Future will soon be clear for Exelon plants

27 October 2016

Exelon expects to achieve "clarity" before the end of the year over the future of its nuclear plants in the states of New York and Illinois, president and CEO Chris Crane said yesterday.

Crane made his comments during a conference call of the company's third quarter results. The company's key priority remains finding an economically sustainable path for its financially challenged nuclear power plants, he said, although the quarter had been "operationally strong" with Exelon's nuclear plants achieving a capacity factor of 93.6%.

Exelon's Ginna and Nine Mile Point plants had been facing such financial challenges until the New York State Public Service Commission (PSC) earlier this year approved a Clean Energy Standard (CES) - explicitly recognizing the zero-carbon contribution of nuclear power plants and helping ensure their continued operation. Exelon is also in the process of taking ownership of Entergy's James A Fitzpatrick plant, which Entergy had previously planned to close for economic reasons.

Exelon expects to receive approval for its acquisition of Fitpatrick from the PSC in November and to sign contracts for all three nuclear plants with the New York State Energy Research and Development Authority the same month, Crane said. A federal court challenge to the CES and the zero-emission credits (ZEC) which will subsidize the nuclear plants' continued operation, recently filed by a coalition of independent non-nuclear power producers, had been expected, he said. "The lawsuit does not request a stay or an expedited trial, and we continue to believe that the CES design is sound and that it will withstand any legal challenge," he said.

Exelon has previously committed to refuel Fitzpatrick in January 2017. The company will therefore, subject to regulatory approvals, effectively become the "economic owner" of the plant's legal risk, Exelon's executive vice president for governmental and regulatory affairs and public policy, Joe Dominguez, said. "We're not going to be able to walk away from the [Fitzpatrick] transaction if something occurs post-January that changes the ZEC program," he said.

The CES program and the acquisition of Fitzpatrick together are expected to add $500 million to Exelon's gross margin in 2019, chief financial officer Jack Thayer said. The company is working to reduce its operations and maintenance expenditure by $100 million in 2018 and $25 million in 2019, he added.

Tight timeline for Illinois

In Illinois, Exelon's Quad Cities and Clinton plants are facing early retirement if state legislation similar to New York's approach is not enacted. Crane said Exelon continued to work with a "wide range of partners" on a comprehensive energy package that would preserve the operating lives of Quad Cities and Clinton. "We remain hopeful that we can reach a constructive solution that is truly in the best interest of our state and our Illinois citizens," he said.

Crane said the timeline for the legislation is "tight", and warned that without appropriate action being taken during upcoming veto sessions scheduled by the Illinois legislature those plants will close. The veto sessions are to take place on 15-17 November and 29 November-1 December.

In the meantime, plans for the plants' retirement continue. Exelon has already notified the US Nuclear Regulatory Commission of its intent to close Quad Cities and Clinton, and in July informed regional transmission organization PJM of its intention to retire Quad Cities and not to enter the plant into the capacity auction for 2020-2021. It will make a similar notification about Clinton to the MISO regional transmission organization "on or about" 1 December if Illinois has not passed legislation by then.

Researched and written
by World Nuclear News