* Joe Cahill at Crain’s takes a look at why Exelon’s stock has surged 25 percent this year to date…
Thanks to intervention by the bureaucrats who oversee the nation’s power grid, prices are firming up in key markets where Exelon’s nuclear plants sell juice to electric utilities. Crane has restored part of a dividend cut he was forced to impose in 2013. And after a 23-month struggle, he closed an acquisition last month that made Exelon the country’s largest electricity delivery company.
And then looks at the future…
Possibly more telling will be his decisions about the future of Exelon’s worst-performing nuclear plants. He has warned of possible plant closings in Illinois if state lawmakers don’t help out. Criticizing policies that favor other forms of energy over nuclear, [Exelon spokesman Paul Adams] says Exelon “may be forced to make the appropriate decision to retire at-risk plants” unless those policies change.
Shutting power plants would shift Exelon’s balance even further toward the regulated businesses Wall Street currently favors. But it also would limit Exelon’s upside if power prices recover over the long term.
* And speaking of possible nuke plant closures…
State Rep. Bill Mitchell, R-Forsyth, has Exelon’s back.
“If you remove nuclear power, you are going to see you electric bills go sky high,” Mitchell said. “In the next six weeks, the Illinois General Assembly must get down to business and pass a bill to make sure Clinton power plant stays in business and thrives.” […]
The Clinton nuclear plant has about 600 employees. Mitchell said losing them would have the same economic impact as Chicago losing 105,000 jobs.
“If Madigan had to face the loss of over 100,000 jobs, can you imagine that (would) not be on the frontburner of Speaker Madigan’s plate?,” Mitchell said.
If they can’t do a budget, which is hurting far more than just 600 employees, how are they going to do an Exelon “bailout”? Particularly this year, which has been notable for its intense voter anger.
* Exelon itself says the Clinton plant will stay open until at least May of next year…
Exelon Corporation said Friday that its Clinton nuclear plant, 23 miles southeast of Bloomington, Ill., had cleared the 2016-2017 Mid-continent Independent System Operator (MISO) capacity auction, which meant that it would continue to operate through May 31, 2017, although its future after that would rely in an “urgent” policy fix. […]
Exelon said it would not wait indefinitely to make a decision on the future of the plant past the fifth month of 2017. It would make that decision sometime this year, the company said.
* The Quad City Times wants Exelon included in the “green” mix of subsidies…
Last year, Exelon threatened the closure of three cash-bleeding plants, major economic engines in Quad-Cities and Clinton, Ill., unless lawmakers OK’d a plan, which included a state-imposed surcharge on users. But the company’s continued profit margins and September’s $1.6 billion windfall in PJM market auction all but killed the already controversial legislation that critics called a “bailout” intended to help “only Exelon.” Holding a trio of major employers hostage didn’t sit well with the public. The U.S. Supreme Court’s temporary stay of federal emissions standards for coal-fired plants didn’t help, either.
But Exelon brass aren’t wrong when pointing to a government-backed deck stacked against them. Wind, solar and other “renewable” sources benefit from perks within Illinois Renewable Portfolio Standard. Exelon, meanwhile, is left to makeup the shortfall when those less-consistent sources of electricity peter out.
Clouds and gentle breezes leave Exelon carrying the water. And yet, Exelon doesn’t benefit from the state subsidies that encourage wind and solar producers to flood the grid when conditions are favorable.
And that’s the problem.
* From the Union of Concerned Scientists…
The nuclear industry is only able to portray itself as a low-cost power supplier today because of past government subsidies and write- offs. First, the industry received massive subsidies at its inception, reducing both the capital costs it needed to recover from ratepayers (the “legacy” subsidies that underwrote reactor construction through the 1980s) and its operating costs (through ongoing subsidies to inputs, waste management, and accident risks). Second, the industry wrote down tens of billions of dollars in capital costs after its first generation of reactors experienced large cost overruns, cancellations, and plant abandonments, further reducing the industry’s capital-recovery requirements. Finally, when industry restructuring revealed that nuclear power costs were still too high to be competitive, so-called stranded costs were shifted to utility ratepayers, allowing the reactors to continue operating.
These legacy subsidies are estimated to exceed seven cents per kilowatt-hour (¢/kWh)—an amount equal to about 140 percent of the average wholesale price of power from 1960 to 2008, making the subsidies more valuable than the power produced by nuclear plants over that period. Without these subsidies, the industry would have faced a very different market reality—one in which many reactors would never have been built, and utilities that did build reactors would have been forced to charge consumers even higher rates.
* With all that being said…
An analysis conducted by the state of Illinois found that closing Clinton would cause wholesale energy prices to rise by $236 million to $341 million annually for families and businesses in the region. These cost increases do not include hundreds of millions of dollars that would need to be spent on new transmission lines. The report also found that allowing Clinton to shut down would result in the loss of almost 1,900 direct and indirect jobs and raise carbon emissions in Illinois by almost 8 million metric tons per year, the equivalent of putting more than 1.7 million cars on the road. The analysis concludes that the societal cost of the increased emissions would be almost $4 billion between 2020 and 2029.