Nuclear assets drew Chicago-based Exelon's eye to New Jersey power producer
By Robert Manor, Chicago Tribune -- Dec. 22
It was the nuclear plants, three poorly operating reactors, that attracted Exelon Corp.'s attention and eventually led it to acquire New Jersey's largest utility.
Exelon Chief Executive John Rowe called the Salem I, Salem II and Hope Creek
reactors "the heart of the deal" in offering new details Tuesday about
the $13 billion stock deal to acquire Public Service.
"We don't want to sell off the nuclear plants," Rowe said.
In fact, it was problems at the nuclear plants that drew Exelon's interest.
Public Service and Exelon co-own the two Salem plants, but Public Service
operates the facility. Salem's reactors were shut down for two years during the
1990s due to poor maintenance.
At Hope Creek, meanwhile, Public Service has put off replacement of a massive
water pump essential to the plant's operation. Opponents of that decision have
complained the pump vibrates and emits noise, a sign that it is failing.
Rowe said executives of the two companies met last summer to look for ways to
fix Public Service's problem.
"We wanted a way to help," Rowe said. After months of off-and-on
negotiations, it became apparent that only a merger would yield economical
solutions to the reactor problems, he said.
"It allows us to give them the benefit of our nuclear strength,"
Rowe said.
Public Service and Exelon also co-own a two-reactor plant called Peach
Bottom. Exelon operates that plant.
Rowe and other Exelon executives have declined to say what they think it will
cost to fix the Public Service nuclear plants. But Rowe did say that it was not
as expensive as one might expect.
"The problems are not largely capital," he said. Instead, Rowe
said, it is mostly Public Service policies and operations that have led to its
problems.
Exelon's fleet of nuclear plants, now the largest in the United States, once
was one of the worst. When Rowe took over in 1998, federal regulators were
deeply concerned about the operation of Illinois nuclear plants. Rowe changed
that.
Exelon's 10 nuclear plants now are producing at well over 90 percent of
capacity, a healthy figure that yields extremely cheap electricity.
"We have made the ComEd nuclear fleet work like a clock," Rowe
said.
Rowe said that Illinois consumers won't see any change in service or their
electricity costs because of the merger.
"Here in Illinois it simply makes a bigger company headquartered in
Chicago," he said.
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