Exelon Will Close Oyster Creek Nuclear Plant Earlier than Anticipated

Exelon Generation will shutter its Oyster Creek Generating Station in October 2018—more than a year before it is required to close the single-unit reactor as part of an agreement with the state of New Jersey.

Exelon agreed in 2010 to close the unit by December 2019—10 years before its license to operate expires—after it decided against installing a cooling tower technology required by the New Jersey Department of Environmental Protection. On February 2, the company said it would permanently close the unit at the end of its current operating cycle in October. The revised schedule will allow Exelon to better manage resources in a market environment where fuel and maintenance costs are rising amid historically low power prices, it said.

Bryan Hanson, Exelon president and chief nuclear officer, noted in a press release that the company will offer a position to every employee at Oyster Creek that chose to stay with the company, and that the revised schedule would give the company time to do that.

Oyster Creek, a single 636-MW unit in Ocean County, New Jersey, 60 miles east of Philadelphia, is a General Electric Type 2 boiling water reactor that began operations in 1969. It received its license renewal from the Nuclear Regulatory Commission (NRC) in June 2009 to continue operating until April 2029.

New Jersey began transitioning to competitive markets in a bid to lower power prices in the mid-1990s. The plant is now within a wholesale competitive market overseen by PJM Interconnection, but it failed to clear the grid operator’s capacity auctions held both in 2014 and 2015—for periods spanning 2017 to 2019. A PJM analysis of Oyster Creek’s December 2019 shutdown date identified no impacts on system reliability.

A spokesperson for PJM, Ray Dotter, on February 2 told POWER that the grid operator hasn’t received a formal notice of an earlier deactivation date for the plant. “Once Exelon provides formal notice of a new planned retirement date, PJM would conduct a re-analysis to determine any reliability impacts of the accelerated closure,” he said. “In general, if PJM finds reliability concerns when studying a unit retirement, it orders upgrades to the transmission system to correct the problems.”

When Exelon’s Chris Crane, the company’s CEO and president, announced Exelon would retire the plant in December 2010, he said the plant faced a “a unique set of economic conditions and changing environmental regulations that make ending operations in 2019 the best option for the company, employees and shareholders.”  Crane also cited a “cumulative effect of negative economic factors, which has caused Oyster Creek’s value to decline.” Those factors include low market prices and demand, and the plant’s need for continuing large capital expenditures. He also pointed to environmental compliance costs based on evolving water-cooling regulatory requirements—both at federal and state levels—which had created significant regulatory and economic uncertainty.

New Jersey’s two other nuclear plants, the 2.3-GW Salem and 1.2-GW Hope Creek nuclear generating stations, are owned by Public Service Enterprise Group (PSEG), a company that has championed state subsidies to keep them open after pre-sell contracts expire this year. A bill introduced in the state Senate in January is up for vote at the state Senate Budget Committee on February 5.

—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)

Updated (Feb 2): Adds PJM’s comments on reliability concerning earlier closure date for Oyster Creek. Corrects year of Oyster Creek start of commercial operations.