Exelon Corp. (NYSE: EXC) announced that the Quad Cities nuclear plant in Illinois and Three Mile nuclear plant in Pennsylvania did not clear the PJM capacity auction for the 2019-2020 planning year, increasing the probability of closing the dual-unit Quad Cities plant.
This is the second consecutive year that Three Mile Island 1 failed to clear the PJM capacity auction. The plant is committed to operate through May 2018, but Exelon says it faces continued economic challenges.
“This announcement should instill a heightened awareness among state policymakers that steps are needed now to preserve the Clinton and Quad Cities plants,” said Nuclear Matters co-chair and former Senator Evan Bayh. “By passing the Next Generation Energy Plan as quickly as possible, the legislature can help ensure that Illinois continues to enjoy the many benefits of these safe, reliable, carbon-free energy sources.”
Exelon announced earlier in May that it would shut down the Quad Cities and Clinton nuclear plants, both located in Illinois, if they did not clear the capacity auction and if the Next Generation Energy Plan (NGEP) is not passed during the spring Illinois legislative session scheduled to end May 31. Quad Cities and Clinton have lost a combined $800 million in the past seven years, but a study commissioned by the state found that shutting down the two plants would cause wholesale energy prices to increase by $439 million to $645 million annually in the region. The utility said the plants could shut down in June 2017 for Clinton, and June 2018 for Quad Cities.
“We have some real challenges for our existing fleet, which is an exceptionally well-performing fleet,” said Marvin Fertel, president and CEO of the Nuclear Energy Institute. “We have a systemic problem, and unless we address the systemic problem, we’re going to have a bigger problem.”
Clinton operates in the MISO market. While the plant did clear MISO’s recent one-year forward capacity auction, it will not receive enough revenue to avoid continued losses. NGEP includes implementation of a zero emission standard that would specifically target at-risk nuclear plants, and it would also nearly double energy efficiency programs and jumpstart solar development with rebates and $140 million per year in new funding.
Exelon’s other nuclear plants in the PJM cleared the auction with the exception of Oyster Creek in New Jersey, which is set to close in 2019 and did not participate. A portion of the Byron plant in Illinois also did not clear the auction and it is committed to operate through May 2020.
Capacity auctions are held annually by grid operator PJM to ensure enough power generation resources are available to meet demand in its region covering all or part of 13 states and the District of Columbia. The auction results take effect June 2019.
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