Exelon unveils its nuke bailout plan

Exelon's allegedly uneconomic Byron reactors.  Photo from wikipedia.

Exelon’s allegedly uneconomic Byron reactors. Photo from wikipedia.

After more than a year of laying the groundwork–well-documented in these pages–Exelon yesterday finally unveiled its plan to force ratepayers to bail out its allegedly uneconomic nuclear reactors at Quad Cities, Clinton and Byron.

It’s a legislative proposal that runs about 100 pages, but can be summarized this way: Exelon wants to set up a new “low-carbon” energy standard that would include nuclear power, “clean” coal and renewables. Ratepayers would have to pay a surcharge to accommodate this standard. And Exelon’s proposal would rig the rules so that its aging, expensive reactors would reap most–and probably all–of the benefit. After all, “clean” coal doesn’t exist and Exelon’s approach would actually prevent renewables from receiving much, if any, of the surcharge.

NIRS’ Executive Director Tim Judson is preparing a more complete analysis of Exelon’s proposal, which we’ll publish next week.

For the entire past year, Exelon has maintained that it doesn’t seek a bailout but rather a “market-based” solution to ensure that its failed reactors can become profitable again. Maybe it’s because I’ve had pneumonia the past two weeks (which is why GreenWorld has not published anything in past two weeks), but it’s a little difficult for my poor brain to discern the difference between a “bailout” and a mandatory “surcharge.”

As Dave Kraft of Chicago’s Nuclear Energy Information Service (NEIS) put it, “If it looks like a bailout, walks like a bailout, and quacks like a bailout – it’s a BAILOUT.” NEIS also charged that Exelon’s proposal, combined with a presentation the company made to FERC last week, “add up to a declaration of war against renewables and energy efficiency.”

NEIS wasn’t the only Exelon opponent to speak out quickly against the proposal. So did AARP, and Illinois PIRG, and the Clean Jobs Coalition, which includes Chicago Mayor Rahm Emanuel and has a different proposal to encourage clean energy in the state that it says would lead to the creation of 32,000 new jobs–without bailing out Exelon.  The Citizens Utility Board also opposed Exelon’s proposal, as did two other major power providers in the state, Dynegy and NRG Energy. Said the latter in a written statement, “The proposed legislation, which appears to be written specifically to subsidize Exelon’s nuclear fleet, would reverse those benefits. Subsidizing nuclear plants, which produce nuclear waste, as sustainable sources of energy makes a mockery of what sustainability is all about.”

Of course, there is some self-interest in NRG’s statement. It owns four coal and three gas-fired plants in Illinois, although NRG is also making serious efforts to become a national leader in rooftop solar and other distributed generation.

Chicago’s Crain’s Business Review also questioned the notion that Exelon’s proposal represents a “market-based” approach and pointed out that its own analysis shows that Exelon’s nuclear fleet already is profitable and doesn’t need a bailout at all.

The stage is now set for a major confrontation in the Illinois legislature and it’s anyone’s guess as to which way the legislature will go. Exelon is probably the strongest political power in the state, both because of its size and its generous campaign contributions. But it has rarely had to face an opposition as large as the one that exists now. And because whatever the legislature does will certainly have ramifications nationally, the issue will be magnified.

Further, the issue will become ensnarled in larger statehouse budget politics. As Howard Learner of the Environmental Law and Policy Center explained, “There are likely to be tremendous cutbacks of basic social services and the legislature is likely to have to raise taxes or fees to make the budget balance,” said Environmental Law and Policy Center Executive Director Howard Learner. “Will legislators at the same time force consumers, through a non-bypassable charge, to pay hundreds of millions of dollars each year for the next six years to bail out Exelon nuclear plants?”

The Illinois legislative session runs until the end of May. Not much time. Stay tuned.

Michael Mariotte

February 27, 2015

Permalink: https://safeenergy.org/2015/02/27/exelon-unveils-its-nuke-bailout-plan/

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