Exelon Threatens to Close #Three_Mile_Island Without Pennsylvania Subsidy RSS Feed

Exelon Threatens to Close Three Mile Island Without Pennsylvania Subsidy

Exelon Corp. warned that it would permanently shutter the single operating unit at its troubled Three Mile Island (TMI) nuclear reactor in Pennsylvania in 2019, unless the state agrees to subsidize the plant, which hasn’t been profitable in five years.

But against a backdrop of cheap natural gas and the rise of renewables, it is unclear if Pennsylvania, which ranks second in terms of nuclear power generating capacity after Illinois, would agree to such a subsidy, as Illinois and New York have done recently. Exelon ultimately may decide to close the 837 MW plant anyway, having made the point one week earlier that nuclear power is at a policy disadvantage at both the state and federal levels.

Exelon said Tuesday it was taking the first steps to close the plant in Londonderry Township, about 10 miles south of Harrisburg by Sept. 30, 2019, “absent needed policy reforms.” Within the next 30 days, the company plans to inform key stakeholders about its decision to close the single operational unit at the plant, TMI-1. That would include sending a deactivation notice to the appropriate regional transmission organization, PJM Interconnection LLC, and shutdown notifications to the Nuclear Regulatory Commission (NRC).

Chicago-based Exelon also said it would incur one-time charges of $65-110 million for 2017, and accelerate $1.0-1.1 billion in depreciation and amortization costs through the announced shutdown date; terminate any capital investment projects for the long-term operation of TMI; and cancel fuel purchases and outage planning for 2019, which would affect about 1,500 outage workers.

“Absent policy reforms, the loss of Pennsylvania nuclear plants would increase air pollution, compromise the resiliency of the electric grid, raise energy prices for consumers, eliminate thousands of good-paying local jobs and weaken the state’s economy,” Exelon said. The company complained that despite producing 93% of Pennsylvania’s electricity, nuclear power is not included in the state’s Alternative Energy Portfolio Standard. “Yet 16 clean power sources including solar, wind and hydro energy are supported by this state energy policy.”

TMI-1 is currently licensed to operate until 2034.

Last week, Exelon said TMI and its 1.8 GW Quad Cities nuclear plant in Cordova, IL, had not cleared the latest PJM capacity auction. For TMI, it was the third consecutive year of not clearing PJM base residual auctions. But the outlook for Quad Cities isn’t as grim, the company said, since Illinois Gov. Bruce Rauner signed the Future Energy Jobs Act (FEJA) into law in December. FEJA, which was to take effect on Thursday, authorizes the Illinois Power Agency to award Zero Emissions Credits (ZEC) to electric utilities.

“Exelon remains fully committed to keeping the Quad Cities plant open, provided that FEJA’s ZEC program is implemented as expected and provided that Quad Cities is selected to participate,” said Exelon spokesman Joe Dominguez last week. “However, Quad has not been selected to receive ZECs under the FEJA program to date.”

Exelon hinted at TMI’s predicament last week, too. “TMI remains economically challenged as a result of continued low wholesale power prices and the lack of federal or Pennsylvania energy policies that value zero-emissions nuclear energy,” it said. “Exelon has been working with stakeholders on options for the continued operation of TMI, which has not been profitable in five years.”

Natural gas combined-cycle plants accounted for most (2,350 MW) of the new generation that cleared PJM’s capacity auction for 2020-2021. The auction also cleared 7,532 MW of year-round demand response resources, 119 MW of solar, 504.3 MW of wind and 1,710 MW of energy efficiency resources.

On Tuesday, CEO Chris Crane said 675 jobs would be lost if TMI closes. “Like New York and Illinois before it, the Commonwealth [of Pennsylvania] has an opportunity to take a leadership role by implementing a policy solution to preserve its nuclear energy facilities and the clean, reliable energy and good-paying jobs they provide,” Crane said.

The New York Public Service Commission (PSC) enacted its Clean Energy Standard in August 2016. The mandate calls for half of the state’s electricity to come from renewable energy sources, including nuclear power, by 2030. According to a report by Reuters, the PSC’s plan would pay several nuclear power plants up to $965 million over two years. Exelon operates three nuclear power plants in the state.

In a note to clients on Wednesday, analysts at Tudor, Pickering, Holt & Co. (TPH) said “Exelon’s TMI playbook is very similar to how it handled its [Quad Cities] nuclear plant in Illinois, as Exelon priced TMI out of the past three capacity auctions before making a retirement announcement. In Quad Cities’ case, last minute legislation saved the plant, at least for the time being.

“To date, Pennsylvania has not been in any hurry to adopt a ZEC-type program like Illinois and New York, but Exelon is now forcing the state’s hand to make a decision. [But] state legislation does not guarantee long term viability for plants, as any type of out of market payment is/will be intensively litigated.”

Read full article at Natural Gas Intel