Exelon plants in question

Wednesday, 28 May 2014
The future of three Exelon nuclear power plants is in question after they failed to secure a capacity payment that would have supported their operation in a difficult power market.

The future of three Exelon nuclear power plants is in question after they failed to secure a capacity payment that would have supported their operation in a difficult power market.

Despite low and predictable operating costs, the Byron, Quad Cities and Oyster Creek nuclear power plants will not receive a payment for their availability to the regional grid during 2017-2018. Their bids, based on their generation cost, were among the higher ones submitted to the PJM auction and not selected by the organisation.

The capacity payment worth $120 per day for each MWe capacity available in during 2017-2018 would have boosted the plants' economics at a time when some units have been challenged, first by low-cost natural gas and later by the subsidies offered to renewable generation.

In particular, the federal Production Tax Credit (PTC) for wind power is large enough for operators to make a profit even when the power price is below zero, and while fossil-fired plants can minimize losses by reducing output or shutting down, nuclear operators have sometimes found themselves paying money to the grid to take their power. Exelon's plants have suffered this situation and the loss of the capacity payment makes their economic situation more severe. Exelon considers the PTC to be "a prime example of the negative consequences of subsidies through which the government picks energy technology winners and losers." The company notified the Securities and Exchange Commission of the auction result without providing a reaction.

PJM Interconnection
 
PJM Interconnection coordinates and directs a transmission grid serving 61 million people across Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. Its regular capacity auctions ensure power plant capacity is available to meet demand, including a reserve margin.

At the Nuclear Energy Institute's annual Nuclear Energy Assembly conference last week, Chris Crane, who is chairman of the trade body as well as president and CEO of Exelon, said that "Nuclear plants provide large-scale electricity production, clean air, price stability and the highest reliability of any electricity generating source, but current market policies and practices do not accord value to these benefits. This threatens the diversity of our nation's generating portfolio and our ability to meet environmental goals. A diverse portfolio serves as a hedge against price volatility or supply disruptions."

The single-reactor Oyster Creek plant is already scheduled for early closure in 2019, ten years before its current operating license ends, to avoid the expense of incoming state environmental regulations that would require the construction of $800 million cooling towers.

The two units at Byron are licensed until 2024 and 2026; The two Quad Cities reactors are both licensed until 2032. Apart from these three plants, Exelon has a further 18 reactors in what is America's largest nuclear power fleet.

Researched and written
by World Nuclear News
  

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