Exelon Wins Financial Aid for Two Uneconomic Nuclear Plants

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Illinois Governor Bruce Rauner earlier this month signed a bill to provide financial support to keep open two nuclear power plants owned by Exelon Corporation (NYSE:EXC) (Chicago, Illinois). The Energy Future Jobs Bill, long sought by Exelon, follows a measure enacted by New York that put a price tag on the value of nuclear power's non-greenhouse gas (GHG)-emitting properties. Exelon will collect about $235 million annually to keep the Quad Cities and Clinton nuclear power stations operating. Quad Cities is a two-unit, 1,848-megawatt plant that came online in 1972. Clinton is a one-unit, 1,055-MW plant that began generating electricity in 1987.

Exelon said the legislation will keep the two plants operating for at least another 10 years. It estimated 90% of the zero-carbon energy produced in Illinois comes from the state's nuclear facilities. In addition to Quad Cities and Clinton, Exelon operates three other nuclear plants in Illinois-- Byron, Dresden and Braidwood-- though those plants were not part of the just-enacted bill.

Exelon had vowed to close Clinton and Quad Cities if it could not win passage of legislation that placed a value on the plants' non-GHG properties. The utility planned to close Clinton in June 2017 and Quad Cities in June 2018 if it was unable to gain financial support for the plants. Those plants have sustained a total of at least $800 million in pre-tax cash-flow losses from 2009 to 2015, the company said. For more information on this, see June 14, 2016, article - Pepco Deal Closed, Exelon Grows and Shifts its Capital Spending Plan and November 10, 2016, article - As Fort Calhoun Shuts Down, Analysts ask, 'Are Nuclear's Days Numbered?'

"What we're looking for is compensation for nuclear's zero-carbon properties," Craig Nesbit, a vice president of generation communications for Exelon, told Industrial Info in an interview earlier this year, before the legislation was passed. "Nuclear is the only zero-carbon source of electricity that is not compensated for not emitting carbon dioxide (CO2). The problems with nuclear power will go away if its owners were compensated for its zero-carbon properties."

Rauner signed Senate Bill 2814 December 7. The bill drew a wide range of supporters, including environmental organizations, because it had something for virtually every constituency. In addition to preserving about 4,200 jobs at the two nuclear plants, the bill also committed $750 million for low-income energy assistance, substantially expanded energy efficiency programs and provided between $180 million and $220 million annually to support development of renewable energy, according to Exelon's summary of the bill.

Speaking December 7 at the bill-signing ceremony, Jennifer Walling, executive director of the Illinois Environmental Council, said: "With this legislation, Illinois will now be able to compete head-to-head for clean energy jobs with any other state in the nation--and win. The Future Energy Jobs Bill fixes and improves the broken Renewable Portfolio Standard, leading to $12 billion to $15 billion in private investment and the development of at least 3,000 megawatts of new solar and 1,300 megawatts of wind energy--enough to power nearly 1 million homes."

"While this legislation isn't perfect, it allows us to protect jobs, ratepayers and taxpayers," Rauner said. "Thank you to those who negotiated in good faith to help make this bill a reality, and most importantly, thank you to the people of the Quad Cities and Clinton for your persistence, your patience, and hard work."

Exelon, and New York State before it, sought subsidies for nuclear power to make it more competitive with low-cost natural gas generation. The shale revolution has made gas the fuel to beat for existing and new generation. The Illinois and New York measures come in the wake of several nuclear plants closing in recent years because they could not compete with gas-fired generation. For more on that issue, see August 3, 2016, article - Cash on the Barrel: New York Clean Energy Standard Includes Multibillion-Dollar Support for Nuclear Power's Carbon-Free Generation.

Exelon said the bill also "levels the playing field with solar and wind energy by valuing the zero-carbon energy produced by the nuclear facilities. The Energy Future Jobs Bill also includes protections that limit the impact of the legislation to 25 cents per month for (its) average residential customer and to all business classes at 1.3% compared with their 2015 rates." The bill also will provide businesses flexible options for capturing savings through expanded energy-efficiency initiatives.

The bill received broad support from more than 200 business, labor, environmental, faith-based and other groups, Exelon added, including the AFL-CIO, International Brotherhood of Electrical Workers, Chicagoland Chamber of Commerce and Illinois Retail Merchants Association. It also had support from members of the Clean Jobs Coalition, including the Citizens Utility Board, Natural Resources Defense Council, Sierra Club, Environmental Defense Fund and others.

"This is an important measure that preserves nuclear as an option in the 'all of the above' energy strategy," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "This was by no means an easy bill to pass, but I expect it was made somewhat easier after New York adopted subsidies for nuclear earlier this year. When you're trying to enact something controversial, it helps if you're not first."

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