Exelon-backed Illinois bill would include nuclear plants in low-carbon standard

In a move backed by Exelon (NYSE:EXC), Illinois lawmakers have introduced legislation to create a state Low Carbon Portfolio Standard that would include nuclear power.

Chicago-based Exelon is the nation’s largest nuclear operator. For more than a year Exelon has said that some of its six nuclear stations in Illinois are in danger of closing because they are have trouble staying profitable in today’s power markets.

Among other things, Exelon has maintained that premature closure of any of its Illinois nuclear units would make it far more difficult for Illinois to comply with the U.S. Environmental Protection Agency (EPA) Clean Power Plan. The EPA proposal would have states cut power sector CO2 30% by 2030.

Any nuclear plant retirements would likely to be made up for by natural gas-fueled generation, Exelon has said.

According to both PJM and the Midcontinent ISO (MISO), the two regional grid operators for Illinois, early nuclear plant closures would cause a significant spike in electricity prices for Illinois residents and businesses, increasing up to 10% the first year, Exelon said in a Feb. 26 news release.

NRG Energy pans the Illinois proposal

When asked for comment, one rival non-utility generator, NRG Energy (NYSE:NRG), panned the Illinois proposal.

“NRG is concerned that a bill, one dubbed the “Exelon bailout bill” by many, would be introduced that blatantly favors one company that nonetheless says publicly that it favors competitive markets,” said an NRG spokesperson, David Gaier.

“The introduction of HB 32293 in Illinois marks the second state in which Exelon has sought ratepayer or taxpayer subsidies for its nuclear plants,” the NRG representative said. “These proposals will distort power markets, raise electric rates, reduce customer choice, and ultimately reduce competition,” Gaier added.

The NRG official was alluding to Exelon efforts in New York State to win approval for a long-term agreement to keep open the R.E. Ginna nuclear plant.

“What Illinois needs, instead, is reasonable, market-based electric rates and a competitive energy market, which will significantly benefit all ratepayers and the Illinois economy. This bill simply asks ratepayers to pay once more for nuclear plants that they’ve already paid for many times over,” Gaier said.

Proposal would mandate 70% power from sources including nukes and ‘clean coal’

 Introduced in both the Senate as SB 1585 and the House as HB 3293, certain electric utilities would be required to purchase low-carbon energy credits to match 70% of electricity used on the distribution system from qualified sources. The qualified sources would include solar, wind, hydro, nuclear, tidal, wave and clean coal.

The Illinois House version, obtained by GeneraitonHub, is 100 pages long. It is sponsored by Reps. Lawrence Walsh, Jr. – Michael Tryon, John Anthony, Tom Demmer, Brian W. Stewart among others.

“With a 70 percent carbon-free energy standard, this legislation would make Illinois the national leader in ensuring a clean energy future – even ahead of other environmental leaders like California,” said Sen. Mattie Hunter (D-Chicago).

“This comprehensive legislation balances the need to preserve our nuclear plants while at the same time promoting other low-carbon energy resources such as wind, solar, hydro and clean coal, among others,” said Sen. Sue Rezin (R-Morris). “The Low Carbon Portfolio Standard doesn’t pick energy winners and losers,” Rezin said.

The legislation includes certain cost controls.

For example, a consumer price cap would limit the impact to a 2.015% annual increase compared to 2009 rates, or about $2/month for the average Illinois residential electricity customer, less than the increase customers would face if the nuclear plants close early, Exelon said.

In addition, if wholesale electric prices exceed a certain level, any excess revenues would be rebated to all Illinois electric customers on their bills.

The Exelon nuclear plants in Illinois include Braidwood, Byron, Clinton, Dresden, LaSalle, and Quad Cities. Clinton has a single power reactor while the other plants each have two active reactors.

The Exelon nuclear units are responsible for almost half of all electricity produced in Illinois. The market-based solution is modeled after findings from a recent HR 1146 report prepared by four state agencies that analyzed the economic, environmental and reliability impacts of premature nuclear plant closures in Illinois.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.