By Michael Mariotte

Bye, bye, Quad Cities. The site’s failure to clear the PJM capacity auction is likely to presage its permanent shutdown. And that can’t come too soon for these aging Fukushima-clone reactors.

Exelon’s troubled nuclear fleet ran into still more trouble Friday, when three of its nuclear sites–totaling four reactors–failed to clear the PJM capacity auction for 2018, despite PJM’s efforts to bolster big-time nuclear and coal generators.

The three losers were the two Quad Cities reactors, Three Mile Island and Oyster Creek. Another Exelon reactor that is bleeding money is Clinton, in downstate Illinois, which is not part of the PJM service area.

Failing to clear the auction does not necessarily mean that these reactors will close, nor, for that matter, that they are even uneconomical. Although, in this case, they are either losing money or barely breaking even.

The capacity auction is held by PJM to ensure a reliable source of power during peak demand periods, like during the recent polar vortex and on the hottest of summer days. Utilities bid a price to PJM that they will accept to guarantee that their power plants will be operating during those times, during that span–June 2018-June 2019. Once PJM has what it considers adequate capacity, power plants whose bids are higher than the last plant bidding successfully are said to fail the auction and PJM will not count on them operating.

However, utilities with power plants that fail the auction can still attempt to, and often do, sell their electricity on the open market. In addition, local transmission constraints can sometimes force regulators to keep power plants open even if they have not cleared the auction. These local grid issues can become quite political and used to keep reactors and other controversial plants operating when other cheaper and cleaner choices may in fact be available. That is what is happening with Exelon’s aging and expensive Ginna reactor in New York, which is “needed” only rarely (some would argue never, since the need could quickly and easily be met with inexpensive renewables), but regulators have implemented a sweetheart deal to keep it running–a deal now being challenged by clean energy activists.

While it’s not known at this point whether any such transmission constraints are in play at Quad Cities, most experts seem to think that Exelon will be announcing within the next few weeks its permanent shutdown, probably by 2017. A similar announcement could come for Clinton if the Illinois legislature does not quickly act on Exelon’s repeated demands for a bailout of its reactors. So far, the legislature has balked at Exelon’s demands, but the company is continuing its all-out lobbying effort. The auction results could actually hurt Exelon’s position, however, since–in an effort to support big coal and nuclear plants–PJM set the terms of the auction so that more of them could qualify. And that means higher electricity prices for ratepayers–in this case 37% higher. It will be a hard sell for Exelon to …read more

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