Lawmakers question Exelon audit as report calls for millions in subsidies

By Peter Hancock Capitol News Illinois

Exelon announced in August 2020 that it plans to shutter its Byron and Dresden power plants later in 2021. (Exelon Corp Photo)

SPRINGFIELD – Members of a state Senate committee sharply criticized a recent audit of Exelon’s nuclear power plant operations that suggested ratepayers may need to subsidize two of those plants by as much as $350 million over the next five years.

Gov. J.B. Pritzker’s office and the Illinois Environmental Protection Agency commissioned the audit last year, at a cost of $208,000, after Exelon announced in August that it plans to shutter its Byron and Dresden power plants later in 2021.

The audit, by the consulting firm Synapse Energy Economics Inc., was released in redacted form on IEPA’s website Aug. 14.

But Sen. Michael Hastings, D-Frankfort, who chairs the Energy and Public Utilities Committee, criticized many of the redactions and insisted lawmakers be given complete copies of the report.

“As my mom would say, son, you have more degrees than a thermometer,” Hastings said. “And you expect me to make some sort of determination based off of a report that’s halfway redacted. I expect more of us, and I expect more of our government in terms of a report. And I find it just very troubling.”

Sen. Sue Rezin, R-Morris, the ranking Republican on the committee, also criticized the handling of the report, noting that the governor’s office provided a quote for a news report about the audit that appeared online several hours before the report was given to lawmakers.

“So the governor’s office felt compelled to release this report to the media and actually give the media a quote before any member who has worked almost two years on this topic received the report, which we received at 10 o’clock that night,” she said.

Deputy Gov. Christian Mitchell, who testified during the hearing, said the report had been redacted to protect company trade secrets, but he said lawmakers would be provided unredacted copies upon request.

He also said the governor’s office responded to media inquiries because it began receiving inquiries about the report soon after it was delivered to Exelon, and because information about it was “out in the universe,” the governor’s office wanted “to make sure that we could get our side out.”

Shutting down the two plants would be a huge setback for Pritzker’s goal of transitioning Illinois’ power industry to 100 percent renewable or carbon-free energy production by 2050, and the governor’s office has already signaled its support for some kind of deal to keep the plants open.

But Mitchell said Thursday, April 22 the administration has no intention of approving an agreement like the one made in 2016, as part of the Future Energy Jobs Act, that provided Exelon with subsidies totaling $235 million a year for 10 years, “with no year-over-year review, or even midpoint review of the subsidy.”

“At no point during that effort was Exelon forced to publicly open their books and demonstrate to ratepayers of Illinois that their subsidies were right-sized or necessary to keep the plants open,” he said.

He also noted that Exelon’s utility subsidiary Commonwealth Edison has been the target of a long-running probe by the U.S. Attorney’s office in Chicago, “leaving the confidence of Illinois citizens and lawmakers at an all-time low after their admitted misconduct.”

In announcing its plan to close the plants, Exelon said even though they were licensed to continue operating for another 10-20 years, they had become economically unviable due to declining energy prices and new market rules that allow fossil fuel plants to underbid nuclear plants in capacity auctions.

The company also said its LaSalle and Braidwood nuclear plants were at “high risk for premature closure.”

The Synapse audit largely confirmed Exelon’s statements about the Byron and Dresden plants, although it disputed Exelon’s claim that the LaSalle and Braidwood plants were in danger of losing money, at least over the next five years.

That analysis was based on a number of assumptions about future energy prices, as well as Exelon’s actual operating costs. But many lawmakers on the committee challenged those assumptions.

In particular, Hastings noted that information supporting many of the assumptions was part of the material that had been redacted.

“And then when you look at the pages that are actually redacted, 34 of those pages actually have redactions in them,” he said to Synapse’s Max Chang, one of the coauthors of the report. “The information in those redactions is essential for me and other members of the General Assembly to make a public policy decision on what we do moving forward here.”

Lawmakers are considering several major pieces of energy legislation this year. Those include the Clean Energy Jobs Act and the Climate Union Jobs Act which are both aimed at transitioning Illinois toward a clean-energy economy. Whatever measures lawmakers take to address nuclear energy policy will likely be included in one of those bills, or in a combined bill.