Quad Cities Nuclear Plant May Be Retired

Exelon’s Quad Cities nuclear plant in Illinois will not be economically viable despite changes in the PJM capacity market, and the company has to make a decision on closing it before the Illinois legislature can act on possible measures to save it, CEO Chris Crane said in Exelon’s second-quarter earnings call on July 29.

Along with the company’s R.E. Ginna plant in New York, Quad Cities has topped lists of nuclear plants at risk of premature shut down because of unfavorable economics. Exelon has been warning for several years that the plant is losing a substantial amount of money as a result of low power prices, and that it is unable to compete with cheaper gas-fired power and subsidized renewable energy.

“The capacity market fixes, focused on reliability, will not be enough to keep all the units economically viable,” Crane said in the call. “It does give us some support for the investments that we continue to make on the assets to maintain the reliability but it’s not totally there. We need a market fix in Illinois to stop the non-competitive nature of the market. And short of the legislation to fix that, we will have to make decisions on retiring assets that are not economically viable.”

Exelon backed proposed legislation in Illinois that would have imposed a surcharge on ratepayers to keep its three plants in the state operating. The move drew substantial opposition—ratepayer advocates and environmental groups denounced it as a money grab—and the legislature took no action on the bill this spring. With the state in the middle of budget crisis, observers see the proposal as having little chance of success.

Crane said that if the plants cleared the 2018–2019 PJM capacity auction, “that would show that they’re financially viable.” But he conceded that such an event was “a long shot” because of the plants’ cost structures. “We’ve got the transmission constraints, we’ve got the overproduction and importation of wind that not only drops the spot but continues to collapse the forward curve. The disconnect between [PJM’s Northern Illinois Hub] and the bus at some of these units is $6[/MWh], $7[/MWh].”

Exelon will make a decision on Quad Cities’ fate in September.

Quad Cities would be only the latest in a string of underperforming or otherwise challenged nuclear plants to shut down prematurely. Dominion shuttered its Kewaunee plant in Carlton, Wis., in 2013 after failing to find a buyer; the plant was licensed to operate through 2033. Entergy retired its Vermont Yankee station in late 2014 because of an inability to compete in its market.

A challenging market for nuclear power also played a part in the 2014 decisions of Duke and Southern California Edison not to repair the damaged Crystal River and San Onofre plants. The moves collectively dropped the nation under 100 operating reactors for the first time since the 1970s.

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

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