Exelon will close its economically challenged Clinton and Quad Cities nuclear power plants in Illinois in June 2017 and June 2018, respectively, if the Illinois Legislature does not establish a program to compensate carbon-free generating sources, the company said Friday.
Many of Exelon's nuclear units, particularly those in Illinois, have been challenged by a number of factors, including competition from natural gas-fired generation and subsidized renewables, particularly wind power, the company has said.
The Clinton reactor and two at Quad Cities, with a combined capacity of about 3,000 MW, had a negative cash flow of more than $800 million between 2009 and 2015, Exelon President and CEO Christopher Crane said Friday during a conference call for analysts on the earnings release.
"Without adequate legislation, we no longer see path to profitability [for Clinton and Quad Cities] and can no longer sustain the ongoing losses," Crane said.
Crane said in the earnings release that in order to remain open, Clinton would also need to clear in the 2019-20 capacity auction for regional transmission operator PJM Interconnection.
Legislation introduced in the Illinois General Assembly last year and supported by Exelon would have instituted measures such as a low carbon portfolio standard to subsidize the nuclear units and other generation sources with revenues from a surcharge on all electricity sold in Illinois. However, the assembly did not vote on the bill before its annual session ended in May 2015.
William von Hoene, senior executive vice president and chief strategy officer at Exelon, said in response to a question after his remarks at the US Energy Association's annual meeting in Washington Thursday that legislation is being developed and will be introduced in the Illinois legislature "soon," but did not provide further details. The assembly's spring term is scheduled to end May 31.
An Exelon official who did not identify himself said in response to a question during the analysts call that the legislation the company supports would be similar to a plan in New York to assist Exelon's Ginna nuclear power plant. Under the proposal, Illinois carbon-free generators would receive "zero emission credit" in the form of funds to compensate "the difference between available market revenues and the costs of operating the plant." The official said the plan would not take the form of a power purchase agreement or contract for difference approach.
Joseph Nigro, executive vice president of Exelon, said during the call that only plants that would receive revenues under the proposal "are those where costs exceed revenues."
The program would have a cap of 20 TWh of generation a year, which has "enough room in it to accommodate Clinton and Quad Cities," Nigro said.
Nigro expects Exelon would seek to have those two plants participate, but not at this time its Braidwood, Byron and Dresden nuclear plants, he added.
Though challenges remain at those plants, and at Ginna in New York and Three Mile Island-1 in Pennsylvania, their cash flow is positive at this time, Exelon Chief Financial Officer Jack Thayer said. When assessing the future of those plants, Exelon will consider whether they clear future capacity auctions in their regions, Thayer added.
