PJM Interconnection, the multistate grid operator whose region includes northern Illinois, conducts an auction each year of power generators and other providers to ensure there’s enough juice available during the highest-demand periods of the year—usually heat waves or sharp cold snaps. Households and businesses pay the charge each month as a form of insurance to ensure those power plants deliver when needed, and they’re embedded in energy prices charged by ComEd and alternative power suppliers.
Unsuccessful were the Quad Cities, Byron and Dresden nukes. Quad Cities already is subsidized by Illinois ratepayers and is in no danger of early closure. But Exelon plans to shutter Byron and Dresden this coming fall without additional state support.
That support appears to be on its way with an agreement struck late last month with the Pritzker administration and state House and Senate leaders to charge ComEd customers more to prop up Dresden, Byron and Braidwood. The deal still hasn’t been made public in the form of legislative language, however, and it awaits votes in both chambers.
The $69 figure for the LaSalle and Braidwood plants is just over a third of what ComEd customers are paying for capacity right now. That will be good for consumers’ wallets but bad for Exelon’s nuclear plants, which are struggling to remain profitable in an era of historically low wholesale energy prices. For the plants, it means that annual revenue from this promise to deliver will fall beginning in mid-2022 to about $110 million, or about $3 per megawatt-hour, from about $310 million now, or about $8.40 per megawatt-hour.
The legislation awaiting action in Springfield would provide about $3 per megawatt-hour in aid to Byron, Dresden and Braidwood. Quad Cities currently gets more than $9 per megawatt-hour under a surcharge Illinoisans have paid each month since 2017, amounting to about $2 for the average household.
In its filing, Exelon warned that “like Byron and Dresden, (Braidwood and LaSalle) face premature retirement due to unfavorable market rules that favor emitting generation. Committing Braidwood and LaSalle to operate through May 2023 will provide time for the significant logistical and technical planning necessary to ensure a safe and orderly retirement in the event policy changes are not enacted.”
Assuming the new five-year state bailout is enacted, LaSalle will remain unsubsidized. That raises the question of whether yet another announcement of an early closure will create a third round of bailout talks in Springfield.
Exelon in a statement hinted that it would have more to say on LaSalle after the state legislation moves. “We have consistently said that zero-carbon nuclear plants, like renewables, need policy support to continue to produce clean energy in a market where fossil fuel plants do not pay for the cost of the air pollution they cause. We are hopeful that in the coming days Illinois policymakers will enact legislation that supports renewable and nuclear energy, and until then we can’t comment on decisions about the long-term operation of any of the plants.”
The PJM capacity auctions usually take place three years before the prices are to take effect, providing time for power generators to plan for capital investments or closure decisions. But several years of wrangling between PJM and Trump administration federal regulators delayed the auction for 2022-23. The short time horizon may have helped to suppress prices.
In the meantime, there’s now discussion of enacting a federal tax credit for nuclear power production. Lawmakers in Springfield can only pray that happens and takes this recurring hot potato off of their plates.