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In which I try to explain what happened yesterday

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Illinois

Two of Exelon’s Illinois nuclear plants were successful bidders in the auction held last month by the power-grid operator for the region, ensuring they will operate through at least mid-2023.

The LaSalle and Braidwood nukes bid low enough to receive $69 per megawatt-day in “capacity” payments from households and businesses throughout Commonwealth Edison’s service territory, Exelon disclosed today in a Securities & Exchange Commission filing. The price takes effect for the year beginning June 1, 2022.

PJM Interconnection, the multistate grid operator whose region includes northern Illinois, conducts an auction each year of power generators and other providers to ensure there’s enough juice available during the highest-demand periods of the year—usually heat waves or sharp cold snaps. Households and businesses pay the charge each month as a form of insurance to ensure those power plants deliver when needed, and they’re embedded in energy prices charged by ComEd and alternative power suppliers.

Unsuccessful were the Quad Cities, Byron and Dresden nukes. Quad Cities already is subsidized by Illinois ratepayers and is in no danger of early closure. But Exelon plans to shutter Byron and Dresden this coming fall without additional state support.

There’s more to this, so go read the rest.

* Quick market explainer from Bloomberg…

The market, which pays generators to be on standby in case extra power is needed, has long been a source of controversy. While it makes the grid more reliable, the system drives up costs for consumers. In the area around Chicago, for instance, these charges total more than $1.7 billion per year, accounting for 20% of customer bills, according to the Illinois Clean Jobs Coalition.

* From Exelon’s SEC filing…

All of Generation’s other [non-Illinois] nuclear and fossil generation power plants located in the PJM market cleared in the auction

From the independent Synapse audit…

• Exelon’s bidding behaviors into PJM’s capacity market have changed in recent auctions. This includes higher capacity offer prices than were seen historically. Some units were bid into PJM’s capacity market at prices which were ultimately above the capacity market clearing price. Other prices came in just above or below the market clearing price, which results in the plants receiving capacity revenues for only a portion of their capacity offers.

• Exelon’s bidding behavior is causally related to its confidence that its units would ultimately be profitable. Exelon has elected as a strategy to submit lower bids for profitable units.

* Back to Bloomberg…

The lower [auction] prices could be especially painful for Exelon’s nuclear plants in Illinois, putting pressure on lawmakers to grant them bailouts.

Bloomberg Intelligence Analyst Kit Konolige said in a research note that Exelon could face a $900 million pretax hit. On Thursday, Exelon issued a statement saying it planned to close two more of its reactors in Illinois unless the state offers subsidies. […]

Nuclear plants did manage to win more contracts in the auction, clearing an additional 4,500 megawatts from the prior auction in 2018. Wind and solar power added about 1,300 megawatts, and natural gas added 3,400 megawatts. Coal slipped by about 8,200 megawatts.

So, it’s probably safe to say that it may turn out to be a good thing that Exelon got locked into a deal on May 31.

* Related…

* Here’s what’s in the big state energy bill still awaiting action

posted by Rich Miller
Thursday, Jun 3, 21 @ 1:37 pm

Comments

So the bottom line is if a bill passes, Exelon will get some money from ratepayers to run three plants for a little while longer AFTER those plants failed a competitive auction??? This is the 7th time Illinois nuclear units have failed to win meaning there are many, many other power plants that would provide the power cheaper than the nukes. Amazingly Quad Cities failed to clear the auction even though it already has a direct state subsidy. What in the world are we doing in this state??? Just give the money to renewables and batteries and move on.

Comment by Avengers Thursday, Jun 3, 21 @ 1:56 pm
Given how common these Ransom Ware Attacks are the sooner these antique plants are closed the better.

Comment by Al Thursday, Jun 3, 21 @ 2:11 pm
==many other power plants that would provide the power cheaper than the nukes.==

At least, that’s what Exelon wants us to think. If those plants win the auction, there would be no need for legislative relief. This could very easily be part of the game of chicken. (Curiously, one of Excelon’s talking points in support of their nukes is that they are the least expensive source of energy.)

Comment by Pot calling kettle Thursday, Jun 3, 21 @ 2:21 pm
“Just give the money to renewables and batteries and move on.”

I second that. Quit wasting taxpayer money on horse and buggy energy.

Comment by Ducky LaMoore Thursday, Jun 3, 21 @ 2:29 pm
Avengers,

This is not an energy auction. It’s a capacity auction which is quite a different thing. Exelon has manipulated the market in the past through its bidding behavior which is what Synapse finally proved. But because it’s capacity, it’s not as simple as “lower priced energy.”

Comment by Southern Skeptic Thursday, Jun 3, 21 @ 2:38 pm
The Sun is shining…all the while.

Comment by Dotnonymous Thursday, Jun 3, 21 @ 2:40 pm
@Southern Skeptic is right. Exelon has been repeatedly accused of manipulating capacity bids and not clearing certain plants on purpose so they can turn around and beg for subsidies, both here and in other states. More of the same this year. Looks like JB is their latest mark.

Comment by Tony Thursday, Jun 3, 21 @ 2:47 pm
Capacity is very different from energy, which is probably why Rich titled this post “in which I try to explain what happened yesterday.”

PJM has a video about capacity markets that explains the difference between capacity and energy at the very beginning: https://pjm.adobeconnect.com/_a16103949/p7bg7qaq3j7/

Comment by Oxfordian Thursday, Jun 3, 21 @ 2:56 pm
If you want to play around with seeing the ways in which various energy forms vary in terms of energy vs capacity, go to the PJM Queue. There you will see a column for MW Energy and a column for MW Capacity. You can do all all sorts of sorting, ranking, location lookups. Very informative. MISO’s queue, on the other hand, is a bear to try and use. https://www.pjm.com/planning/services-requests/interconnection-queues.aspx

Comment by Anon221 Thursday, Jun 3, 21 @ 3:17 pm