Why did Exelon include the Byron plant in its closure plans?

https://ift.tt/3gJxHkY

The Byron plant near Rockford, on the other hand, had promised to deliver until at least mid-2022. So it came as something of a surprise when Exelon announced that Byron, too, would be shuttered next year.

Exelon yesterday notified PJM Interconnection, the multistate power-grid operator that is tasked with ensuring there’s enough generating capacity to keep the lights on, that it was closing Dresden. But, so far, it hasn’t provided the same notification for Byron.

The company said that it can’t do so yet because past agreements in mergers require it to provide official notification only after Byron—or any other nuke—fails to clear an auction that PJM conducts to set the price qualifying power plants are paid simply for the promise that they’ll deliver during hot summer days and cold winter nights when they’re most needed.

PJM used to conduct such auctions every year, but it hasn’t since 2018 in large part due to complex disagreements with the Federal Energy Regulatory Commission over the rules. In a world where power generators now are paid historically low amounts for the actual electrons they produce, the price for these “capacity” promises—embedded in the electric bills all of us pay—is a critical percentage of their revenue.

Byron’s hundreds of workers, as well as the localities near Rockford that depend heavily on the property taxes the plant generates, knew the facility was at risk. But they could be forgiven if they thought they had until 2022 to deal with the issue.

After all, as Exelon disclosed May 24, 2018, in a Securities & Exchange Commission filing, “While Dresden and all but a small portion of the Byron nuclear plant did not clear in the auction, they are not at risk of early retirement at this time as they are committed to honoring their capacity obligations through May 2021 and 2022, respectively.”

Instead, Exelon in the announcement yesterday said Byron would close next fall rather than 2022, as most expected.

Dresden’s future is clear-cut. It’s a far older plant than Byron, and its operating license runs only seven more years for one of its reactors and nine more years for the other. Byron’s licenses for its two reactors don’t expire until 2044 and 2046, respectively.

So it’s fair to wonder why Exelon felt the need to include Byron in its closure announcement for Dresden. After all, the company has been pressing Springfield for more ratepayer subsidies for nukes it says are “uneconomic” given current market conditions. In energy industry circles, Dresden’s closure is considered essentially a foregone conclusion. But Byron is a different matter.

If Exelon wanted to get Springfield’s attention, arguably a notification of Dresden’s closure wasn’t going to provide enough of a jolt. Adding Byron to the announcement undoubtedly ramped up the pressure.

The company already has played the closure-threat card successfully. But only after convincing state lawmakers that it was serious about shuttering plants and eliminating union jobs. In 2016, the Future Energy Jobs Act imposed surcharges on electric bills throughout Illinois that funnel $235 million each year to keep two other nukes operating. Exelon had threatened to close those two in order to win the subsidies.

In emails to Crain’s, Exelon didn’t address any political motivations. It said it merely wanted to provide workers and others affected by Byron’s closure timely notice.

“We made the public announcement now because the retirement is imminent and we cannot wait any longer to notify our employees, communities, and other interested stakeholders,” the company said.

Under past agreements, Exelon can’t even officially notify PJM of its intent to close Byron until PJM holds another capacity auction and Byron doesn’t clear that auction. It’s unclear when the next PJM auction will occur.

So a September 2021 shutdown timetable, as Exelon informed PJM it wanted to pursue for Byron, is questionable.

In addition, currently Byron is obligated to deliver a “small amount” of capacity through mid-2022 under PJM rules. Exelon has the ability to swap in other megawatts to meet that obligation, but must do so in future small-scale auctions that PJM has yet to schedule.

In other words, there are many facets outside of Exelon’s control that are critical for meeting the September 2021 closure timetable for Byron.

26-Delivered

via Crain’s Chicago Business

August 28, 2020 at 10:04AM

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s