Exelon to Close Two Nuclear Plants if Needs Aren't Met -- Update
May 06 2016 - 1:43PM
Dow Jones News
By Austen Hufford
Exelon Corp. said Friday that it would close two nuclear power
plants in Illinois if state officials don't pass legislation that
provides funding and support for nuclear and solar power.
The company said it would close its Clinton, Ill., nuclear power
plant and its Quad Cities nuclear power plant, which is based near
Cordova, Ill., if Illinois doesn't pass "adequate legislation" by
the end of the month.
Electricity producers in several states are asking for hundreds
of millions of dollars in financial support to keep costly nuclear
power plants in business. If successful, the legislation is likely
to increase customers' power bills.
The utilities claim the nuclear reactors should be given special
compensation because they are important to local economies and the
electrical grid's stability, and because they don't emit greenhouse
gases or other pollutants. Exelon employs 1,500 employees in total
at the two plants and said it would work to relocate some of the
employees if the plants close.
Abe Scarr, Director of Illinois PIRG, a public interest advocacy
organization that fights against "powerful interests," said the
bill amounted to a nuclear bailout.
"Ratepayers have paid multiple times for these plants over the
decades," Mr. Scarr said. "We should be investing in the energy
generation for the future. We should not be doubling down on an
energy source of the past that is not competitive."
According to Exelon, Clinton and Quad Cities have lost more than
$800 million over the past six years.
In a release Thursday, Exelon said some nuclear plants are at
risk of closing because wholesale energy prices are at a 15-year
low.
"Losing these nuclear plants would not only jeopardize
reliability of the grid, but it would make it nearly impossible to
meet our nation's goals to reduce carbon emissions," Chief Strategy
Officer William A. Von Hoene Jr. said in prepared remarks.
"Unfortunately, current energy policies do not fairly compensate
nuclear energy for its reliability and zero-carbon benefits."
Illinois lawmakers -- a majority of whom are Democrats -- and
Republican Gov. Bruce Rauner have been unable to pass a state
budget for almost a year. According to the National Conference of
State Legislatures, Illinois is the only remaining state that
hasn't passed a budget for the 2016 fiscal year.
The utilities claim the nuclear reactors should be given special
compensation because they are important to local economies and the
electrical grid's stability, and because they don't emit greenhouse
gases or other pollutants.
In addition, Exelon said the Quad Cities plant needs to be
successful in an auction for long-term contracts. Annual capacity
auctions are held where power producers bid for long-term contracts
to supply electricity. The results of the auction for 2019-2020
contracts come out on May 24.
The Clinton facility in April won contracts for the 2016-17
year, but Exelon said Friday that the agreed-upon price is
"insufficient to cover cash operating costs."
If the favorable legislation doesn't pass and the Quad Cities
plant fails the auction, then the Clinton plant will close on June
1, 2017, and Quad Cities will cease operations a year later.
Exelon currently has 23 reactors nuclear reactors operating
primarily in Illinois, Pennsylvania, New York and New Jersey.
In March, Exelon closed its $6.8 billion acquisition of Pepco
Holdings Inc. after clearing its final regulatory hurdle. D.C.'s
Public Service Commission, by a split vote, agreed to let the
transaction move forward after the companies modified their terms
to reduce the possibility of power price increases in future
years.
Exelon on Friday also reported results for the quarter.
In the quarter, Exelon reported a profit of $173 million, or 19
cents a share, down from $693 million, or 80 cents, a year earlier.
Excluding $394 million in merger commitments and $76 million in
merger costs, among other items, earnings per share fell to 68
cents from 71 cents.
Operating revenue slid 14% to $7.57 billion. Analysts projected
68 cents in adjusted per-share profit on $7.52 billion in revenue,
according to Thomson Reuters.
Exelon said results in the quarter were boosted by fewer Nuclear
outage days and increased capacity, which was offset by lower
realized energy pricing and increased nuclear decommissioning
amortization expense at Generation; and Favorable impacts at the
utilities of regulatory rate increases mostly offset by less
favorable weather.
Shares of Exelon added 8 cents to $35.46.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
May 06, 2016 13:28 ET (17:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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