Exelon (NYSE:EXC) got better results in the just-completed PJM Interconnection transition capacity auction for the 2016-2017 planning year than it did for a recent PJM auction for the 2018-2019 planning period.
Exelon said Sept. 2 that all of the Illinois nuclear plants in PJM cleared in the transition capacity auction for the 2016-2017 planning year. The auction results take effect in June 2016.
PJM announced results of its first transitional auction on Aug. 31. The auction itself occurred Aug. 26 through Aug. 27.
For competitive reasons, Exelon cannot disclose whether its plants outside of Illinois cleared this auction, given the 2017-18 transition auction taking place this week, Exelon said in a news release.
This is the first of two transitional auctions that PJM is holding to supplement its prior base capacity auctions for the 2016-2017 and 2017-2018 planning years with the new capacity performance product, which is designed to strengthen electric grid reliability.
Exelon had announced Aug. 24 that one of its plants in Illinois, the two-unit Quad Cities station, along with the Three Mile Island 1 plant in Pennsylvania and the Oyster Creek plant in New Jersey had failed to clear the PJM capacity auction for the 2018-2019 planning year.
Oyster Creek is already scheduled to close by the end of 2019.
“We continue to be encouraged by these auction results, which along with EPA’s Clean Power plan, begin to properly value nuclear power for their reliability and low-carbon benefits,” said Exelon President and CEO Chris Crane,. “These auction results, as well as other factors, will come into play as we analyze the current and expected economics of each of our plants,” Crane added.
Exelon, the nation’s largest nuclear operator, has been very public about the fact that it might close one or more of its non-regulated nuclear plants for economic reasons.
With electricity markets being dominated by flat demand, weak power prices and energy fueled by cheap natural gas, Exelon has been pushing for better market incentives for baseload generation that doesn’t emit CO2.
In addition to better capacity markets, Exelon has also been pushing Illinois regulators to pass a clean energy standard that would recognize nuclear. Thus far, Exelon has been unable to win passage in the Illinois legislature.
The new capacity auction rules were ordered by the Federal Energy Regulatory Commission (FERC) to ensure reliability given the changing nature of the generation fleet as more intermittent renewable and gas-fired generation comes online, Exelon said.
The competitive market reforms will result in generators investing in their power plants to ensure reliability during extreme weather events and to have sufficient fuel on hand, which will benefit customers, Exelon said. Exelon spends nearly $1bn annually on its nuclear plants to add the latest technologies and keep them operating safely and reliably, the company said.
The capacity market reforms are being implemented at a time when the PJM region is currently experiencing its lowest wholesale electricity prices in 10 years, Exelon said.
Capacity auctions are held annually by grid operator PJM to ensure enough power generation resources are available to meet demand in its region covering all or part of 13 states and the District of Columbia.
Speaking of Washington, D.C., Exelon has indicated that it hasn’t given up on winning over D.C. Public Service Commission approval for its merger with Pepco Holdings (NYSE:POM). The Washington, D.C. PSC recently voted against the proposed merger.