Nuclear Power Finds Hope in the Illinois Next Generation Energy Plan
Investor-owned utilities in Illinois recently announced their support for sweeping energy legislation to address unprofitable nuclear operations after results from MISO’s April capacity auction saw an approximate 50% YoY decline to $72/MW-day. If the proposed Next Generation Energy Plan (NGEP) fails to be passed before the current legislative session ends on May 31, Exelon plans to retire its Clinton and Quad Cities nuclear plants, which would decrease the state’s carbon-emission-free electricity significantly.
- The NGEP calls for creating a new zero emission standard, modeled after New York’s Clean Energy Standard, under which state regulators would review each plant annually to determine whether it’s entitled to a modified compensation rate
- If approved, the additional compensation will be dispersed only when market revenues fail to cover operating costs and risks; however, if revenues or costs are different than forecasted, there’s no true-up mechanism
- The bill also proposes an additional $1 billion in funding for low-income assistance programs, more than $140 million per year in new funding for solar power deployments, and a doubling of energy efficiency programs that would create $4.1 billion in energy savings
- Moreover, the bill proposes rate structure revisions for Commonwealth Edison, an Exelon subsidiary, that would cut fixed charges by 50% while allowing the utility to implement a mandatory “grid impact rate” or demand charge for its nearly four million customers
- According to Exelon, the average residential customer would see an increase of $0.25 per month on their power bill upon implementation of the NGEP
- Current market prices do not value the capacity and clean energy of nuclear power sufficiently enough to maintain its profitability, and the economic impacts are beginning to expand beyond uneconomic small single-unit plants to large singles (Clinton) and the first dual-unit economic shutdown (Quad Cities)
- States such as New York, Illinois, and Connecticut are pursuing legislation to keep reactors online, but it may be too little, too late to avoid significant loss of carbon-free generation
- Some system operators, including MISO and ISO-NE, are also attempting to respond by proposing market-based solutions, like adjusting the shape of demand curves
- Still others, such as PJM, are cautioning policymakers on the negative effect that subsidies and other public policies like zero emission standards can have on market efficiency insofar as they create “capital bias”
SNL Financial: Cost of Illinois nuclear plants looms large for Exelon
SNL Financial: PJM report defends market in debate over subsidizing nuclear
Energy Central: Clean-energy bill could save Clinton plant
Nuclear Power Illinois: Next Generation Energy Plan overview
This report is part of the Nuclear Minute series. To view all featured Minutes, please click here.
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