Legislative Nuclear Power Deal Still In The Dark

Exelon, the big, Chicago-based energy company, has a reputation for influence in Springfield.

But this spring, the company conceded that a bill it was pushing to helps its nuclear power plants in Illinois was going nowhere. 

Exelon still has hopes for the legislation, once lawmakers are done dealing with the state budget. And whether or not it passes could have an impact on the price of electricity in Illinois, and the fate of its three nuclear plants in Clinton, Byron and Quad Cities, which are losing money.

Losing these plants would cost an estimated to 8,000 Illinois jobs, $1.8 billion in lost economic activity every year, according to Exelon.

Exelon Vice President for Government Affairs, David Fein said that in a time of lower demand and cheap natural gas, the Clinton, Byron and Quad Cities nuclear plants have special difficulties, because they’re located at spots on the electric distribution grid that make it hard for them to send power to high demand areas.

Instead, that power goes to nearby states where regulations keep the price for electricity lower --- and profits for the plants lower as well. 

In the bill proposed by Exlelon, the new revenue would come, ultimately, from electric rate-payers in Illinois.

They would be charged for new low-carbon energy credits, to be bought by the state’s two big utilities, Comed --- which is owned by Exelon --- and Ameren.

The credits would represent the level of low-carbon electricity that utilities should ideally be using to meet clean air standards according to a low-carbon portfolio standard, which is also the official name of the legislation.

That low carbon energy would be mostly nuclear, and Exelon says money --- limited by a cap to protect rate-payers ---- would help its Clinton, Byron and Quad Cities nuclear plants. 

But Exelon has drawn much skepticism due to its unwillingness to share financial details about the low carbon portfolio standard bill, especially since Exelon's fleet of nuclear plants in Illinois are profitable as a whole.

Fein says Exelon has shared some confidential financial information with the governor and state legislative leaders, but was not ready to disclose more to the public.

"We’re a public company in a highly competitive industry. We can’t just open our books as many have called for," said Fein.

 Another problem for Exelon is convincing everyone that the closing of one or more nuclear power plants in the state would indeed be a serious blow to Illinois electric customers.

This is one of the questions the state legislature told several state agencies to study last year, when Exelon first said that some of their nuclear plants might close.

The so-called 1146 Report, named for the legislation that ordered its creation, looked at the potential impact of a nuclear plant closure.

That report’s conclusions are clear to supporters of the Low Carbon Portfolio Standard bill, like its Illinois House sponsor, State Representative Larry Walsh (D-Joliet).

"Energy prices could increase by 500 million dollars statewide each and every year," said Walsh at a Springfield news conference held in April to promote the bill..

Walsh referred to a worst-case scenario outlined in the 1146 report, in which Exelon closes all three of its troubled nuclear plants. Other scenarios see electricity rates increase by lesser amounts, or hardly at all.

That range of options lead some to question the validity of the worst-case scenario.

Dave Lundy, with the BEST Coalition, a group formed specifically to oppose the bill that Exelon, says Exelon cannot substantiate the catastrophic repercussions in the 1146 Report.

"I have read the report, in detail. And what was most interesting about that report is they were unable to substantiate that the impact would be devastating to our power grid. In fact, Illinois is still a significant net exporter of power,” said Walsh.

Another view of the matter comes from University of Illinois engineering professor George Gross, who focuses on energy and power systems. He believes the future belongs to renewable energy --- but until improvements in battery technology make wind and solar energy more reliable, Illinois needs its nuclear power plants. If they lose some of them, Gross says Illinois will be even more dependent on natural gas, which he says won’t be cheap forever, and on coal-fired plants, at a time when their high-carbon emissions are being challenged.

"Given the EPA plan in terms of cleaning up the air from coal plants, the idea of, at the same time, simultaneously shutting down any of the nuclear plants, plays, I think, with the security of supply", said Gross. "And we have to think twice about shutting down any of the plants."

Four months after its introduction, Exelon now says the bill to help its Illinois nuclear plants is not likely to pass at this time.

In a statement, the company says they’re now looking ahead to an upcoming market capacity auction by PJM, which operates the regional power grid covering 5 of its six Illinois plants.

The auction will set prices for electricity offered during peak usage times. And it could provide extra revenue for Exelon --- as a recent auction by the grid operator MISO did for the Clinton plant. 

But the auction also marks a time when Exelon might announce its future plans for its nuclear plants.

An Exelon statement on June 1st said, "In September, we have an obligation to inform PJM – which is the organization that administers these auctions – if any of our plants will not be participating in future auctions. We’ve got a similar decision point in December for the Clinton plant, which is in MISO".

Meanwhile, Dave Lundy of the BEST Coalition thinks the market capacity auction could provide so much revenue for Exelon that their legislation could become irrelevant. He believes that possibility is the main reason why the Low Carbon Portfolio Standard legislation hasn’t gone anywhere in Springfield.

"Lawmakers have recognized that this power auction could solve effectively solve Exelon’s problem without needing to vote on it", said Lundy. "So essentially, this legislation was premature.

Exelon argues that the power auction money is unlikely to be enough the ensure profitability for their three lagging nuclear plants. But another hot Illinois summer will have passed before the power auction is held --- and Illinoisans find out the possible fate of the nuclear plants at Clinton, Byron and the Quad Cities.

 

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