Expect a new nuke-bailout proposal from the governor soon

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Pritzker has said preserving Exelon’s nuclear fleet is critical to achieving his goal of transitioning to a carbon-free power industry. The administration will issue its own legislative proposal within the next two weeks, and subsidies for the Dresden and Byron stations, which Exelon is moving to shutter, will be part of it, Deputy Governor Christian Mitchell said in an interview.

“It is a massive amount of our clean energy,” he said.

But the report supports a level assistance that isn’t as generous as the $235 million annually Exelon obtained in 2016, the last time it went hat in hand to Springfield for financially ailing nukes—in that case, the Quad Cities and Clinton stations. Synapse suggests Dresden and Byron, if directly subsidized by ratepayers, together would need about $100 million annually.

Pritzker is likely to advocate for setting Illinois’ first-ever price on carbon, which would be paid by generators whose plants emit the heat-trapping gas. A modest price, similar to what Northeastern states have imposed for years, would reduce the need for direct subsidies to Exelon. In that case, only Dresden would need support to remain open, the report said.

The other two unsubsidized nukes—Braidwood and LaSalle—don’t need financial help in any near-term scenario, according to the report. Exelon CEO Chris Crane has said in the past that those plants are likely to need ratepayer assistance as well in the not-too-distant future, setting up yet another future clash over bailouts.

Synapse’s methodology for assessing the plants’ financial health differs from Exelon’s. The auditor questioned the large amount the Chicago-based company labels a “cost” when it in fact is a cushion for scenarios in which the plants don’t operate.

But, even if Exelon quibbles with the numbers, this report is a clear victory for a company that has seen its once-legendary clout in the state capital evaporate following the U.S. attorney’s office’s uncovering last year of systemic corruption over nearly nine years by Exelon-owned Commonwealth Edison in order to win support for lucrative legislation.

Unions representing the thousands of workers at Exelon’s nukes have picked up the slack in terms of pushing for more subsidies.

Asked whether the governor’s support for another bailout is, in effect, rewarding past bad behavior by the company, Mitchell said there are clear differences this time compared with four years ago, when the company demanded that policymakers take its word that plants were losing money. “There was a reason Gov. Pritzker called for an audit,” Mitchell said.

The state has more information than it’s ever had on plant financials. And the governor will support only the minimum amount needed by the plants to remain in the black, as well as annual audits. If the plants don’t need as much money in a given year, the subsidies should decline, Mitchell said.

To date, committees in the House and Senate have been holding hearings on competing bills that would put the state on a path to carbon-free power production. Many of those bills contain entirely contradictory ways of achieving that, but the measures all have been sailing through the committees anyway, with the expectation that a real vehicle will emerge in negotiations.

The governor’s bill would be expected to serve as that vehicle. Stitching together a comprehensive measure that pleases all the interests that want cash from ratepayers without sending electric bills soaring will be difficult, however. If too much money is set aside to preserve nukes, there won’t be enough to finance the new solar projects and wind farms Pritzker envisions as the state’s power-industry future.

The Synapse report doesn’t say so explicitly, but it implies there’s a compromise option available to the state. Byron, a much newer plant than Dresden, is in significantly better financial shape and needs much less help, the report said. If the state sets a price on carbon, Byron wouldn’t need any direct help, according to the report, while Dresden still would.

Both of Dresden’s reactors are slated to close within a decade anyway, and Exelon hasn’t moved to extend the Nuclear Regulatory Commission licenses. Byron’s two reactors are licensed to run until 2044 and 2046.

Asked whether Pritzker would support a compromise to prop up Byron but not Dresden, Mitchell reiterated the governor’s backing for preserving the fleet while the state beefs up its renewable power sector.

via Crain’s Chicago Business

April 15, 2021 at 07:02AM

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