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* 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.
posted by Rich Miller
Monday, Apr 18, 16 @ 1:39 pm
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It is very telling that the UCC doesn’t make an environmental argument. Rather, the decidedly left-wing political organization makes an argument based on decades-old economic decisions, none of which change the current situation.
We produce half our state’s electricity by carbon-free nuclear. I provides reliable and cost-competitive base load power. What’s more, it employs thousands of people in very high-paying, stable jobs and brings billions into the state economy.
Currently, we as a state, as a nation, and as a society in general, provide huge incentives, subsidies and assistance to two big priorities: Job creation/retention, and reducing carbon pollution. But the single industry in Illinois doing the most on both fronts as the same time is left out.
Combine the gray-haired “no nukes” crowd, the right-wing “corporate welfare” crowd, the CUB/Quinn “hate all utilities” crowd, and Exelon has an uphill battle on their hands.
Comment by Adam Smith Monday, Apr 18, 16 @ 2:10 pm
“I provides reliable and cost-competitive base load power.”
… apparently not.
Comment by okgo Monday, Apr 18, 16 @ 2:40 pm
Adam Smith Chicago brings in billions of dollars to the state. How about increasing the state taxes from everyone outside of Chicago to help Chicago pay its bills? This legislation is nothing more than a tax on rate payers so that the citizens of Dixon and other nuke plant cities can avoid paying property taxes.
Comment by TominChicago Monday, Apr 18, 16 @ 3:03 pm
I’ve lived in Dixon my whole life and if there’s a nuke plant here it’s been hidden well. Maybe you mean Byron….?
Comment by Led Hed Monday, Apr 18, 16 @ 3:07 pm
How much of a subsidy would Illinois’ ratepayers be saddled with? Somehow I have a feeling it would be far more than the “$236 million to $341 million” increase in energy prices if Clinton were to close.
Also, the UCC should have tackled the big future (federal) taxpayer subsidy to nuclear power that’s still not been determined yet - where will the high-level radioactive waste be stored? Last time I checked, wind and solar produce no waste by-products.
Comment by cover Monday, Apr 18, 16 @ 3:15 pm
Led Hed Sorry, meant Clinton.
Comment by TominChicago Monday, Apr 18, 16 @ 3:35 pm
let them close. then the state can seize them for oennies since they have no value as defucnt olants and turn them into public utilities. exelin gets out and we get more public energy. CWLP is an example of govt doing power better and cheaper.
Comment by Ghost Monday, Apr 18, 16 @ 4:55 pm
Exelon is full of it, call them on their bluff
Comment by foster brooks Monday, Apr 18, 16 @ 7:23 pm
Exelin will continue to threaten to close Clinton. It is one of it’s weakest links. And, it will shutdown some day anyway, and at that time there will be even more taxpayer “subsidies” for oversight of the spent fuel on site- dry casks or not. Exelin does not need any more handouts!
Comment by Anon221 Monday, Apr 18, 16 @ 8:40 pm
Exelon not Exelin- spellcheck!
Comment by Anon221 Monday, Apr 18, 16 @ 8:42 pm
Ghost, CWLP customers pay about 15% more for electricity than ComEd customers, and about 20% more than Ameren. Don’t forget their huge rate giveaway from Springfield last fall, and the expensive coal plant they are now stuck with for decades….
Comment by What Monday, Apr 18, 16 @ 9:57 pm
Don’t you find it funny that Exelon doesn’t want wind tax credits here in Il but it is okay in other states where they have wind turbines and they are enjoying the taxes credit’s. Also Nuclear gets many tax credits for the government all ready.
Comment by Steve Wednesday, Apr 20, 16 @ 5:32 am
For those of you cheering on nuclear energy’s demise - wind and solar don’t come anywhere close (and won’t for a very long time) to the energy Illinois needs, so where do you think our energy will come from if plants close? The answer is it will result in a lot more coal and natural gas, driving up carbon emissions…
Comment by Clinton resident Thursday, Apr 21, 16 @ 1:17 pm