbitrary,

capricious, and unreasonable because the record does not support the

conclusion that the applicants satisfied the financial eligibility requirement

codified at N.J.S.A. 48:3-87.5(e)(3), and advances other general adequacy

challenges.   Notably, Rate Counsel does not contend on appeal that the

applicants failed to satisfy any of the four remaining statutory criteria.

      Monitoring Analytics, P3 and NJLEUC also support reversal of the

Board's decision, as does amicus curiae AARP.            PSEG Nuclear, Exelon,

PSE&G, JCP&L, ACE and the Board, along with amicus curiae NEI, ask us to

affirm the Board's decision. 4

3
   One Board member, Commissioner Upendra J. Chivukula, dissented from
the eligibility determination. Chivukula asserted the Board heavily considered
the overall policy goal of achieving fifty-percent clean energy by 2030 and did
not adequately consider its role as an economic regulator.
4
  Amicus curiae IPI advocates for neither affirmation nor reversal but explains
why the social cost of carbon referenced in the ZEC Act at N.J.S.A. 48:3-
87.3(b)(8) is the best available estimate for valuing the harm caused by carbon
dioxide emissions.       Similarly, Clean Air explains how nuclear plants
contribute to cleaner air in New Jersey.

                                                                             A-3939-18
                                        31
      "Judicial review of agency determinations is limited."      Allstars Auto

Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 157 (2018) (citing

Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)).

"[We] afford[] a 'strong presumption of reasonableness' to an administrative

agency's exercise of its statutorily delegated responsibilities." In re Restrepo,

Dep't of Corr., 449 N.J. Super. 409, 417 (App. Div. 2017) (quoting Lavezzi v.

State, 219 N.J. 163, 171 (2014)); see In re N.J. Am. Water Co., 169 N.J. 181,

195 (2001) ("[A]n agency's administrative action is presumptively valid.").

Thus, "[a]n administrative agency's final quasi-judicial decision will be

sustained unless there is a clear showing that it is arbitrary, capricious, or

unreasonable, or that it lacks fair support in the record." Allstars Auto, 234

N.J. at 157 (quoting Russo, 206 N.J. at 27); see also N.J.S.A. 48:2-46

(explaining that this court may "review any order of the board [of Public

Utilities] and . . . set aside such order in whole or in part when it clearly

appears that there was no evidence before the board to support the same

reasonably.").

      Rate Counsel argues there was error in the Board's rejection of its

experts and methodology excluding operational risks, market risks and other

non-realized costs from the applicants' certified cost projections. Rate Counsel

also contends the ZEC Act's plain language required the applicants to

                                                                          A-3939-18
                                       32
demonstrate that the nuclear power plant is projected to not fully cover its

costs and risks, including operational risks, such as, operating costs higher

than anticipated, along with market risks, such as market energy and capacity

price volatility.

      "The goal in cases of statutory construction is simple. It is the court's

duty to seek and give effect to the Legislature's intent."     Nw. Bergen Cty.

Utils. Auth. v. Donovan, 226 N.J. 432, 443-44 (2016).          A "statute's plain

language . . . is the 'best indicator' of legislative intent." State v. Rodriguez,

238 N.J. 105, 113 (2019) (quoting DiProspero v. Penn, 183 N.J. 477, 492

(2005)).    "When the Legislature's chosen words lead to one clear and

unambiguous result, the interpretive process comes to a close, without the need

to consider extrinsic aids." State v. Shelley, 205 N.J. 320, 323 (2011). "Only

if there is ambiguity in the statutory language will we turn to extrinsic

evidence," including legislative history. Richardson v. Bd. of Trs., Police &

Firemen's Ret. Sys., 192 N.J. 189, 195-96 (2007).

      If a statute's plain language is ambiguous, we "are . . . warranted in

placing considerable weight on the construction of the statute . . . by the

administrative agency charged by the statute with the responsibility of making

it work." In re PSE&G Co.'s Rate Unbundling, 167 N.J. 377, 384 (2001)

(quoting Passaic Daily News v. Blair, 63 N.J. 474, 484 (1973)). Under those

                                                                           A-3939-18
                                       33
circumstances, we "defer to 'the agency's interpretation . . . provided it is not

plainly unreasonable.'" Ibid. (quoting Merin v. Maglaki, 126 N.J. 430, 437

(1992)). "Deference is particularly appropriate when, as here, the agency must

construe and implement a new statute, 'or when the agency has been delegated

discretion to determine the specialized and technical procedures for its tasks.'"

In re Adoption of N.J.A.C. 7:26E-1.13, 377 N.J. Super. 78, 98-99 (App. Div.

2005) (citation omitted). "However, a reviewing court is 'in no way bound by

[an] agency's interpretation of a statute or its determination of a strictly legal

issue.'" Allstars Auto, 234 N.J. at 158 (quoting Dep't of Children & Families

v. T.B., 207 N.J. 294, 302 (2011)).

        Here, the ZEC Act's financial eligibility criterion states that an applicant

must:

              demonstrate to the satisfaction of the [B]oard, through
              the financial and other confidential information
              submitted to the [B]oard pursuant to subsection a. of
              this section, and any other information required by the
              board, . . . that the nuclear power plant's fuel diversity,
              air quality, and other environmental attributes are at
              risk of loss because the nuclear power plant is
              projected to not fully cover its costs and risks, . . . and
              that the nuclear power plant will cease operations
              within three years unless the nuclear power plant
              experiences a material financial change[.]

              [N.J.S.A. 48:3-87.5(e)(3).]

                                                                             A-3939-18
                                          34
      The plain language of the subsection makes clear that the Legislature

intended for the Board to consider the applicants' "costs and risks" when

determining eligibility. Had the Legislature intended for the Board to exclude

the applicants' operational and market risks when analyzing financial

eligibility under subsection (e)(3) and to instead assess only whether the

applicants were "projected to not fully cover [their] costs," it would not have

included the words "and risks" after "costs."      In our view, to adopt Rate

Counsel's position that the Board should have accepted the experts'

methodology would render the Legislature's use of the words "and risks" in

subsection (e)(3) meaningless, contrary to established principles of statutory

construction.

      The plain language of N.J.S.A. 48:3-87.5(a) lends further support to the

Board's interpretation of the ZEC Act and its rejection of the experts' opinions.

Subsection (a) mandates that the applicants' certified cost projections include

"operation and maintenance expenses, fuel expenses, including spent fuel

expenses, non-fuel capital expenses, fully allocated overhead costs, [and] the

costs of operational risks and market risks that would be avoided by ceasing

operations," along with "any other information . . . to demonstrate that . . . the

nuclear power plant is projected to not fully cover its costs and risks . . . ."

N.J.S.A. 48:3-87.5(a). It defines operational risks as including "the risk that

                                                                           A-3939-18
                                       35
operating costs will be higher than anticipated because of new regulatory

mandates or equipment failures and the risk that per-megawatt-hour costs will

be higher than anticipated because of a lower than expected capacity factor."

Ibid. It defines market risks as including "the risk of a forced outage and the

associated costs arising from contractual obligations, and the risk that output

from the nuclear power plant may not be able to be sold at projected levels."

Ibid.

        Had the Legislature intended for the Board to exclude the applicants'

operational and market risks from their certified cost projections when

analyzing financial eligibility under subsection (e)(3), there would have been

no need for the Legislature to require applicants to provide information about

their operational and market risks in subsection (a), or to define those terms.

Similarly, had the Legislature intended for the Board to exclude operation and

maintenance expenses, fuel expenses, including spent fuel expenses, non-fuel

capital expenses and fully allocated overhead costs from the "costs" referenced

in subsection (e)(3) when analyzing financial eligibility, there would have

been no need for the Legislature to require applicants to provide this

information to the Board.

        In sum, the experts' methodology was inconsistent with the ZEC Act's

plain language, which does not exclude operational risks, market risks and

                                                                        A-3939-18
                                      36
other non-realized costs from the financial eligibility analysis. Thus, it was

reasonable for the Board to reject the experts' opinions and to consider those

categories of costs and risks. The Board was under no obligation to adopt the

opinions of respondents' experts or the expert consultant that it retained to

assist its staff. Board staff are charged with making recommendations to the

Board. N.J. Dep't of Pub. Advocate v. Bd. of Pub. Utils., 189 N.J. Super. 491,

518 (App. Div. 1983). But per the plain language of N.J.S.A. 48:3-87.5, the

ultimate eligibility determination for ZECs is to be made by the Board alone.

      Additionally, the Board's decision concerning the applicants' financial

eligibility for ZECs is amply supported by the voluminous financial

submissions contained in the record, including but not limited to, the

applications and the comments. In compliance with N.J.S.A. 48:3-87.5(e)(3),

PSEG Nuclear certified on behalf of each applicant that each plant's projected

costs exceeded its projected revenues and that each plant will cease operations

within three years unless it experiences a material financial change. PSEG

Nuclear submitted extensive financial information to support each plant's

certified cost projections, summarized in charts listing various subcategories of

costs and revenues showing that its costs and risks were projected to exceed its

revenues by millions of dollars each year.        PSEG Nuclear explained its

inclusion of operational and market risks, consistent with the ZEC Act's

                                                                          A-3939-18
                                       37
definition of those terms, along with its inclusion of spent fuel, support

services, fully allocated overhead and capital expenditures as part of each

plant's certified cost projections.

      Consistent with the ZEC Act's plain language, the Board properly

considered the applicants' operational and market risks, spent fuel costs,

support services costs, fully allocated overhead costs, and capital expenditures

included in their certified cost projections as part of its financial eligibility

determination.    The Board also considered the ET's recommendations, the

experts' independent analyses, the comments, among other information, and

came to the reasoned conclusion that each plant is projected to not fully cover

its costs and risks, and will cease operations within three years absent a

material financial change, in satisfaction of N.J.S.A. 48:3-87.5(e)(3).

      Although Rate Counsel does not contend that the applicants failed to

satisfy the four remaining statutory eligibility criteria, it nonetheless asserts

other general adequacy challenges pertaining to the Board's findings and

conclusions. Rate Counsel claims the Board: (1) failed to acknowledge that

each of the five eligibility criteria must be met; (2) allowed "considerations

beyond the five statutory criteria to color its analysis" by giving them greater

weight; and (3) based its decision on a "fear" that PSEG Nuclear would close

all three plants if it did not receive ZECs for each of them. We disagree.

                                                                             A-3939-18
                                       38
      Despite the fact that the Board's discussion focused primarily upon the

financial eligibility criterion, N.J.S.A. 48:3-87.5(e)(3), as it disagreed with the

ET's findings and conclusions pertaining to financial eligibility, it also

explained that applicants must satisfy all five statutory criteria. The Board

summarized each of them in its decision in three different places, and

recounted the ET's determination that the applicants had satisfied the first,

fourth, and fifth criteria, explaining: (1) the units were "licensed to operate

beyond 2030"; (2) the units "have not [or] are not receiving any other

subsidies"; and (3) "the appropriate application fees were received."

      The determinations track the plain language of the eligibility criteria

found at N.J.S.A. 48:3-87.5(e)(1), (4), and (5). Although the Board did not

expressly state that it was adopting the ET's findings as to the first, fourth, and

fifth criteria, it did not disagree with those findings, which are adequately

supported by the record and not disputed on appeal. Thus, we can infer from

the broader context of the Board's decision that it incorporated those findings

and conclusions as to the first, fourth, and fifth criteria.

      Although the Board did not expressly state that the applicants had

satisfied N.J.S.A. 48:3-87.5(e)(2), the Board's findings, coupled with the ET's

more detailed determinations, support the implied conclusion that each plant,

as a zero-emission facility, makes a significant and material contribution to the

                                                                            A-3939-18
                                         39
air quality in the State by minimizing emissions that result from electricity

consumed in New Jersey, minimizes harmful emissions that adversely affect

the citizens of the State, and that retirement would significantly and negatively

impact New Jersey's ability to comply with state air emissions reduction

requirements, particularly with regard to global warming and ambient air

quality. N.J.S.A. 48:3-87.5(e)(2).

      Rate Counsel's assertion that the Board weighed certain other

considerations, including fuel diversity, fuel security, and the economic impact

of closure on the region and the State, more heavily than the eligibility criteria

codified at N.J.S.A. 48:3-87.5(e), is unsupported by the record.         There is

nothing in the Board's decision to indicate that it weighed these factors more

heavily than the statutory criteria. The extensive record in this case belies

Rate Counsel's contention that the Board's decision is based on a fear that

regardless of whether the eligibility criteria were met PSEG Nuclear would

close the plants if it did not get subsidies for all three units.

      Accordingly, Rate Counsel has not made a clear showing that the

Board's ZEC eligibility determination is arbitrary, capricious, or unreasonable,

or lacks fair support in the record. Allstars Auto, 234 N.J. at 157 (quoting

Russo, 206 N.J. at 27).

                                                                           A-3939-18
                                          40
                                      VI.

      In its second point, Rate Counsel contends the Board's decision is

arbitrary, capricious, and unreasonable because it failed to reduce the $0.004 -

per-kilowatt-hour charge established in the ZEC Act at N.J.S.A. 48:3-

87.5(j)(1). Rate Counsel relies on a different section of the statute, N.J.S.A.

48:2-21(b), to support its contention, claiming that it mandates that the Board

"[f]ix just and reasonable" rates to be imposed "by any public utility" and that

the Board was required to harmonize N.J.S.A. 48:2-21(b) with the ZEC Act.

Respondent NJLEUC and amicus curiae AARP support reversal for the same

reasons. We reject this argument for the following reasons.

      Citing N.J.S.A. 48:3-87.5(j), the Board found the ZEC Act required each

EDC to file with the Board a tariff to recover from its retail distribution

customers a charge in the amount of $0.004 per kilowatt-hour, which,

according to the ZEC Act, reflects the emissions avoidance benefits associated

with the continued operation of selected nuclear power plants. It furth er found

that the ZEC Act provided that the Board shall approve the appropriate tariff

after notice, the opportunity for comment, and public hearings, within sixty

days after the EDCs' tariffs were filed.    The applicants for ZECs are not

regulated utilities and do not have authorized rates of return, nor are they

subject to rate cases. Upon finding that each applicant was eligible to receive

                                                                         A-3939-18
                                      41
ZECs, the Board directed the EDCs to submit final tariffs consistent with the

Board's order.

      "Administrative agency power derives solely from a grant of authority

by the Legislature." Gen. Assembly of N.J. v. Byrne, 90 N.J. 376, 393 (1982).

"An administrative agency exercises its delegated authority and applies its

intended expertise pursuant to the Legislature's enabling act that frames the

performance of the agency's assigned tasks." Acoli v. N.J. State Parole Bd.,

224 N.J. 213, 226 (2016). We "review de novo an agency's interpretation of a

statute and legal conclusions." Kaminskas v. State of N.J., Dep't of Law &

Pub. Safety, 236 N.J. 415, 422 (2019). As noted, "[w]hen considering the

meaning of a statutory provision, absent any legislative intent to the contrary,

courts must give effect to the language of the provision."       PSE&G's Rate

Unbundling, 167 N.J. at 383-84. "If a statute's plain language is clear, we

apply that plain meaning and end our inquiry." Garden State Check Cashing

Serv., Inc., v. State Dep't of Banking & Ins., 237 N.J. 482, 489 (2019).

      The ZEC Act's plain language makes clear that the Legislature did not

authorize the Board to alter the $0.004-per-kilowatt-hour charge at the time of

its initial eligibility determination. Under the plain meaning rule of statutory

construction, "the Legislature's choice of the word 'shall,' . . . is ordinarily

intended to be mandatory, not permissive." Jersey Cent. Power & Light Co. v.

                                                                           A-3939-18
                                       42
Melcar Utility Co., 212 N.J. 576, 587-88 (2013).          Thus, N.J.S.A. 48:3-

87.5(j)(1), through its use of the word "shall," requires the Board to effectuate

the $0.004-per-kilowatt-hour charge to fund the ZEC program as follows:

                   The [B]oard shall order the full recovery of all
            costs associated with the electric public utility's
            required procurement of ZECs and with the board's
            implementation of the ZEC program under this act,
            through a non-bypassable, irrevocable charge imposed
            on the electric public utility's retail distribution
            customers.     Within 150 days after the date of
            enactment of this act, each electric public utility shall
            file with the [B]oard a tariff to recover from its retail
            distribution customers a charge in the amount of
            $0.004 per kilowatt-hour which reflects the emissions
            avoidance benefits associated with the continued
            operation of selected nuclear power plants. Within
            [sixty] days after the tariff filing required pursuant to
            this paragraph, after notice, the opportunity for
            comment, and public hearing, the [B]oard shall
            approve the tariff, provided that it is consistent with
            the provisions of this subsection. No later than the
            date of the [B]oard's order establishing the initial
            selected nuclear power plants to receive ZECs, each
            electric public utility shall implement the tariff and
            begin collecting from its retail distribution customers
            the approved charge.

      Subsection (j)(3) of N.J.S.A. 48:3-87.5 specifies two limited scenarios

under which the Board may reduce the per-kilowatt-hour charge to ensure that

the ZEC program remains affordable to New Jersey retail distribution

customers after its initial eligibility determination. These may apply if the

Board determines that a reduced charge will nonetheless be sufficient to

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achieve the state's air quality and other environmental objectives by preventing

the retirement of the nuclear power plants that meet the eligibility criteria

established pursuant to subsections (d) and (e) of this section.              Neither

scenario is present here.

      Under the first scenario, if the above criteria are met, "the [B]oard may,

in its discretion, reduce the per-kilowatt hour charge imposed by paragraph (1)

of this subsection starting in the second three year eligibility period and for

each subsequent three year eligibility period thereafter . . . ." N.J.S.A. 48:3 -

87.5(j)(3)(a). Under the second scenario, if the above criteria are met, and "the

[B]oard does not certify any nuclear power plants for a subsequent eligibility

period pursuant to this Act, the [B]oard may, in its discretion, reduce the per

kilowatt-hour charge imposed pursuant to paragraph (1) of this subsection . . .

in the final year of the first eligibility period . . . ." N.J.S.A. 48:3-87.5(j)(3)(c).

      Had the Legislature intended to grant the Board authority to reduce the

$0.004-per-kilowatt-hour charge at the time of its initial eligibility

determination, it would have said so. Instead, it carefully limited the Board's

authority to alter the $0.004-per-kilowatt-hour charge. In short, the Board

does not have the authority to override the Legislature's imposition of the

$0.004-per-kilowatt-hour charge at the time of its initial eligibility

determinations. See Jersey Cent. Power & Light Co., 212 N.J. at 600 ("[A]n

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administrative agency can only act reasonably within the scope of its delegated

authority.").

      N.J.S.A. 48:2-21(b), last amended in 1962, states, in relevant part:

                The [B]oard may after hearing, upon notice, by order
                in writing:

                       1. Fix just and reasonable individual rates, joint
                rates, tolls, charges or schedules thereof, as well as
                commutation, mileage and other special rates which
                shall be imposed, observed and followed thereafter by
                any public utility, whenever the [B]oard shall
                determine any existing rate, toll, charge or schedule
                thereof . . . to be unjust, unreasonable, insufficient or
                unjustly discriminatory or preferential. In every such
                proceeding the [B]oard shall complete and close the
                hearing within [six] months and enter its final order
                within [eight] months after the filing of the order of
                the [B]oard initiating such proceeding, when such
                proceeding is on the [B]oard's own motion; or after
                issue is joined through the filing of an answer to a
                complaint, when such proceeding is initiated by
                complaint.

      It is clear from the plain language of N.J.S.A. 48:2-21(b) that it applies

to rate hearings involving public utilities either initiated on the Board's own

motion or by complaint. "A rate hearing involves (a) the determination of the

value of utility property (rate base), (b) an examination of utility expenses, and

(c) the fixing of a fair rate of return to investors. The result is the base rate

which the utility may charge its customers." In re Jersey Cent. Power & Light

Co., 85 N.J. 520, 529 (1981).

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      The matter before the Board was not a rate hearing pursuant to N.J.S.A.

48:2-21(b). But rather, it was implementation of the ZEC program under the

ZEC Act, which was enacted decades after N.J.S.A. 48:2-21(b), and eligibility

determinations on the three ZEC applications made by unregulated nuclear

power plants. Although N.J.S.A. 48:2-21(b) and N.J.S.A. 48:3-87.5(j) are both

included in Title 48, they do not reference each other and were not designed to

serve a common purpose.        Marino v. Marino, 200 N.J. 315, 331 (2009).

Therefore, it is unnecessary to interpret these two provisions in pari materia

with each other. See Richard's Auto City v. Dir., Div. of Taxation, 140 N.J.

523, 540 (1995) ("Aside from the[ir] clearly distinct purposes . . . the fact that

the acts were not enacted during the same time and make no specific

references to each other further indicates that they were not intended to be read

in pari materia.").

      Rate Counsel's reliance on In re Proposed Increase Intrastate Industrial

Sand Rates, 66 N.J. 12, 14 (1974), is similarly unavailing. There, Central

Railroad Company of New Jersey initiated a rate proceeding for a freight

carriage rate increase affecting "the transportation of industrial sand from

point of origin to several glass manufacturing companies in Northern New

Jersey."   Id. at 16. The Board found that the rate increase was "just and

reasonable," approving it without establishing a rate base and the fair rate of

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return. Id. at 17-18. We reversed and remanded the matter because the Board

failed to establish "a rate base and a fair rate of return thereon." Id. at 18. The

Supreme Court affirmed. Id. at 19, 29.

      Based on our review, Industrial Sand also does not support the

proposition urged by Rate Counsel that the Board had authority to reduce the

statutorily   mandated    $0.004-per-kilowatt-hour      charge   to   ensure     its

constitutionality during the ZEC proceedings. The only relevant takeaway

from Industrial Sand is that aggrieved parties may seek relief via other

remedies, either "in the legislative halls" or in the courts by way of an action to

restrain enforcement of a statute alleged to be unconstitutional, where a rate is

set either unreasonably low and confiscatory, or unreasonably high and

extortionate upon the public. 66 N.J. at 23-24, 29.

      The parties' remaining arguments are without sufficient merit to warrant

discussion in a written opinion. R. 2:11-3(e)(1)(E).

      Affirmed.

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