Aside: For reasons that aren’t obvious, Exelon’s public communications about financial difficulties affecting its nuclear plants rarely, if ever, mention the magnitude of the cost increases that have been imposed as a result of regulatory ratcheting in overreaction to 911, tritium “leaks”, Fukushima and less publicized issues like “open phase condition.” Financial pressures aren’t just due to insufficient sales revenue, they are also added by cost increases that are also driven by political choices. End Aside.
Tom Kacich, writing for the News-Gazette in Springfield, IL, explained that Exelon had issued an ultimatum. If legislation was not passed by May 31, it would begin the process of shutting down the Clinton nuclear power plant. The final closure would happen in the summer of 2017. According to Sen Donne Trotter (D-Chicago), who is the chief sponsor of a bill intended to meet Exelon’s stated revenue requirements, the company indicated that the actions it would begin taking would be irreversible.
“Unfortunately the way it’s been portrayed to me is that once they start to shut down processes, it’s highly improbable to get it ratcheted back up. I know they’re thinking long and hard on this because they’re businessmen. They have to think about those steps that have to be taken especially when it involves something like nuclear power.”
Exelon’s tactic of establishing a hard deadline made it too easy for competitors to win the skirmish. All they needed to do was delay action by a legislature that has been so dysfunctional in recent years that it cannot pass a budget.
There are plenty of groups interested in receiving benefits from forcing a low cost, emission free source of electricity out of a market that is currently oversupplied. All they needed to do to achieve their goal was to express their doubts loudly enough to keep the negotiations going without making any decisions.
Natural gas suppliers, coal suppliers, wind turbine developers, solar panel installers, operators of underused power plants and bankers that hold loans to some of those currently stressed entities should benefit from both increased unit sales and higher realized prices when the balance between electricity supply and demand shifts back in their favor. That will happen when Exelon chooses to scrap a capable production unit.
The benefit to Exelon from closing a unit would not just be stemming the losses associated with that unit. The units it continues to operate would benefit from higher market prices.
Some of the potential beneficiaries have been contributing to the political war chest of ELPC, the Environmental Law and Policy Center, an interest group organized as an environmental non-profit entity.
Howard Learner founded ELPC during the 1990s, another low point in the gas price cycle when nuclear plant closures were the rage. Here is what he had to say about Exelon’s bid for additional support.
“The Clinton nuclear power plant is not competing very well in the competitive economic power market,” he said. “Everybody looks with excitement when a new natural gas plant is built. People look with excitement when a new wind farm comes, creating construction jobs.”
Noting that the Clinton nuclear plant is competing with coal plants, with low-price natural gas plants “and in some ways” with other Exelon nuclear plants, Learner added, “Exelon’s management needs to make a decision based on the view of the market today and what the market will be in the future, but it needs to be an Exelon decision.”
If Learner and his allies, which include Sierra Club, Natural Resources Defense Council (NRDC), Environment Illinois, Illinois Environment Council and Environmental Defense Fund (EDF) were interested in protecting the environment by preventing increases in CO2 emissions, they would have aligned in support of nuclear as a carbon free power source. Instead, their actions reveal their true mission is to market wind and natural gas.
Will Clinton Close?
From all publicly available information, it appears that Exelon has determined that the Clinton plant is worth more dead than alive. The legislation providing additional cash to make up for revenue shortfalls was not enacted by the stated deadline.
Exelon is a company that prides itself on following through on its promises. It seems likely that it will join Entergy, SCE, and PG&E in the modern game of seeing how many nuclear plants they need to close to eliminate the current “oversupply” of electricity generation in the restructured electricity markets in the Midwest and Northeast.
Aside: No matter what people tell you about the wonders of fracking, temporary oversupply is the reason that wholesale natural gas prices are low. If the cheap gas was a result of a technological revolution resulting in sustainable cost reductions, there wouldn’t be so many bankruptcies, layoffs and distressed companies in the business. Part of the oversupply is coming from growing numbers of unpredictable, occasionally productive wind turbines that are built to capture tax benefits and comply with “renewable” energy mandates. End Aside.
The “collateral damage” resulting from the nuclear plant closure game includes financial stresses for thousands of highly trained, skilled workers. Their refined trade skills have value elsewhere, but nothing like the value they produce when working in the specific plant for which they are already trained. Because their skills don’t produce the same return for any other employer, it is almost certain that they will be burdened with lower pay, homes that are difficult to sell and the always-high cost of relocating when there is not an executive “relo” program on which to depend.
All of the rest of us will also be collateral damage as the increased pollution, higher gas prices, damage to the reputation of nuclear energy and higher CO2 emissions will not be limited to Illinois.
Quad-City Times June 1, 2016 Exelon bill dead for this session
Despite the apparent failure of the legislation for this session, Marquard said he’s hopeful it can be resurrected in the fall session. Even though Exelon gave a spring session deadline for the bill to be passed, he said the Quad-City plant is not closed yet.
“We’re just going to keep fighting until they literally close the thing,” he said.