Exelon Plans to Close Two Nuclear Plants in Illinois Citing Revenue Shortfalls

Exelon Generation on Aug. 26 announced that it plans to retire two nuclear plants in Illinois with a capacity of more than 4.1 gigawatts as they face revenue shortfalls due to falling energy prices and market rules that allow fossil fuel generators to underbid carbon-free resources in PJM Interconnection LLC’s capacity auction. The announcement follows the release of a report by Illinois Democratic Governor J. B. Pritzker, outlining a set of principles to guide the state to a clean energy economy. The report also suggests that the fixed resource requirement in current legislative proposals to pull Illinois out of the capacity market would not accomplish the clean energy goals and would further subsidize Exelon’s nuclear plants.

Gov. Pritzker’s report notes that fixed resource requirement, or FRR, proposal has been the centerpiece of current energy discussions, but its first step is to annually pay each of Exelon’s nuclear plants an amount, which is thrice the current taxpayer subsidy that two Exelon plants already receive – “without showing their math as to why this is necessary.” In 2016, Illinois enacted the Future Energy Jobs Bill which created a zero-emission standard, or ZES, to support continued operation of the financially struggling Clinton and Quad Cities nuclear plants for 10 years. Further, the report notes that the FRR construct does not provide the benefits of a market construct, does not guarantee an environmental generation mix, and may bring issues with market power concentration in Exelon. Given the significant time and costs required for an FRR, participation from new renewable energy generation could be delayed. The proper approach would be to explore all means to set up a clean energy framework comparing costs and benefits.

The Exelon Corp. subsidiary intends to close the 2.3-gigawatt Byron Generating Station in September 2021 and 1.8-gigawatt Dresden Generating Station in November 2021, resulting in the loss of four nuclear generation units that supply 30 percent of Illinois’ carbon-free energy. The Byron and Dresden plants are licensed to operate for an additional 20 years and 10 years, respectively. The two units generate nearly $63 million in taxes annually and supply more than four million consumers in northern Illinois, according to Exelon. The state’s six nuclear plants accounted for 12 percent of U.S. nuclear power net generation in 2019, according to the U.S. Energy Information Administration.