SPRINGFIELD — Exelon Corporation on Thursday, Aug. 27 announced plans to close two Illinois nuclear power plants next year in a decision the company claims is independent of legislative energy policy negotiations.
But, in a news release announcing the closures, Exelon’s CEO said the company will “continue our dialogue with policymakers on ways to prevent these closures.”
The announcement comes one week after the governor’s office laid out guidelines for negotiation of energy legislation that include accountability measures for the state’s utility companies.
“We agree with Gov. Pritzker that policy reform is urgently needed to address the climate crisis and advance Illinois’ clean energy economy, and we support the objectives of the governor’s recent energy principles,” Christopher Crane, president and CEO of Exelon, said in a news release Thursday. “That’s separate from today’s announcement to retire these two zero-carbon nuclear plants, which was not a decision made lightly and is one that has been in the works for some time.”
The plants tentatively slated for closure include Dresden Generating Station in the Grundy County city of Morris and Byron Generating Station just outside of the Ogle County city of Byron.
Exelon is the parent company of Commonwealth Edison, the largest utility in the state which serves approximately 3.8 million ratepayers in northern Illinois. In July, ComEd admitted in a court document to — from 2011 until 2019 — seeking to “influence and reward” a high-ranking public official identified as Illinois House Speaker Michael Madigan in exchange for favorable action on legislation.
A spokesperson for Gov. J.B. Pritzker was critical of the company’s news release in an email statement on Aug. 27.
“First, let’s remember that Exelon already receives a ratepayer-funded subsidy of $235 million dollars per year to run nuclear plants in Illinois,” Jordan Abudayyeh, Pritzker’s press secretary, said in an email. “While they couch their messaging in their desire for a clean energy future, their primary purpose is to dramatically increase those subsidies on behalf of their shareholders.”
Abudayyeh was referring to revenue generated through Zero Emission Credits, or ZECs, approved through the Future Energy Jobs Act, or FEJA, in 2016.
Prior to the passage of that legislation in 2016, Exelon issued a news release stating it would “move forward to shut down the Clinton and Quad Cities nuclear plants,” which both remain open after receiving the ZECs made possible by FEJA beginning in 2017. The 2016 release said those plants “lost a combined $800 million in the past seven years, despite being two of Exelon’s best-performing plants.”
Exelon’s news release Aug. 27 said the closure of the “uneconomic” Byron and Dresden plants is necessary because they “face revenue shortfalls in the hundreds of millions.”
“We recognize this comes as many of our communities are still recovering from the economic and public health impacts of the pandemic, and we will continue our dialogue with policymakers on ways to prevent these closures,” Crane said. “To that end, we have opened our books to policymakers and will continue to do so for any lawmaker who wishes to judge the plants’ profitability.”
The governor’s office has said when it comes to subsidies such as ZECs, companies such as Exelon will have to “show their math and show the ratepayers of Illinois why they need a benefit.”
“We have seen these threats before, and this time Exelon’s threats will need to be backed up by a thorough and transparent review of their finances — including why the profits of the company as a whole cannot cover alleged operating losses at a few plants,” Abudayyeh said. “The administration looks forward to working with lawmakers and stakeholders to pass legislation centered on consumers and the climate that creates and retains good paying, union jobs in communities across the state.”
The Dresden plant is licensed to operate for another 10 years, while Byron is licensed for 20, according to Exelon. Together, the plants employ more than 1,500 full-time employees and 2,000 supplemental workers during refueling outages. They pay nearly $63 million in taxes annually and supply 30 percent of Illinois’ carbon-free energy, according to the news release.
While the company said the closure was separate from Pritzker’s recently-announced energy guidelines, the news release specifically referenced a policy difference between Exelon and the administration. That difference pertains to a Fixed Resource Requirement, or FRR, proposal, which seeks to pull the state from the multi-state capacity auctions conducted by the federally-regulated PJM regional transmission organization.
Capacity procurement is not the purchase of energy production, but the guarantee that a company will be able to produce a given amount of energy years into the future.
Proponents of an FRR say if the state is given authority to conduct capacity auctions, it can set fixed requirements for the purchase of renewable and zero-carbon energy sources.
The governor’s office disagrees with the FRR proposal and prefers a “market-based program that incorporates the social cost of carbon.”
“The proposed FRR has been the centerpiece of current energy discussions, but the first step in that FRR is to annually pay each of Exelon’s nuclear plants an amount equal to three times the current taxpayer subsidy that two Exelon plants already receive without any strings attached and without Exelon showing us their math as to why this is necessary,” according to the governor’s energy guidelines.
In its news release, however, Exelon cited “declining energy prices” and “market rules that allow fossil fuel plants to underbid clean resources in the PJM capacity auction” as driving forces of closures.
Exelon said a recent Federal Energy Regulatory Commission decision affecting the minimum offering price an energy generator can bid for PJM capacity auctions exacerbates the need for change. It also suggested it was considering further closures.
“As a result of these market rules, Exelon Generation’s LaSalle and Braidwood nuclear stations in Illinois, each of which house two nuclear units and together employ more than 1,500 skilled workers, are also at high risk for premature closure,” according to the news release.
Senate President Don Harmon, D-Oak Park, released a statement Aug. 27 saying he would “explore options for keeping nuclear plants open”
“Independent market monitors believe these plants can be profitable,” he said in a written statement. “I intend to look into legislative options including requiring these plants be put up for sale before they can be shuttered. We owe it to these workers and communities to see if someone else can successfully run these assets.”
State Sen. Michael Hastings, a Frankfort Democrat, said the Senate Energy and Public Utilities Committee he chairs “has been committed to working on legislation and consumer assistance since the beginning of the COVID-19 pandemic and we remain committed to working with the men and women of organized labor and all stakeholders to find solutions to secure the future of clean energy in Illinois.”
Rep. David Allen Welter, R-Morris, said “disappointment” in the closure announcement “does not even begin to scratch the surface of my frustration.”
“Exelon’s plan to retire Dresden Station is a direct result of Gov. Pritzker and Speaker Madigan’s failure to bring comprehensive energy legislation up for a vote at any point during the last two years,” he said in an email statement.
An Exelon spokesperson said there is “a short window during which these decisions could be reversed if a policy solution is implemented.”
“However, we must move forward with the required regulatory notifications and take other necessary steps to prepare the plants for early retirement. The further we get down that path, the more expensive and difficult it will be to reverse course,” the spokesperson added.