PSEG Power and Constellation plan 200 MW uprate at Salem nuclear plant

What PSEG disclosed

PSEG Power and Constellation Energy plan a 200 MW uprate at the jointly owned Salem nuclear plant in southern New Jersey, according to an earnings presentation by Public Service Enterprise Group, PSEG Power's parent. Salem's current installed capacity is 2,280 MW, so the addition would raise output by less than a tenth. PSEG Power would have a 112-MW share and Constellation would own the remainder, the presentation says. PSEG owns 57% of Salem and operates it; Constellation holds 43%, POWER Magazine reported.

The uprate would support a recently announced nuclear-focused power purchase agreement with Google, according to the presentation. The partners are assessing how the extra capacity could support rising power needs from data center operators, Yahoo Finance reported.

Salem 1 inspection

PSEG also disclosed a problem at the plant. In its quarterly filing with the US Securities and Exchange Commission, the company said a visual inspection found the thermal shield inside the reactor vessel is degraded. The check took place during a scheduled refueling outage at Salem 1 last month.

Further testing is ongoing and is expected to extend the refueling outage, PSEG said. The company said the impact on Salem 1 will depend on the timing and results of the inspection and necessary repairs.

Yahoo Finance said the unresolved piece is reliability and regulatory risk at the plant level. It cited an extended refueling outage at Salem 1 and prior concerns about debt coverage, and said analysts have flagged policy, compliance and financing as swing factors.

Google contract context

The Google agreement, announced 6 October, is a 20-year power purchase agreement supporting more than $4.3 billion of upgrades at 11 nuclear units across Illinois, Pennsylvania and New Jersey, TechRepublic reported. It is slated to add 890 MW to the PJM grid, with the first uprate due by 2028 and all 890 MW available before the end of 2032, according to Google. Constellation said the 890 MW will be entirely new capacity for PJM, which serves parts of 13 states and Washington, D.C.

A separate 15-year agreement covers 2,700 MW of Constellation's existing PJM generation and is distinct from the 890 MW of new capacity. POWER Magazine, citing Nuclear Newswire, reported the Google deal will likely include Salem and that it is unclear how the 890 MW will be allocated among units.

PSEG fleet and earnings

PSEG Power's roughly 3,760 MW nuclear fleet ran at a 95.5% capacity factor in the third quarter, up from 92.4% in the same period last year, the presentation says. Public Service Enterprise Group reported third-quarter operating income of $574 million, up from $565 million a year earlier. It expects operating earnings to compound at 6% to 8% a year through 2030, not counting one-time items. Weather-normalized electric sales rose about 1% over the last 12 months.

What happens next

PSEG Power is continuing to develop terms with large load entities for contracting arrangements involving existing nuclear production, future nuclear upgrades and other generation opportunities, Ralph LaRossa, PSEG's chair, president and CEO, said on the earnings call. He said FERC's rejection of key portions of PJM Interconnection's proposed plan for connecting data centers and other large loads reinforces that the focus has shifted to the states to address retail curtailment and cost issues tied to large customers.