Exelon Generation Co. on Thursday said it would retire two nuclear power plants in Illinois over the next 15 months, years or even decades ahead of the expiration of their federal licenses.
The Byron Generating Station in Ogle County will shut down in September 2021, followed by the Dresden Generating Station in Grundy County in November of that year. The two facilities are no longer economically viable, facing revenue shortfalls in the hundreds of millions of dollars, Chicago-based parent company Exelon said in a filing with the Securities and Exchange Commission.
“The primary factors contributing to the deteriorating economic value of Byron and Dresden include significant declines in plant revenues due to prolonged periods of low wholesale power prices, market rules that allow fossil fuel plants to underbid clean resources in the PJM capacity auction, and the absence of federal or state policies that place a value on nuclear energy for its ability to produce electricity without carbon or air pollution while contributing to grid reliability and resiliency,” the 8-K filing says. “All of these factors contribute to deteriorating economic value and losses for the foreseeable future.”
Those are the same issues that Exelon and its peers have raised for years as they have closed a number of nuclear facilities ahead of the end of their planned service life cycles.
Exelon left open the possibility that its decision could be reversed, with support from the state – as happened in 2016, when Illinois passed legislation to subsidize the company’s Clinton and Quad Cities plants.
“We recognize this comes as many of our communities are still recovering from the economic and public health impacts of the pandemic, and we will continue our dialogue with policymakers on ways to prevent these closures,” Exelon President and CEO Christopher Crane said in a press release. “To that end, we have opened our books to policymakers and will continue to do so for any lawmaker who wishes to judge the plants’ profitability.”
A spokesman for Illinois Gov. J.B. Pritzker (D) expressed skepticism on the offer Thursday in an interview with the Chicago Sun-Times. Exelon is already receiving $235 million in annual subsidies, Jordan Abudayyeh told the newspaper: “While they couch their messaging in their desire for a clean energy future, their primary purpose is to dramatically increase those subsidies on behalf of their shareholders.”
The Sun-Times noted that Exelon subsidiary Commonwealth Edison is already embroiled in a federal bribery case involving efforts to buy influence in the Illinois legislature.
Details on Exelon’s plans for decommissioning the four reactors at Byron and Dresden remained unclear at deadline Friday for RadWaste Monitor. In the 8-K, the company acknowledged it might not have enough money on hand to meet federal requirements for decommissioning at Byron. Company representatives did not respond to queries on the situation.
Currently, there are 95 operational nuclear power reactors at 57 facilities, according to the federal Energy Information Administration. Eight reactors have shut down since 2013, and 25 are at risk of early closure through 2030, industry representatives said earlier this month at an American Nuclear Society online conference.
Exelon Generation says it operates 21 nuclear power reactors in Illinois, Maryland, New York, and Pennsylvania, representing the nation’s largest nuclear fleet. Last September, it retired Unit 1 at the Three Mile Island plant in Pennsylvania.
“It is heartbreaking to learn that Byron & Dresden Units in Illinois will close prematurely in Fall 2021,” Assistant Energy Secretary for Nuclear Energy Rita Baranwal tweeted on Thursday. “This loss is a devastating blow to the state’s thriving nuclear power hub and significantly impacts surrounding communities by reducing jobs and economic support from nuclear.”
The Nuclear Regulatory Commission license for Byron Unit 1 was issued in February 1985 and expires in October 2044. The Unit 2 license was issued in January 1987 and is good until November 2046.
Dresden Unit 2 was licensed in February 1991; the license was renewed in October 2004 and is good to December 2029. The Unit 3 license dates to January 1971, with renewal in October 2004 and expiration in January 2031. Unit 1 shut down in October 1978.
Together, the two sites have over 1,500 full-time employees, and bring on another 2,000 workers during refueling outages, the company press release says. Each year, they pay roughly $63 million in taxes.
The early closures will generate a projected $200 million to $300 million in one-time costs this year for Exelon and its Generation subsidiary, the 8-K says. These involve “materials and supplies inventory reserve adjustments, employee-related costs, and construction work-in-progress impairments, among other items.” The companies believe they could incur up to $50 million in additional charges in 2021.
As of December 2018, Exelon estimated it would cost $580 million to complete the decommissioning of Unit 1 at Dresden. Work would not start in earnest before 2029, timed to what was then the schedule for closure of Unit 2, according to an April 2019 Exelon status report to the NRC on decommissioning funding for the company’s reactors. Most of the spending was anticipated from 2029 to 2033, with a brief uptick in 2037-2038. The decommissioning trust fund at the time held roughly $350 million, with a 2% annual rate of return forecast to help cover all costs.
The Exelon document does not provide a corresponding breakdown of decommissioning cost projections for the other two Dresden reactors. But, as of the end of 2018, there was $696.6 million in the trust fund to decommission Unit 2 and $712.3 million in the Unit 3 trust.
The Byron Unit 1 decommissioning trust fund held $378.7 million at that point, Exelon reported. The company had $364.9 million for Unit 2. The company’s cost estimates for those projects were also not immediately available.
Exelon would have two years after each facility is closed to file a post-shutdown decommissioning activities report with the Nuclear Regulatory Commission. laying out its approach and cost estimates for the reactor cleanup.
Per federal regulations, decommissioning is complete only when a nuclear facility is safely removed from service and radioactivity levels are reduced to the point that the plant license can be terminated and the property put to other use. That generally involves removal of most or all of the facility infrastructure.
In its 8-K filing Thursday, Exelon said it has sufficient funding assurance for decommissioning the Dresden reactors, but that it might not meet the NRC’s minimum funding requirements for Byron “due to the earlier commencement of decommissioning activities and a shorter time period over which the nuclear decommissioning trust fund (NDTF) investments could appreciate in value.” Exelon said it could be required to provide up to $375 million in additional funding assurance for Byron with the federal regulator.
That might involve a parental guarantee, it said: “However, the amount of any required financial assurance would ultimately be dependent on the decommissioning approach adopted at Byron, the associated level of costs, and the decommissioning trust fund investment performance going forward.”
The NRC would have to approve exemptions for Exelon to apply money from the reactor trusts to associated operations that are not specifically radiological decommissioning, in particular management of spent fuel from the reactors and site restoration, the 8-K says. The Dresden plant is not expected to need supplemental funding for those operations in the absence of that exemption, but Byron could need up to $175 million in assistance over a decade to meet its expenses for spent fuel operations.
