Improved finances trip up Exelon’s push for nuclear bail
Exelon’s push to get state lawmakers to approve a ratepayer-financed rescue package for the company’s nuclear power plants is running out of gas.
In a sign of how the state’s energy policy dynamics have changed, a senior executive at the clout-heavy company now says Exelon is open to an alternative to a bailout—creating a state or regional market to put a price on power plant carbon emissions. That wouldn’t benefit Exelon’s nukes as directly or immediately as a subsidy but assuredly would boost the company’s finances over time.
The company continues to say that it wants Springfield to increase electricity rates statewide or it may have to close plants. But Exelon repeatedly has postponed acting after lawmakers failed to meet its deadlines for new legislation. And a brighter financial outlook for plants previously pegged as money-losers is making for a difficult sale.
Five of Chicago-based Exelon’s six Illinois nukes now are projected at least to break even within the next few years. Until recently, the company had said red ink at three of the plants—Quad Cities, Clinton and Byron—would persist, forcing Exelon to close the facilities unless it got almost $300 million in help from ratepayers through a state-mandated surcharge on their electric bills.
Byron, near Rockford, is clearly profitable. But also among the plants that no longer are financial basket cases is Quad Cities, which the company had all but promised a few months ago to begin closing. Even as recently as early September, Executive Vice President Joseph Dominguez said that Quad Cities was on course to remain at least $50 million in the red but that Exelon would keep the plant open for a few years to give state lawmakers more time to consider its rescue plan.
And that was shortly after a multistate power auction run by the electric grid operator guaranteed tens of millions of additional revenue for Quad Cities in the year beginning June 1, 2017. The new money comes via a substantial increase in the payments consumers will make to generators to produce power when electricity demand peaks. Those “capacity charges” are embedded in the energy costs contained in electric bills.
Fast-forward to Oct. 30, when Exelon CEO Chris Crane disclosed a surprise on a conference call for analysts: Quad Cities is on pace to break even beginning in mid-2017.
What changed in 50 days?
Exelon is deferring all but the most immediate capital projects at Quad Cities and slicing other costs at all of its power plants as part of an upcoming cost-cutting initiative, Dominguez says. Those factors, combined with a one-year reduction in nuclear fuel costs at Quad Cities, amount to roughly $25 million in reduced costs. Crane’s statement to analysts also didn’t include the cushion that power plants build into their annual budgets in case the facilities unexpectedly shut down, an amount about equal to the cost reductions, Dominguez says.