Jeremy L. Dillon
RW Monitor
8/1/2014
Exelon will not make any decisions about closing some of its nuclear fleet until June 2015, the company announced during its second quarter earnings call this week. Exelon is currently conducting an analysis to see whether the plants in question—three of which are located in Illinois—can maintain a sustainable profitable future. Exelon had originally planned to make a decision by the end of this year, but indications from the Illinois state legislature that it would be willing to engage in market-based reform has made Exelon willing to wait on the decision. “We have agreed not make any decisions about retiring these units until June of next year to allow for the Illinois legislature time to enact market-based reforms at the state level,” Exelon President and CEO Chris Crane said during this week’s call. “This could be things such as joining [Regional Greenhouse Gas Initiative] or clean energy standards. However, as we have said in the past, if we are unsuccessful and we do not see a path to sustained profitability for these units in question, we will be forced to retire them to avoid long-term losses. I do want to declare we are not looking and do not want contracts for subsidies from Illinois, only contracts that recognize the environmental benefit and the reliability of the assets.”
Exelon first announced its assessment of its nuclear fleet during a conference call for investors in early February. The utility said the competition from natural gas, along with a harsh energy policy towards nuclear, has hurt the profitability of operating a nuclear plant. In the past couple years, five stations have announced pre-mature shutdown, with many citing the economic environment as a major influence in the decision to cease operations. The tide may be turning, however, with the recent proposed regulations from the Environment Protection Agency that would charge states with limiting carbon emissions from existing power plants. The regulations would seem to place an increased value to nuclear, a carbon-free form of production, which could lead to a more hospitable regulatory and legislative situation.
These proposed EPA regulations, Crane said, could have a positive impact on Exelon’s nuclear fleet. “We see this as a potential positive for Exelon and we are pleased at the rule recognizes the critical importance of the nation’s nuclear generation as vital to achieving the proposed standards,” Crane said. “While it’s still early to draw sweeping conclusions about state by state impacts given the complexity of the rule in the time afforded to the state’s to respond, we think that our clean, base-load nuclear fleet is well position to take advantage of the potential changes in the stack composition generation mix that this rule will achieve.”
