There’s plenty of pain in store for Exelon, too, if it shutters nukes
Making good on his threat to close four nuclear plants if he doesn’t get what he wants out of Springfield isn’t going to be entirely up to CEO Chris Crane.
It sounded ominous—Exelon CEO Chris Crane’s Halloween threat to close four Illinois nuclear plants if the company doesn’t win 2020 approval of state legislation providing more ratepayer cash to the financially struggling facilities. “Plants will shut down,” he told analysts. “That’s the reality if something doesn’t happen in the spring.”
How credible is such a threat? The four plants operated by Illinois’ largest power generator together have the capacity to generate nearly 8,900 megawatts, enough to serve 7.8 million customers. It’s fair to say those four facilities produce the majority of electrons keeping lights on in the Chicago area. Mothballing them sounds like a nightmare scenario, right?
But the company can’t just close plants without alternatives in place. Exelon would have to submit a plan to PJM Interconnection, the grid operator overseeing a multistate region that includes northern Illinois, to ensure replacement power is available. If not, Exelon would need to keep one or more plants open on contracts negotiated by PJM until reliability was ensured.
In addition, it’s not as if there’s no cost to Exelon to shutter plants that today may well be “marginally” profitable, as Crane allowed on the Oct. 31 earnings call. The obligation for radioactive decommissioning and eventual restoration of the sites falls entirely on Exelon.
The cost to Exelon of retiring plants that otherwise would operate for another 25 years or more could be substantial. In Illinois, thanks to the 1997 state law that deregulated power generation, ratepayers bear no responsibility for financing the eventual radioactive decommissioning and restoration of those sites. The funds Exelon has set aside to handle that multibillion-dollar job for two of those facilities, the Byron and Braidwood stations, are woefully low. Judging by what Exelon told investors in 2016—the last time it came close to shuttering plants in Illinois—it could be on the hook to furnish more than $1 billion to assure federal regulators there will be enough money for the job.
In addition, reactors at one of the four plants—Dresden in Morris—already are scheduled to close in 2029 and 2031, respectively, when their federal licenses expire. Dresden currently is obligated to run until at least June 2021. Subsidizing the plant with ratepayer cash would appear to buy workers and the Grundy County community that benefits economically from the nuke no more than about eight years.
In a response to emailed questions, Exelon says Dresden’s life, in theory, could be extended if its profitability is assured because there’s time to renew the license. But Nuclear Regulatory Commission review of a license extension is a multiyear process, and nuclear generators typically begin the process well before this point.
