Nuclear powerOperator set to close three Illinois nuclear power plants

Published 4 March 2014

Abundant natural gas and growing reliance on solar and wind energy have been steadily eroding the profit margins of nuclear energy. Last year operators have shut down four nuclear plants in the United States last year. Exelon Corporation, which operates six nuclear plants in Illinois, has notified Illinois state regulators that legislative actions may be necessary to keep half of its Illinois nuclear plants from closing, since current market forces make it impossible to continue the operation of the plants profitably.

The Byron nuclear plant, one of three to be shut down // Source: northwestern.edu

Chicago-based Exelon Corporation, the largest nuclear plant operator in the United States, has notified Illinois state regulators that legislative actions may be necessary to keep half of its Illinois nuclear plants from closing.

Three of Exelon’s six nuclear plants in Illinois may shut down due to unprofitability. The three nuclear plants are the Byron nuclear plant in northwest Illinois, the Quad Cities plant in western Illinois, and the downstate Illinois Clinton plant.

Byron, one of Exelon’s best performing and largest plants, is licensed to run for another decade. The three plants in total employ more than 2,300 people with an annual payroll of $193 million, a $51 million taxes to localities and the state, and provide electricity to power more than 4.2 million homes and businesses.

Illinois House Speaker Michael Madigan’s spokesman Steve Brown, referring to a meeting between Madigan and Exelon CEO Chris Crane, said that “it was about market conditions and the impact on the nuclear fleet.” “There was no request made.”

Brown mentioned that the state is open to considering different options for keeping the plants open, since the plants provide “a goodly number of good-paying jobs.”

Crain’s Chicago Business reports that Exelon attributes the financial woes to a weak demand for nuclear energy, caused by the current market environment which favors alternative energy sources like natural gas. Exelon also blames low wholesale energy prices on wind energy operations, which can profit from tax subsides to sell at low prices. Exelon lobbyists have proposed the idea of creating a “clean energy” credit which would recognize nuclear power plants for their clean-air benefits and dependability as 24/7 power sources. Such recognition would entitle nuclear plants to extra payments from ratepayers.

Though Exelon has not submitted formal proposals, Crane has ruled out asking Illinois state legislators for long-term power purchase agreements. Such agreements would ensure that the nuclear plants were profitable but the agreements would also counter Exelon’s commitment to letting markets determine winners and losers.

Crane did consider long-term contracts as a way to ensure profitability, but he rejected the idea in a February 2014 conference call with analysts. “It’s hard to think of anything (the state can do to help Exelon) other than impose higher consumer charges for the nuclear plants,” says David Kolata, executive director of Chicago-based consumer advocacy group Citizens Utility Board. “We’d be open to (discussing) a fair mechanism that equitably balanced costs and opportunities,” he adds. “What it can’t be is something that privatizes profit and socializes risk.”

In documents circulated among lawmakers and interested parties, Exelon states that “we are looking for solutions and we are talking about this now both to let you know what we are up against and to avoid any surprises later. We need more emission-free electricity in Illinois and the U.S., not less. Getting rid of the cheapest, most reliable source of electricity in America today makes no sense.”

Exelon is majority owner of the Nine Mile Point nuclear plant on the shores of Lake Ontario, New York which has an above-market contract with New York state set to expire in June 2014. Analysts expect the contract to be renewed as Northeastern states aim for carbon reduction.