Exelon’s Crane says decision on nuke closures likely in early 2021

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“We will not run plants and lose free cash flow or earnings on assets that are not supporting themselves,” Crane said.

“It’s reality,” he added. “We’ve shut two units down in recent years if we could not see a path to sustainability of those assets in the portfolio. Not the greatest decisions we’ve ever had to make, and we understand the impact of that on communities we serve and the environmental goals and economic impact of the states. But maintaining an investment grade (rating) that can support the remaining facilities is our main focus.”

He said the company likely would have an update on the Illinois plants when it reports fourth-quarter earnings in early February.

The company in past Securities & Exchange Commission filings has identified the Dresden, Byron and Braidwood nuclear stations as at risk of early closure due to persistently low power prices. The state in 2016 enacted the Future Energy Jobs Act, which funneled $235 million a year from surcharges on electric bills statewide to other Illinois nukes Exelon had threatened to shutter: the Clinton plant in central Illinois and the Quad Cities station along the Mississippi River.

For two years, Exelon has pressed Illinois lawmakers to have the state take over a critical part of establishing power prices from PJM Interconnection, the regional grid administrator for a multi-state region that includes northern Illinois. The proposal would result in carbon-free sources of energy—particularly nukes—being paid more than plants powered by national gas and coal.

Environmental groups and some consumer advocates have endorsed that approach, but it’s opposed by renewable power producers.

Gov. J.B. Pritzker made it a goal early this year to enact legislation that would put Illinois on a path to a carbon-free power sector. But the effort was put on hold once the COVID-19 crisis emerged, and now ComEd’s admissions in a deferred-prosecution agreement with federal prosecutors probing Madigan’s political operation have made it harder for state politicians to do something that’s perceived as helping ComEd and Exelon.

Crane acknowledged as much today. “There’s an obvious issue that trust has been eroded and although it’s isolated to ComEd it has effect on all the (Exelon) entities,” he said. “Our job is to rebuild the trust.”

“This will not happen overnight, and it will be a formidable task,” he added.

The last time Exelon won state subsidies for nuclear plants, Crane convinced lawmakers that he was serious. He started the Nuclear Regulatory Commission’s extensive process for closing the two plants before the state acted.

But the 2016 law that bailed out the nukes also provided substantial new profit-making opportunities for ComEd and was identified by federal prosecutors as part of the spoils ComEd won through what they termed bribery of public officials.

Crane has been cagey about whether any of the three at-risk nukes are losing money now. “Some are uneconomic at this point right now,” he said today.

"Uneconomic," of course, is in the eye of the beholder.

One thing seems certain: Exelon will have to do far more than it did in 2016 to prove to Springfield that plants built long ago with ratepayer money and then freed from regulation in the late 1990s at Exelon’s insistence can’t make it in a free market.

26-Delivered

via Crain’s Chicago Business

August 4, 2020 at 01:05PM

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