POWER September 2016 - 72

GENERATION TRANSITIONS
Exelon, America's Leading Nuclear
Generator, Keeps the Faith on
Nukes
The U.S. nuclear power business is in trouble, and Exelon has six units totaling
more than 5,300 MW of dependable capacity on the chopping block. How
will the Chicago electricity giant respond? Perhaps by acquiring more nuclear
capacity?
Kennedy Maize
C
hicago-based Exelon Corp., the largest
nuclear power generator in the U.S., is
facing what could be the greatest challenge
in the company's history. Exelon confronts
the potential shutdown of six operating nuclear
generating units at four stations, out of a fleet of
23 units at 14 stations across the country.
This comes after Exelon essentially abandoned
coal, selling off its interests in coalfired
generation. In late 2014, the company
unloaded its last minority shares in major coal
generation, the Keystone (42%) and Conemaugh
(32%) plants in central Pennsylvania,
once a significant element in its power mix
(see sidebar). RTO Insider newsletter commented,
" Exelon once had extensive coal-fired
generation but has either sold or retired them
over the years as it concentrated on new gasfired
generation and its massive nuclear fleet. "
Exelon's recent nuclear market woes have
jeopardized its generation strategy, built
years ago around nuclear bidding into competitive
merchant markets. The company
faces the biggest hit in a nuclear industry
that is declining across the country, driven
by market economics, market design, the rise
of natural gas and renewables, and continued
antipathy by many, but not all, national and
local environment groups.
" I find it frustrating, " Exelon President
and CEO Christopher (Chris) M. Crane told
POWER in mid-July. Crane, 57, advanced to
lead the company through the nuclear power
community and feels the stress on nuclear
power personally. " I've talked for years
about the unintended consequences of policies
that incentivize technologies versus outcomes, "
he said.
Crane said it has been difficult making the
case for the value that nuclear power brings
to the country in terms of reliability, zero carbon
emissions, and low-cost power.
In late June, Exelon notified state and federal
regulators that it plans to close the 1,098MW
Clinton, Ill., single-unit boiling water
72
reactor (BWR) in June 2017 and the twounit,
1,880-MW Quad Cities BWR in Cordova,
Ill., a year later. According to Exelon,
Quad Cities and Clinton (Figure 1) have lost
a combined $800 million over the past seven
years, " despite being two of Exelon's bestperforming
plants. " The plants have been
unable to compete in auctions for contracts
to supply electricity to competitive markets,
losing out to low-cost natural gas and subsidized
renewables, particularly wind.
The announcement came after the Illinois
legislature this spring failed to enact legislation
that would allow Exelon to bid into the
PJM and Midcontinent Independent System
Operator wholesale markets by way of the
markets recognizing the currently unstated
value of zero-carbon emissions. " We worked
for more than two years to find a solution, "
said Crane in a press release announcing the
planned closures, " but now it is time to take
the necessary steps to retire the plants. We
are committed to working with all stakeholders
to ensure the plants are shut down in a
responsible, safe and transparent way. "
Evolving Nuclear Market Support
But Crane has not given up on getting Illinois
to subsidize his money-losing nuclear units.
He told POWER that Exelon is continuing to
advance its case with key state legislators,
staff, and stakeholders. He hopes that the
company will be able to bring up the nuclear
support issue again when the legislature
meets from November 2 through December
2 for a short " veto session. "
The difficulty in Illinois last spring,
Crane said, was that the nuclear problem
" was not the biggest issue to be resolved in
Springfield. " A protracted budget fight was
the highest priority and dominated the legislature's
attention. The state faced a severe
funding crisis, going into a second year without
a budget, portending school closings and
major cuts in social service programs. The
legislature at the last moment agreed to a
stopgap budget, which may not prove lasting.
Also on Exelon's nuclear life support are
three units in New York-the elderly Ginna
610-MW Westinghouse pressurized water reactor
near Rochester and the two-unit, 1,761-MW
Nine Mile Point BWR station, also upstate.
In the Empire State, Exelon may have better
prospects for a governmental rescue. Gov.
Andrew Cuomo is pushing a plan to compensate
the upstate nukes for their lack of carbon
dioxide emissions so they can compete in New
York's wholesale competitive market, the New
York Independent System Operator (NYISO).
Exelon sent a letter in mid-June to the New
York Department of Public Service (PSC) saying
it needs to have agreement to the Cuomo
subsidy by the end of September or it will close
the plants. An Exelon attorney told the PSC that
the company " must make critical business decisions
by the end of September 2016, " including
expenditures on fuel fabrication for a Nine Mile
Point 1 refueling in March 2017.
" I've talked for years about
the unintended consequences
of policies that incentivize
technologies versus outcomes. "
-Chris Crane, Exelon President and CEO
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POWER | September 2016
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POWER September 2016

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