Exelon Postpones Decision On Quad Cities And Byron NPPs

Exelon Corporation, owners of the largest fleet of nuclear power plants in the country, said Thursday it would defer its decision on whether or not to continue operating the Quad Cities and Byron nuclear power plants for one year.

Quad Cities NPPThe company said “all of its nuclear plants in the PJM market cleared in the transition capacity auction for the 2017-18 planning year.” As a result, the company will operate the Quad Cities nuclear power plant through at least May 2018. The Byron plant is already obligated to operate through May 2019, Exelon said.

Exelon intends to bid Quad Cities, Byron, Three Miles Island and all eligible nuclear plants into the 2019-20 PJM capacity auction next year. The decision to defer retirement decisions comes after rigorous analysis of the present and future economics of the plants, taking into consideration the constructive market trends stemming from the PJM capacity auction reforms, the company said.

Quad Cities and Byron “remain economically challenged,” said Chris Crane, Exelon president and chief executive officer. However, the company was encouraged by the recent capacity auctions. “The new market reforms help to recognize the unique value of always-on nuclear power, while preserving the reliability of our electric system,” Crane said, adding that plants are “long-lived assets with decades of useful life left.”

The decision made this week was “only a short-term reprieve,” he said, calling for policy reforms that would help Illinois meet new Environmental Protection Agency rules on carbon emissions.

The Illinois Environmental Protection Agency determined that the loss of two nuclear plants would increase emissions by about 24 million short tons, more than doubling the emissions reductions required under the EPA’s carbon reduction rules and making it twice as costly to comply, Exelon said. The Illinois EPA calculated the incremental societal cost of losing two plants at more than $10 billion -- a figure that does not include the additional billions of dollars early retirements would cost in the form of higher energy bills, reduced electric reliability and lost jobs.

The auction results for the 2017-18 planning year take effect in June 2017. The transition auction was the second of two held by PJM to supplement its prior base capacity auctions for the 2016-17 and 2017-18 planning years with the new capacity performance product, which is designed to strengthen electric grid reliability.

Unlike Quad Cities and Byron, Exelon’s Clinton nuclear plant operates in MISO territory and did not benefit from the PJM auction results. While a MISO capacity auction held earlier this year helped reduce Clinton’s economic losses, the plant remains economically challenged and is at risk of premature retirement if conditions do not improve.

Grid operator PJM holds a capacity auction annually to ensure enough power generation resources are available to meet demand in its region covering all or part of 13 states and the District of Columbia. Although capacity revenue in a single year is an important consideration in a plant’s long-term viability, it is just one of several factors that go into decisions about a plant's future operations, said Exelon, which is one of the largest competitive U.S. power generators, with more than 32,000 megawatts of owned capacity comprising one of the nation’s cleanest and lowest-cost power generation fleets.

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