State plan would help nuclear plants by punishing carbon-based providers

Jan 07 - Chicago Tribune (IL)

Illinois governmental agencies Wednesday issued reports proposing ways to prop up Exelon's ailing nuclear power plants.

The agencies suggested Chicago -based Exelon's financially struggling nuclear plants could be kept open by favoring Exelon because it creates electricity without producing greenhouse gases. The policy would punish competitors who use carbon-based fuels that produce carbon dioxide.

Several state agencies delivered reports to the state legislature touting the environmental and economic benefits of the state's six nuclear power plants, which are owned by Exelon .

The agencies were directed to issue the reports in line with a House resolution passed last year under the direction of Speaker Michael Madigan .

"We thank the state for its attention and work on such an important issue for Illinois and the future of the state's energy assets," said an Exelon spokesman, adding that the company would review the report and issue a statement later.

The $31 billion company is the country's largest owner of nuclear plants, and has been lobbying for policies that would reward it for not emitting greenhouse gases.

Madigan's resolution also called for pro-nuclear lobbying of the U.S. Environmental Protection Agency , the Federal Energy Regulatory Commission , electric grid operators and Congress .

More than half the power produced in the state comes from coal and natural gas plants and renewable energy, but none of those companies has received that kind of treatment from Madigan.

Exelon expects to see a boost to its bottom line from a proposed federal "carbon rule" as its competitors face shutting down or paying to curb or offset pollution. The aggressive goals set by the U.S. EPA would reduce greenhouse gases by 30 percent from 2005 levels by 2030.

While the rule isn't expected to kick in for three years, the company is pushing state lawmakers to hash out legislation in the spring, saying it will decide the fate of several financially ailing nuclear plants this year.

Exelon has said that at least three of its nuclear plants in the state could be closed for economic reasons. The company has signaled to legislators that it would like to be included in some kind of "clean portfolio standard" under which it and solar and wind power producers are rewarded for providing energy to the state. Either that, or the company will push for a price on carbon that would make its noncarbon-emitting plants more competitive.

But the nuclear giant isn't merely waiting for the money to appear.

Last May, Exelon shrewdly turned its weakness as a nuclear generator into a long-term strength.

The strategy involved two nuclear plants in Illinois and a third in New Jersey . The three plants lost out on power contracts at an auction because Exelon bid them high and the plants were deemed too expensive. But those losses ultimately became a win for Exelon because the market was left with fewer plants to provide power, thus driving up prices for Exelon's remaining plants.

More recently, Exelon successfully lobbied the PJM Interconnection -- which oversees the grid in 13 states, including the Chicago region -- to propose a "no excuses" policy that would increase consumers' electric bills and financially reward the one form of power it relied on during last year's polar vortex when record-setting cold set in: nuclear.

A year ago, coal-fired generating plants stopped working because their conveyor belts froze and natural gas plants couldn't obtain enough fuel in time. Meanwhile, nuclear plants kept running at 95 percent capacity.

jwernau@tribpub.com

Twitter @littlewern

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