Deferral follows outcome of third PJM capacity auction
Exelon Corporation (NYSE: EXC) today announced that all of its nuclear
plants in the PJM market cleared in the transition capacity auction for
the 2017-18 planning year and that the company will defer any decisions
about the future operations of its Quad Cities and Byron nuclear plants
for one year. As a result, the company plans to continue operating its
Quad Cities nuclear power plant through at least May 2018. The Byron
plant is already obligated to operate through May 2019.
Exelon intends to bid Quad Cities, Byron, Three Mile Island and all
eligible nuclear plants into the 2019-2020 PJM capacity auction next
year. The decision to defer retirement decisions comes after rigorous
analysis of the present and future economics of the plants, taking into
consideration the constructive market trends stemming from the PJM
capacity auction reforms.
“While Quad Cities and Byron remain economically challenged, we are
encouraged by the results of the recent capacity auctions. The new
market reforms help to recognize the unique value of always-on nuclear
power, while preserving the reliability of our electric system,” said
Chris Crane, Exelon president and CEO. “However, these plants are
long-lived assets with decades of useful life left, and today’s decision
is only a short-term reprieve. Policy reforms are still needed to level
the playing field for all forms of clean energy and best position the
state of Illinois to meet EPA’s new carbon reduction rules.”
Exelon will continue its dialogue with Illinois policymakers about
market and policy reforms that properly value nuclear power for the
economic and environmental benefits it provides.
Exelon has long supported efforts to reduce carbon dioxide emissions
from the power sector and has invested in clean technologies to improve
the quality of the air for the benefit of its customers. The EPA’s Clean
Power Plan, which mandates significant reductions in carbon emissions
from power plants, will require the states and the power sector to find
the most cost-effective solutions to achieve the required reductions.
The Illinois Environmental Protection Agency determined that the loss of
two nuclear plants would increase emissions by about 24 million short
tons, more than doubling the emissions reductions required under the
EPA’s carbon reduction rules and making it twice as costly to comply.
The Illinois EPA calculated the incremental societal cost of losing two
plants at more than $10 billion -- a figure that does not include the
additional billions of dollars early retirements would cost in the form
of higher energy bills, reduced electric reliability and lost jobs.
The auction results for the 2017-18 planning year take effect in June
2017. The transition auction was the second of two held by PJM to
supplement its prior base capacity auctions for the 2016-17 and 2017-18
planning years with the new capacity performance product, which is
designed to strengthen electric grid reliability.
Unlike Quad Cities and Byron, Exelon’s Clinton nuclear plant operates in
MISO territory and did not benefit from the PJM auction results. While a
MISO capacity auction held earlier this year helped reduce Clinton’s
economic losses, the plant remains economically challenged and is at
risk of premature retirement if conditions do not improve.
Grid operator PJM holds a capacity auction annually 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. Although
capacity revenue in a single year is an important consideration in a
plant’s long-term viability, it is just one of several factors Exelon
uses to make decisions about its plants’ future operations.
Exelon Corporation (NYSE: EXC) is the nation’s leading competitive
energy provider, with 2014 revenues of approximately $27.4 billion.
Headquartered in Chicago, Exelon does business in 48 states, the
District of Columbia and Canada. Exelon is one of the largest
competitive U.S. power generators, with more than 32,000 megawatts of
owned capacity comprising one of the nation’s cleanest and lowest-cost
power generation fleets. The company’s Constellation business unit
provides energy products and services to more than 2.5 million
residential, public sector and business customers, including more than
two-thirds of the Fortune 100. Exelon’s utilities deliver electricity
and natural gas to more than 7.8 million customers in central Maryland
(BGE), northern Illinois (ComEd) and southeastern Pennsylvania (PECO).
Follow Exelon on Twitter @Exelon.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150910005365/en/
Copyright Business Wire 2015
Source: Business Wire
(September 10, 2015 - 8:00 AM EDT)
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