By Ezequiel Minaya and Russell Gold
Exelon Corp. warned Tuesday that it will close the Three Mile
Island nuclear power plant in Pennsylvania in 2019 unless it
receives government aid, the latest sign of how the sector is in
danger of shrinking as it faces intense competition in the U.S.
A global symbol of the potential perils of nuclear power after
suffering a partial meltdown in 1979, the plant has been losing
money for years. Last week, it failed to sell its electricity in
advance in a regional power auction for 2020 and 2021, the third
year in a row it did not find a buyer.
As a result, Exelon said it was accelerating its retirement
unless it receives assistance from the federal government or the
state, which has been reluctant to subsidize it as some states have
done to keep their nuclear facilities running. Three Mile Island
has a federal license to operate until 2034.
"Like New York and Illinois before it, [Pennsylvania] has an
opportunity to take a leadership role by implementing a policy
solution to preserve its nuclear energy facilities," said Exelon
Chief Executive Chris Crane. The company said it was taking
one-time charges of up to $110 million for 2017 in connection with
the planned closure.
Utilities have been closing U.S. nuclear-power plants at a rapid
clip due to political pressure from critics and growing competition
from other electricity sources, notably the increasing number of
plants fired by natural gas as horizontal drilling and hydraulic
fracturing unlock mass quantities of the fuel.
Power demand in the U.S. has been flat for nearly a decade,
creating a battle for market share. Last year, natural gas
generated 34% of the electricity in the U.S., according to federal
data. Nuclear power generated 20%, and coal 30%. The rest came from
renewable sources, including hydroelectric dams.
Three Mile Island would be at least the fifth U.S. nuclear
facility set to close by 2025, including PG&E Corp.'s Diablo
Canyon plant in California, and Entergy Corp.'s Palisades unit in
Michigan and the Indian Point plant in New York.
Four other facilities have already closed in the past four
years, including Dominion Resources Inc.'s Kewaunee plant in
Wisconsin. The retirements would leave about 60 nuclear plants in
the U.S.
A little more than a decade ago, the U.S. nuclear industry was
talking about a rebirth. But the first new nuclear units being
built in the country in years, facilities in Georgia and South
Carolina, are years behind schedule and billions over budget.
Southern Co. and Scana Corp., the utilities behind the new
plants, are now scrambling to determine how much it will cost to
finish them after their builder, Westinghouse Electric Co.,
declared bankruptcy in March.
The fate of the new plants could help determine the future of
U.S. nuclear power. Late last year, the Tennessee Valley Authority
sold two unfinished nuclear units in northern Alabama for $111
million after spending billions since the 1970s on the project.
"We have to find a way to build these reactors in the U.S.,"
Jose Gutierrez, Westinghouse's interim chief executive, said last
week. "Otherwise, the future is going to be compromised."
Even if the nukes get built, their hardships underscore the fact
that nuclear power remains a complex business full of booby traps,
analysts say.
"The nuclear renaissance is dead for the foreseeable future,"
said Steve Fleishman, managing director at Wolfe Research.
Exelon and other operators have sought state subsidies to keep
plants running, arguing that they create high-paying jobs and do
not emit air pollution or greenhouse gases.
Three Mile Island employs 675 people and contracts with another
1,500 workers. Exelon said Tuesday that it provides roughly 93% of
the emissions-free electricity in Pennsylvania.
Exelon has succeeded in persuading some states to provide new
financial incentives. Last year, Illinois lawmakers voted to allow
Exelon to collect as much as $235 million annually from customers
in exchange for keeping two nuclear power plants open.
But the deals have been controversial due to opposition from
critics of nuclear power and from such independent power producers
as Dynegy Inc. and NRG Energy Inc. that own coal-fired power plants
and other sources of electricity.
Pennsylvania lawmakers in March formed a bipartisan caucus to
discuss possible funding. State Rep. Dave Hickernell, who
represents the area where Three Mile Island is located and is a
member of the caucus, said he hopes Exelon's decision can be
reversed.
Three Mile Island drew international attention in 1979 when a
partial core meltdown in one of its two reactors led to five days
of panic. The reactor involved was permanently shut down and the
incident was followed by 14 years of expensive cleanup, heightening
awareness of the potential safety problems of nuclear plants.
Shares of Exelon were up 22 cents to $36.04 shortly before noon
Eastern time Tuesday.
--Miguel Bustillo contributed to this article.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com and Russell
Gold at russell.gold@wsj.com
(END) Dow Jones Newswires
May 30, 2017 13:30 ET (17:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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