Exelon: Illinois nuclear report highlights need to help plants

Nuclear energy critics were encouraged by the release of a voluminous report by Illinois officials last week examining the possible impacts if three of Exelon’s financially troubled nuclear plants in Illinois were to shut down.

They pointed to report findings that electricity supplies would not be seriously affected by closures, and that clean energy investments could partially mitigate the job losses and economic impacts.

But Exelon also praised the findings in the report, and said it supports the company’s assertions about the need for state action to avoid plant closures.

“Several of Illinois’ nuclear facilities, including the Byron, Quad Cities and Clinton stations, have been experiencing major annual losses in the past few years, and continuing to operate them at a loss would defy common business sense,” said Exelon spokesman Paul Elsberg. “If we do not see a path to sustainable profitability emerge for them, we will consider all options, including unit shutdowns.”

Elsberg said that the state has within the past seven years passed laws that support “clean coal,” wind, hydro, solar and biomass energy, and that nuclear energy should get similar treatment.

“Nuclear energy is the only energy source not recognized for the carbon-free energy it provides and needs to be included as part of an all-of-the-above energy strategy,” Elsberg said.

An Exelon statement provided by Elsberg indicated that the company interprets the report as supporting Exelon’s plea for state intervention to create “market-based solutions” favorable to nuclear power.

The Exelon statement cites potential economic impacts at the high end of a wide spectrum detailed in the report. The Exelon statement says:

“The report finds that closing the three Illinois nuclear plants at greatest risk of early retirement would have a significant negative economic impact on the state, including $1.8 billion in annual lost economic activity and more than 7,800 job losses, and that the resulting increase in carbon emissions would have a societal cost of more than $18 billion. It also concludes that the closures would increase wholesale electricity costs in the northern Illinois region served by ComEd by up to 9.9 percent, or $437 million, in the first year.”

The Illinois Department of Commerce and Economic Opportunity, one of four state agencies that created the report, found that the closure of the Byron, Clinton and Quad Cities nuclear plants would result in $1.8 billion of lost economic activity, including the loss of 2,500 direct and 4,431 indirect jobs.

The department said this impact could be mitigated by investment in renewable energy and energy efficiency, including the creation of 9,600 new jobs, though the report noted elsewhere that wind energy jobs taper off quickly when construction is completed and that energy efficiency has a low investment-to-job-creation return rate.

The Illinois Environmental Protection Agency estimated the “social cost of carbon” if the nuclear plants closed and were replaced by coal or gas plants that emit carbon dioxide. The agency predicted between $2.5 billion and $18.6 billion in social costs of carbon between 2020 and 2029, depending on how many of the nuclear plants retired and what energy sources replaced them.

The PJM regional transmission organization, working with the Illinois Commerce Commission on the report, found that plant retirements could increase load payments in ComEd’s zone (covering northern Illinois) by between $307 million and $437 million. It predicted load payment increases of 8.1 to 9.9 percent if all three plants closed, increases of under 1 percent if only Clinton closed; of 2.7 to 3.2 percent if Quad Cities closed and 5.1 to 6.8 percent if Byron closed. Over the entire PJM footprint, the increase would range from zero to 3.5 percent. Load payment increases could translate to higher rates for consumers.

The report explored “market-based solutions” including a cap-and-trade program, a carbon tax, a sustainable energy plan and a low-carbon portfolio standard, all measures that could make nuclear energy more competitive on the market.

State lawmakers or agency officials could potentially create such programs including as part of Illinois’ plan to comply with the U.S. Environmental Protection Agency’s mandates to reduce power plant emissions. However, the report notes that solutions to limit carbon emissions are typically more common and effective on a federal or regional level.

“We continue to believe that the best, most cost-effective approach for preserving the benefits these plants provide is a market-based solution that properly values the emissions-free, always-on energy they generate,” said Exelon’s statement. “The report presents several potential policy solutions and is a good starting point for discussions with lawmakers and other stakeholders about the right path forward for continuing to meet Illinois’ energy needs.”

Meanwhile the power company NRG provided their view on the state report. NRG is the country’s largest solar developer, with a total capacity of 53,000 MW also including natural gas, coal, oil and wind power. A statement from spokesman David Gaier said:

These reports demonstrate that the economic situation for multiple nuclear facilities is more manageable than originally thought. The report finds that the retirements of the Illinois nuclear fleet won’t cause reliability problems with the state’s electric supply, except under extreme scenarios never before seen in US energy markets.  In addition, short-term job losses could be replaced with increased investment in energy efficiency and renewable energy.

 

In any event, any subsidy to these plants, already paid for many times over, is unnecessary and could easily cost more than the rate increase costs of nuclear plant retirements. Allowing the market to work, which means no “subsidy legislation,” will save ratepayers more than $120 million per year and create almost 10,000 new Illinois jobs between now and 2020.

 

NRG is willing to invest in new energy projects in Illinois without additional ratepayer subsidies. Within the last 8 months, NRG has announced a Waukegan solar project; a fleet modernization plan with dramatic environmental improvements; an electric vehicle charging station network in Chicagoland; and is looking at opportunities to build additional clean generation. NRG made these investments with no direct assistance from Illinois taxpayers or ratepayers.

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