Exelon’s Nukes Get a Reprieve

Exelon Corp.’s embattled nuclear fleet got some good news on Sept. 10 when the company announced that it was deferring a decision on whether to retire its Quad Cities and Byron plants by at least a year.

Both plants cleared PJM’s capacity auctions this summer despite concerns about their profitability. As a result, Exelon is committed to operate Quad Cities at least through May 2018 and Byron through May 2019.

Byron cleared the 2018–2019 capacity auction, and Quad Cities cleared the 2017–2018 transition capacity auction. The transition auction was the second of two held by PJM to supplement its base capacity auctions for the 2016–2017 and 2017–2018 planning years with its new rules for capacity performance.

“While Quad Cities and Byron remain economically challenged, we are encouraged by the results of the recent capacity auctions,” Exelon CEO Chris Crane said in a statement. “The new market reforms help to recognize the unique value of always-on nuclear power, while preserving the reliability of our electric system.”

Quad Cities had previously failed to clear the 2018–2019 auction, raising questions about its viability. Exelon said earlier this summer that the plant might have to be retired. Quad Cities has been losing money for years, and Exelon has lobbied the Illinois state government for some sort of economic support to keep it—and its other reactors in the state—open.

The results may prove to be something of a mixed bag for the plant, as they suggest its near-term economic situation may not be as dire as has been feared, which could reduce pressure for a legislative fix.

Crane insisted, though, the long-term reality for the plant had not changed.

“These plants are long-lived assets with decades of useful life left, and today’s decision is only a short-term reprieve,” he said. “Policy reforms are still needed to level the playing field for all forms of clean energy and best position the state of Illinois to meet EPA’s new carbon reduction rules.”

Nuclear industry groups hailed the news.

“The Quad Cities and Byron nuclear stations employ almost 1,800 people directly, and are responsible for an additional 7,500 indirect jobs,” Richard Myers, vice president for policy development and planning with the Nuclear Energy Institute (NEI) said in a statement. “The two facilities produce $3.1 billion a year in total economic value for the state, according to an economic analysis conducted by NEI. In addition to this immense economic value, these nuclear energy facilities are essential if Illinois hopes to reduce its carbon emissions.”

Exelon said it intends to bid Quad Cities, Byron, Three Mile Island, and all eligible nuclear plants into the 2019–2020 PJM capacity auction next year. The company also said that another of its Illinois plants, Clinton, “remains economically challenged and is at risk of premature retirement if conditions do not improve.” Clinton cleared a MISO capacity auction earlier this year, but the result was not enough to stop its losses.

–Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).