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Exelon’s downstate nuclear plant will see a revenue increase from a spike in downstate Illinois electricity bills, but it won’t come close to the $50 million that some critics and analysts have estimated.

Exelon said yesterday that its money-losing Clinton nuclear plant, which the company threatens to close without financial help from the state, will see $13 million in higher revenue in the year beginning June 1. That won’t solve Clinton’s financial problem.

“The results are not sufficient to make Clinton power station profitable,” Exelon said in a statement. […]

If Exelon had bid all of its capacity at the Clinton plant into the auction held by MISO, it would have seen a $50 million-plus windfall.

But Exelon already had sold more than half of Clinton’s output for the year beginning June 1 to other parties. And the company did not set the $150-per-megawatt-day clearing price that’s causing downstate electricity rates to soar.

So, Exelon makes a bad business decision and that’s a reason for a government bailout?

Please.

Also, Exelon contracted to sell three quarters of its Clinton nuke power to wholesale suppliers, many of them out-of-state. Yet, it continues to harp about how the Clinton nuclear plant is so vitally important to Illinois’ power supply system.

* Meanwhile…

The CEO of Illinois’ second largest power generator is warning lawmakers that they will put downstate jobs at his company’s coal-fired power plants at risk if they approve Exelon’s proposal to hike electric bills statewide in order to provide more revenue to its Illinois nuclear fleet.

Bob Flexon, chief executive of Houston-based Dynegy, said that Illinois effectively will be sacrificing jobs downstate to protect jobs mainly in the northern half of the state if it agrees to subsidize Exelon to stave off threatened nuke closures.

“It’ll have a severe economic impact on jobs downstate,” he said in an April 22 interview. Dynegy’s plants will be “more at risk for shutdown.”

What he really means is he wants some nuke plants to close in order to drive up prices for Dynegy’s coal plants.

* And Exelon is sure making noises about that prospect…

In the meantime, Dominguez said Exelon continues to demand action from Springfield on its bill in this legislative session. The electricity-rate spike downstate is prompting some to call on Exelon to delay the bill until the fall veto session to see how power markets develop. A similar capacity-price increase that would hike electric bills beginning in mid-2018 is forecasted for the regional grid that includes the Chicago area.

Exelon won’t agree to that, Dominguez said. “We need to have certainty one way or the other by the end of the session,” he said.

If this Exelon bid follows the usual corporate handout playbook, we’ll soon be seeing some sort of announcement about an imminent plant closure.

* Exelon is also putting the squeeze on local governments…

The Clinton Nuclear Power Station and the Clinton Board of Education continue to be at odds over the value of the power station.

The value of the power station means a great deal to the Clinton Board of Education as they reap the benefits of the property taxes that come in from it. According to Dr. Jeff Holmes, Superintendent of Clinton Schools, the latest negotiations have been as productive as several before. […]

The taxing bodies will be entering into an appraisal process with the power plant. Dr. Holmes points out this has been done before and has found the value of the power plant is decreasing because of factors in the energy markets. It is the belief of the taxing bodies the decline in the value is not as drastic as Exelon officials say.

Exelon wants to lower the value of its plant from $217 million down to a mere $72 million.

posted by Rich Miller
Friday, Apr 24, 15 @ 11:11 am

Comments

Rich: Your Ad Revenues!

Comment by walker Friday, Apr 24, 15 @ 11:15 am
How can it possibly be the case that a similar spike in capacity pricing is expected in Chicago when the spike downstate makes absolutely no sense. To go from 16 bucks to 150 is completely obscene in and of itself. Then throw in that every other region say a decrease from 16 to about tree-fitty. The amount of greed that these guys have (both Exelon and Dynegy) is simply amazing and would make Vanderbilt blush.

Comment by Juice Friday, Apr 24, 15 @ 11:18 am
Ummmm, where is the fight against this special interest group Gov? oh, that’s right, you received a campaign donation from them, shhhhhh.

Comment by throwing stones Friday, Apr 24, 15 @ 11:19 am
I’d bet a case of scotch exelon keeps byron open no matter what happens in Springfield

Comment by foster brooks Friday, Apr 24, 15 @ 11:19 am
Just a comment that those who are stuck getting electricity from the Clinton plant have long been paying MUCH more than those getting electricity from the Ameren plant in Newton. It is a big enough difference that one might wish to consider it when locating. I happen to live much closer to the Newton plant; but am a Coop member stuck with high rates due to the Clinton fiasco.

Comment by logic not emotion Friday, Apr 24, 15 @ 11:19 am
Rich,
Pick a lane. You either need to pay the contractor with ad revenue. Or you need to continue being honest and running the most informative site in the country? This IS not the legislature, you have no hopes of payoffs.

Comment by Walter Mitty Friday, Apr 24, 15 @ 11:20 am
Walker, they’ll keep paying. If these guys are good at anything, it’s knowing how to participate in corporate giving to mask their greed and get away with this nonsense. And there’s no way they’re going to put Oscar the puppy at risk.

Comment by Juice Friday, Apr 24, 15 @ 11:20 am
Nuclear is undeniably cleaner than coal. We need them both, but the cost of coal (climate change, asthma, etc.) isn’t reflected in the price of coal-generated electricity. So nuclear is at a disadvantage.

We could just pay the nuclear energy more money as consumers to make up for coal not paying for the cost of their pollution. That’s essentially the Exelon proposal.

Or we could just charge the coal companies a price to pay for their pollution. A pollution tax. Instead of Exelon shareholders getting that money, we taxpayers would get it.

That’s what two University of Illinois professors at the Institute of Government and Public Affairs suggested. We should charge coal a fee for their pollution. And that would (largely) solve Exelon’s problem that their cleaner energy is more expensive than Dynergy’s dirtier energy.

Plus we’d help balance our budget. Imagine if the money was used to cover LGDF. Or a capital program. It could finance a $10 billion capital plan (assuming the pollution tax generates a billion a year as the professors calculated).

That ought to be on the table.

Here’s a Chicago Magazine article on the topic:

http://www.chicagomag.com/city-life/March-2015/Could-Cap-and-Trade-Help-Fix-Illinoiss-Budget-Mess/

Comment by Dan Johnson Friday, Apr 24, 15 @ 11:22 am
I can’t believe you’re making the rookie mistake of letting journalistic integrity threaten advertising revenues, Rich!!1! It’s this kind of idealistic thinking that lead to the downfall of journalistic titans like… uhh… hmmm…

Well, I can’t think of other examples of the press putting their journalistic ethics ahead of their biggest advertisers right now, but I’m sure I’ll think of someone!!1!

In any event, this can’t be a good idea!!1!

– MrJM

p.s. Next time I see you, I’m buying you a b̶e̶e̶r̶ shot.

Comment by MrJM Friday, Apr 24, 15 @ 11:24 am
Don Johnson…stop being so logical about public policy. Some one might inadvertently listen.

Comment by D.P.Gumby Friday, Apr 24, 15 @ 11:45 am
They made huge bonuses anf profits. We need to stop giving away tax money to increase bonuses for a couple people at the top of a company. If they want to close it, let it close.

Comment by Ghost Friday, Apr 24, 15 @ 11:53 am
We gave 100 mil to tje chicago board of trade, who then paid a 40 million bonus to its exec. Our current shortfall for services being discussed is over 26 million. Basically we gave the revenue to support these programs to one guy at the chicago board of trade.

Comment by Ghost Friday, Apr 24, 15 @ 11:55 am
What School of Business is teaching extortion as a model?

Comment by Cable Line Beer Gardener Friday, Apr 24, 15 @ 11:58 am
I like Ghost’s position: “If they want to close it, let it close.” But, I’ll go one further, Exelon’s arguments for a State bailout also supports the fact that a free market electric supply system is not working. Time to REGULATE it again.

Comment by Frank Ambrose Friday, Apr 24, 15 @ 12:05 pm
D.P.Gumby, you just bought yourself a drink.

And Ghost, is that true about the $40M bonus? Can you link to that? I really hope it isn’t true….

Comment by Dan Johnson Friday, Apr 24, 15 @ 12:09 pm
Dan Johnson… typical northern Illinois response; raise costs on southern Illinois to help out the northern Illinois company. No thank you!

If Exelon needs more money to run a power plant, they can just spend it. Same with Dynegy. Both companies are big, national organizations with investments all over America. Exelon’s spending $8.8 billion in Texas and Maryland right now to buy a utility or build gas plants and Dynegy just spent $6.5 billion to buy power plants in other midwestern states. See here for Exelon:

Maryland story:
http://www.washingtonpost.com/business/economy/exelon-files-to-purchase-pepco-for-68-billion/2014/08/19/d6d73540-27b5-11e4-958c-268a320a60ce_story.html

Texas story:
http://fuelfix.com/blog/2014/09/29/ge-gets-500m-price-tag-for-gas-turbines-in-texas/

and see here for Dynegy:

http://www.troutmansandersenergyreport.com/2015/04/ferc-approves-dynegys-6-25-billion-acquisition-of-merchant-generation-from-duke-and-energy-capital-partner/

This whole “cry poor to the Illinois legislature and see if they’ll give us more money” act is sickening.

Comment by Anon Friday, Apr 24, 15 @ 12:09 pm
Thank you Rich. If Oscar the Puppy needs treats, let me know!

Comment by Anon221 Friday, Apr 24, 15 @ 12:21 pm
Dan Johnson - Yes, a cap & trade or carbon tax would be financially beneficial for the state of Illinois, but that is not what the Exelon bill does.

Their bill is not an environmental program, nor is it is technology-neutral. It is designed to specifically channel $300 million/year to nuclear plants in Illinois, all of which are owned by Exelon. The company made bad business decisions and now they want a bailout from ratepayers. The only way it’s different than the Sears or CBOT bailouts is that Exelon charges electric ratepayers directly instead of taking money from state coffers. Their bill is extortion and would be terrible public policy.

Comment by Senator Clay Davis Friday, Apr 24, 15 @ 12:24 pm
DJ, a pollution tax, or cap and trade, were good ideas when the Heritage Foundation was pushing them way back when as conservative free market policies.

Something happened in 2008 that changed all that. I don’t know what it was, but they somehow became communism or fascism or Zoroastrianism or something after that.

It’s a mystery.

Comment by Wordslinger Friday, Apr 24, 15 @ 12:26 pm
=So, Exelon makes a bad business decision and that’s a reason for a government bailout?=
That’s traditionally been a central tenet for utility regulation.
Now ComEd is done reaping the the benefits of electric generation dereg it sponsored in the late 1990’s. It’s ready to be under the government again just in time for shareholder bailout time.

Too bad ComEd successfull

Comment by Qui Tam Friday, Apr 24, 15 @ 1:27 pm
A mystery, Wordslinger?

Here’s a hint: have a Koch and a smile!

Comment by okgo Friday, Apr 24, 15 @ 1:27 pm
And, I don’t think “Cap and Trade” or “Cap and Invest” is that far off or a crazy idea around these parts. There is that “other” legislation (HB2607/SB1485) with 69 sponsors in the House and Senate that does just that.

Its the most market-oriented way you could credit low- and no-carbon resources such as renewables, energy efficiency, nuclear, etc. And it would likely give Dynegy money to clean up its existing plants and make them more efficient, too.

Comment by okgo Friday, Apr 24, 15 @ 1:36 pm
The Clinton nuclear plant was initially a dog, plagued by cost overruns, safety violations and technical problems. Exelon bought the plant cheap and made it work. Still, it’s the least profitable of the company’s six nuclear plants in Illinois and shouldn’t be propped up further by the utility ratepayers.

Exelon is correct that Dynegy is using the atmosphere as a dumping ground for carbon pollution. I think a carbon tax is the way to go to level the playing field. It’s probably best to implement the tax at the national level, but unlikely with the anti-science cranks controlling the Republican congressional leadership.

Comment by Going nuclear Friday, Apr 24, 15 @ 1:51 pm
If Bruce went after the union workers at exelon he could lower my bill sic em

Comment by Anonymous Friday, Apr 24, 15 @ 2:23 pm
Critics are talking out of both sides of their mouths. It’s a bad business decision that Exelon should’ve made more money through the auction? I thought people were already up in arms about how much money the auction was going to deliver to them? Also, as others have said, we’re all paying for Dynegy’s pollution in the form of health and environmental costs. That needs to be accounted for through a carbon tax or standard.

Comment by Night Rider Friday, Apr 24, 15 @ 3:05 pm
==What School of Business is teaching extortion as a model?==

All of them, it seems.

Comment by walker Friday, Apr 24, 15 @ 3:15 pm
Night Rider - the bad business decision was to purchase 11 nuclear reactors in a market that now has power prices lower than the operating costs of those plants. Exelon took a gamble, they lost.

Comment by Senator Clay Davis Friday, Apr 24, 15 @ 3:20 pm
Since Exelon feels that the Clinton plant is worth so little, maybe another nuclear supplier could buy the plant at that reduced price and take it off poor Exelon’s hands, and run it more profitability.

Comment by George Washington Friday, Apr 24, 15 @ 3:25 pm
What Walker said.

We’re in a new age of the robber barons.

Your old-timers wouldn’t have put up with this stuff, not your parents or your grandparents or your great-grandparents.

They respected themselves, and knew which side their bread was buttered.

We live in the Age of Acquiescence.

Comment by Wordslinger Friday, Apr 24, 15 @ 4:22 pm
“Critics are talking out of both sides of their mouths. It’s a bad business decision that Exelon should’ve made more money through the auction?”

No, it’s a bad business decision that they entered bilateral contracts for 3/4 of their capacity at an obviously below-market price so poor Exelon “only” reaped an additional $13 million from the auction instead of the $58 million they could have.

Comment by BEST Dave Friday, Apr 24, 15 @ 4:54 pm