Will Exelon nuke-site cleanup cash be there when needed?
The Chicago area has relied heavily on nuclear power for its electricity for decades, but eventually those plants’ useful lives will end. Billions will be needed to clean them up and return that land to productive use. Will the money be there?
Chicago-based Exelon, the nation’s largest nuclear generator and the owner of six Illinois stations, has been socking away just a little over $20 million annually in recent years to clean up all of its U.S. nukes.
At $13.3 billion at the end of 2017, Exelon’s nuke-cleanup funds are collectively short by nearly $6 billion what they will eventually need under reasonable current estimates, which are only likely to rise, according to a recent report by San Francisco-based investment consultant Callan Associates.
On average, Exelon’s nuke licenses don’t expire for 22 years, giving the company time to let investment returns help close the gap. But with a shortfall topping all other U.S. nuclear operators as of the end of 2016, Exelon’s slight annual contribution raises questions about whether it’s investing enough to ensure those plant sites are cleaned up in a timely manner after they close.
Under state deregulation laws, including Illinois’, that occurred in the 1990s, Exelon is solely responsible for amassing the funds needed to restore the plant sites. For years, ratepayers paid into those funds, but they no longer have to.
“There’s no ability to go to ratepayers to charge them for the plants,” says Howard Learner, executive director of the Environmental Law & Policy Center and a longtime critic of Exelon’s funding approach. “There’s a real risk Exelon or its successors will leave taxpayers holding the bag.”
Of course, in Illinois at least, ratepayers are subsidizing Exelon’s nukes in other ways. The Future Energy Jobs Act, signed by Gov. Bruce Rauner in 2016, imposes a surcharge on electric bills throughout the state to funnel $235 million a year to Exelon, which had threatened otherwise to shutter two money-losing stations.
So, like a prudent parent saving for their kids’ college, will Exelon start salting more away? Doesn’t sound like it.
In a statement, the company says it “is fully prepared to meet all of the Nuclear Regulatory Commission’s decommissioning funding requirements for the safe, responsible shutdown and decommissioning of our Illinois nuclear plants, with the earliest possible retirement date still many years away.”
The company won’t comment on whether it will begin to put more cash into the funds now that it’s getting subsidies. New York ratepayers also are paying extra to Exelon to keep plants there open.
The NRC’s funding requirements don’t really set a realistic expectation, however. The agency permits nuke operators to wait 50 years to fully reclaim sites after ensuring spent fuel is stored properly. And owners can reflect that assumption in their funding plans.
For example, Oyster Creek in New Jersey is Exelon’s one operating nuke for which it has a firm closing date. And it’s assuming—for now, at least—it will take the full 50 years to reclaim the site.
How many communities will be OK with keeping formerly productive land unusable for that long? With 11 reactors, Illinois has the most nukes in the U.S. The next closest is Pennsylvania, with nine. Exelon is the dominant generator in both states.
Like Illinois’ decades-in-the-making pension time bomb, which in recent years exploded in the faces of state lawmakers and two governors, adequate funding for nuke-site reclamation can be easily ignored. Until it can’t.
Exelon sidestepped a big headache over inadequate funding when the state agreed to bail out its Clinton and Quad Cities plants, which the company had begun the process of closing. Well short of the needed money in the funds supporting the two stations, Exelon was staring down having to set aside hundreds of millions to satisfy regulators.
The still-running bull market has helped the company on this score. Its nuke-cleanup funds collectively are valued at $13.3 billion, the company says, up 20 percent in a single year from $11.1 billion at the end of 2016.
But, of course, what goes up goes down. During the 2009 market crash, funds at four Illinois nuclear sites shrank so much that the NRC pressed Exelon to justify why it shouldn’t pump more cash in. Ultimately, the company was able to satisfy the regulator.