By Michael Mariotte

Artist's rendition of an Exelon building in Baltimore. The  nuclear giant didn't get what it wanted--grounds for a ratepayer bailout-- from Illinois state agencies.

Artist’s rendition of an Exelon building in Baltimore. The nuclear giant didn’t get what it wanted–grounds for a ratepayer bailout– from Illinois state agencies.

Last May, the Illinois legislature responded to months of mounting hysteria from Exelon that several of the utility’s reactors in the state were losing money and might be forced to close by passing HR 1146, which directed four state agencies to examine Exelon’s claims with a clear intent to support the utility. In October, the Nuclear Energy Institute piled on, releasing a study meant to bolster Exelon’s position and influence the state agencies.

Exelon should have heeded the old adage: be careful what you ask for.

The agencies’ report was released on Wednesday. Despite the directive from HR 1146 that could have been read to require the agencies to support Exelon (for example, HR 1146 told the agencies to recommend “market-based solutions to ensure that premature closures do not occur.”), and despite the fact that the agencies did not exactly welcome public input, Exelon did not get what it wanted.

In fact, the agencies concluded that Illinois would get by just fine if all of Exelon’s uneconomic reactors were to close, thank you. Even worse for Exelon, the report said that shutting down the reactors “could even bolster clean energy generation and jobs,” as Midwest Energy News put it.

“Reliability” has been a catchword for Exelon and other nuclear utilities with uneconomic reactors. Even if they’re not providing competitively-priced electricity, the idea goes, at least reactors run reliably. That argument didn’t go so well for Exelon either. Midwest Energy News reported,

The agency found that there would be some impact on generation capacity if the nuclear plants retired. But it would be below industry levels of concern, and less than impacts of plant closures in other states.

The report also found that demand response – reducing the demand for energy especially during peak times – could offset much of the impact. “There may not be sufficient concern regarding reliability and capacity to warrant the institution of new Illinois-specific market-based solutions to prevent premature closure of nuclear plants,” the Illinois Power Agency opined.

Meanwhile, making Exelon’s uneconomic reactors profitable would be expensive for ratepayers. While electricity prices are expected to go up 10-20% in Illinois upon implementation of the EPA’s Clean Power Plan, keeping Quad Cities running–the most expensive of Exelon’s reactors–would require a rate hike of nearly 50%, according to the report.

The report did find that shutting down the reactors would cost some jobs and lost economic activity. As E&E Publishing reported,

The state’s economic development agency noted that early retirement of the three Exelon plants could affect 2,500 direct jobs and almost twice as many indirect jobs, $1.8 billion in economic activity and additional economic losses as a result of higher wholesale power prices.

However, the report said the losses would be mitigated by nearly 10,000 new jobs and economic gains from investments in energy efficiency and renewable energy.

None of this necessarily means that the Illinois legislature won’t take steps to bail out Exelon this year anyway. But it does mean the legislature will have far less political or policy rationale to do so. And electricity rate increases tend to be politically unpopular. When they’re made solely to placate a nuclear power utility, they’re even more so. And that spells trouble ahead for Exelon–but quite possibly a cleaner, safer, and more affordable energy future for Illinois.

The full 269-page report from the state agencies is available here.

Michael Mariotte

January 9, 2015


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Filed under: Nuclear Economics, nuclear industry Tagged: Exelon, Illinois, Quad Cities

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