Exelon to Close Two Nuclear Plants if Needs Aren’t Met
Energy provider also reports quarterly earnings
Exelon Corp. said Friday that it would close two nuclear power plants in Illinois if state officials don’t pass legislation that provides funding and support for nuclear and solar power.
The company said it would close its Clinton, Ill., nuclear power plant and its Quad Cities nuclear power plant, which is based near Cordova, Ill., if Illinois doesn’t pass “adequate legislation” by the end of the month.
Electricity producers in several states are asking for hundreds of millions of dollars in financial support to keep costly nuclear power plants in business. If successful, the legislation is likely to increase customers’ power bills.
The utilities claim the nuclear reactors should be given special compensation because they are important to local economies and the electrical grid’s stability, and because they don’t emit greenhouse gases or other pollutants. Exelon employs 1,500 employees in total at the two plants and said it would work to relocate some of the employees if the plants close.
Abe Scarr, Director of Illinois PIRG, a public interest advocacy organization that fights against “powerful interests,” said the bill amounted to a nuclear bailout.
“Ratepayers have paid multiple times for these plants over the decades,” Mr. Scarr said. “We should be investing in the energy generation for the future. We should not be doubling down on an energy source of the past that is not competitive.”
According to Exelon, Clinton and Quad Cities have lost more than $800 million over the past six years.
In a release Thursday, Exelon said some nuclear plants are at risk of closing because wholesale energy prices are at a 15-year low.
“Losing these nuclear plants would not only jeopardize reliability of the grid, but it would make it nearly impossible to meet our nation’s goals to reduce carbon emissions,” Chief Strategy Officer William A. Von Hoene Jr. said in prepared remarks. “Unfortunately, current energy policies do not fairly compensate nuclear energy for its reliability and zero-carbon benefits.”
Illinois lawmakers—a majority of whom are Democrats—and Republican Gov. Bruce Rauner have been unable to pass a state budget for almost a year. According to the National Conference of State Legislatures, Illinois is the only remaining state that hasn’t passed a budget for the 2016 fiscal year.
The utilities claim the nuclear reactors should be given special compensation because they are important to local economies and the electrical grid’s stability, and because they don’t emit greenhouse gases or other pollutants.
In addition, Exelon said the Quad Cities plant needs to be successful in an auction for long-term contracts. Annual capacity auctions are held where power producers bid for long-term contracts to supply electricity. The results of the auction for 2019-2020 contracts come out on May 24.
The Clinton facility in April won contracts for the 2016-17 year, but Exelon said Friday that the agreed-upon price is “insufficient to cover cash operating costs.”
If the favorable legislation doesn’t pass and the Quad Cities plant fails the auction, then the Clinton plant will close on June 1, 2017, and Quad Cities will cease operations a year later.
Exelon currently has 23 nuclear reactors operating primarily in Illinois, Pennsylvania, New York and New Jersey.
In March, Exelon closed its $6.8 billion acquisition of Pepco Holdings Inc. after clearing its final regulatory hurdle. D.C.’s Public Service Commission, by a split vote, agreed to let the transaction move forward after the companies modified their terms to reduce the possibility of power price increases in future years.
Exelon on Friday also reported results for the quarter.
In the quarter, Exelon reported a profit of $173 million, or 19 cents a share, down from $693 million, or 80 cents, a year earlier. Excluding $394 million in merger commitments and $76 million in merger costs, among other items, earnings per share fell to 68 cents from 71 cents.