Some needed good news for the U.S. nuclear industry, which is struggling in some markets to stay price-competitive with low-cost natural gas, has come via the passage in Illinois of the Future Energy Jobs Bill (SB2814). The bill provides Exelon zero emission credits (ZEC) for continuing to operate its Clinton and Quad Cities nuclear plants and funds energy efficiency programs at minimal cost to the average consumer.
Exelon successfully pursued the ZEC strategy in New York earlier in 2016. The New York State Public Service Commission approved a clean energy standard on August 1 that gives ZECs to Exelon for continued operation of Nine Mile Point 1 and Ginna, and allowed Exelon to acquire the Fitzpatrick nuclear plant.
The Illinois legislation would provide $235 million annually to Exelon in subsidies similar to those accorded wind and solar power for carbon-free energy production. In exchange, Exelon will keep open the two plants, which it had threatened to shut down in June of 2016, and preserve 1,600 employees’ jobs and an estimated $1.2 billion of economic activity attributable to these plants’ ongoing operation. The bill’s provisions cap the impact on the consumer to an average of 25 cents/month, though some advocacy groups question whether the legislation will be strong enough to maintain these caps over the long term.
The bill that was passed was scaled back from earlier proposals that included controversial demand-based rate provisions and support for Illinois’ waning coal business, though it did retain requirements for increasing energy efficiency programs, committing $750 million for low-income assistance, and providing increased freedom for large industrial users to manage their own energy programs.
With these measures in place, five U.S. nuclear stations in Illinois and New York were saved from the ax that previously fell on Ft. Calhoun, Kewaunee, Vermont Yankee, Oyster Creek and Pilgrim nuclear stations, each of which has been or will be shut down due to their owners’ inability to compete with low-cost natural gas or subsidized renewables.
Recently, FirstEnergy announced that it would exit the competitive electricity business and sell its nuclear and coal power plants if the states of Ohio and Pennsylvania do not reverse prior course and re-regulate electric supply, a move that could endanger Davis-Besse, Perry and Beaver Valley nuclear stations. FirstEnergy is facing the same economic headwinds as Exelon, though it has failed in its attempts to secure similar ZEC credits or other subsidies. And while demand base rates were not part of the final package in Illinois, there is growing industry support to attempt evening the playing field between renewables and nuclear where nuclear plays an important role in providing baseload power that solar and wind cannot.
So, what can be drawn from these developments? It is certain that Exelon’s strength as a company has much to do with its relative success at securing ZEC concessions. However, it should be noted that New York and Illinois have shown the willingness to recognize the benefit of carbon-free, baseload electric supply from nuclear power.
In order to maintain and grow the existing nuclear fleet, such measures will ultimately need to be nationalized or taken up in the remaining states where nuclear power remains the best available baseload carbon- and pollution-free solution. However, the actions taken in New York and Illinois may serve as model for other states with nuclear capacity to follow.
Sources:
http://futureenergyjobsbill.com/about
