But Exelon hasn’t said what it wants Illinois to do about these threats. The utility has said it wants Illinois to institute a vague “market-based solution” to Exelon’s economic problems. Last year, Exelon floated the idea that it needs some $580 million/year in additional revenue to make up for its nuclear fleet’s losses. The utility did get the legislature last year to order state agencies to produce a report that Exelon hoped would provide backing for its position. But that report didn’t exactly do what Exelon wanted. Instead, it found that Illinois could easily handle the threatened reactor shutdowns; that if they occurred, it might bolster clean energy development in the state; and that bailing out Exelon would be expensive.
Why Exelon hasn’t articulated what it wants is obvious: it knows that when it puts down real numbers for the subsidies it seeks, then people will be able to figure out what a bailout may cost. Even the “market-based solution” Exelon wants, which is utility-speak for a means of hiding the costs, will have to have numbers attached to be meaningful.
Adding Exelon’s nukes to a Clean Energy Standard that rewards new carbon reduction projects? That would be one market-based solution. But how would giving a utility financial credit for power plants it already has lead to any new carbon reductions? Or, in Exelon’s view, should states simply reward any utility that threatens to close a nuclear reactor (or wind farm, or solar plant for that matter) regardless of whether it has provided actual numbers to show its losses–which Exelon hasn’t--or whether closing expensive power plants might actually be better for ratepayers and lead to new clean energy generation?
Illinois could find some other way of getting Exelon its $580 million or so, assuming that’s still the utility’s goal. It could simply order rate increases, or it could pass a law saying that nuclear power is so valuable its power will be priced above other power sources. Hmmm, those options might not be very politically popular.
That’s especially so when the PJM grid already has taken some steps to reward Exelon for its threats. And even more so when the state agencies’ report, and some independent analyses, suggest that Exelon may have been crying wolf all along and that its nukes may not be losing the kind of money the utility has claimed.
If Exelon wanted the new Republican Governor of Illinois to make a proposal for it, that didn’t happen. As Crain’s Chicago Business reported in a story titled Rauner’s energy policy ignores Exelon elephant in the room, new Governor Rauner’s transition team January 9 released a detailed report on major issues facing the state, including five pages of energy policy recommendations–and never once mentioned Exelon’s threat to close reactors. The report did, however, suggest overhauling the state’s renewable energy standard–though it did not adopt Exelon’s idea of including nuclear in it.
Meanwhile, Exelon doesn’t appear to be gaining any new friends. Even the Chicago Sun-Times editorialized on the issue, beginning its piece: “The people of Illinois got a bit of good news Wednesday when a report by several state agencies essentially said nobody should rush in with baskets of cash to rescue Exelon’s fleet of nuclear power plants.” The paper said the legislature should “be in no hurry to play along” with Exelon.
NRG Energy, one of Exelon’s major competitors in the state, was even less charitable, saying in a statement to Midwest Energy News,
These reports demonstrate that the economic situation for multiple nuclear facilities is more manageable than originally thought. The report finds that the retirements of the Illinois nuclear fleet won’t cause reliability problems with the state’s electric supply, except under extreme scenarios never before seen in US energy markets. In addition, short-term job losses could be replaced with increased investment in energy efficiency and renewable energy.
In any event, any subsidy to these plants, already paid for many times over, is unnecessary and could easily cost more than the rate increase costs of nuclear plant retirements. Allowing the market to work, which means no “subsidy legislation,” will save ratepayers more than $120 million per year and create almost 10,000 new Illinois jobs between now and 2020.
Exelon’s case seemed weak when it began its howling a year ago, and then went and spent an unknown amount of money creating the astroturf group Nuclear Matters to provide outside backing from a bunch of former politicians for the notion that nuclear reactors should apparently never close for any reason, no matter what the cost might be.
A year later–with still no actual proposal, no numbers to back its position, with its reactors another year older and closer to retirement anyway, and with a state agency report intended to support it but which undercut it instead–Exelon’s case appears even weaker.
In New York, meanwhile, Exelon is looking for another ratepayer bailout: this one for its antiquated Ginna reactor, which it says has lost $100 million over the past three years. Exelon wants the NY Public Service Commission to approve a new above-market power purchase contract with Rochester Gas & Electric that would cost ratepayers more than $200/year each. RG&E at first appeared willing to do so, but is now looking at other possible alternatives that would lead to Ginna's shutdown.
To improve its overall balance sheet, Exelon is also trying to take over the mid-Atlantic electricity distribution utility Pepco, a proposal that has engendered substantial opposition in Washington, DC, Maryland and Delaware. DC, for example, has a stated policy of becoming the greenest city in the country with the goal of being 50% renewable powered by 2030--a goal Pepco's pro-renewable policies support. For its part, Exelon owns the dubious distinction of being the only utility ever thrown out of the American Wind Energy Association for its vociferous anti-renewable policies. A new analysis of the proposed deal by the independent Institute for Energy Economics and Financial Analysis recommended that the Washington PSC reject the merger.
For its part, the second-largest nuclear utility, Entergy, already closed its uneconomic Vermont Yankee reactor. Its Pilgrim reactor in Massachusetts is also teetering on the edge of viability; Entergy's solution so far is similar to one of Exelon's ideas: get Pilgrim included in the state's new Clean Energy Standard. As in Illinois, this wouldn't lead to any new carbon reductions, but would serve to prevent investment in new, genuinely clean energy technologies. So far, Massachusetts has held firm in its view that no existing power plants, including Pilgrim, should be included in the new standard, but with a new Republican governor that stance could change. The state will hold public hearings on its standard in March.
Ohio’s FirstEnergy can be added to the list of bailout seekers. It is seeking subsidies that the Ohio Consumers Counsel puts at $3 Billion to keep its Davis-Besse reactor and some old, decrepit coal plants operating.
The portion for Davis-Besse alone is at least $171 million/year and NIRS estimates that the actual price tag may be $225 million/year above the market rate for electricity.
Ohioans are not happy with the prospect of such rate increases. As the Cleveland Plain-Dealer reported Wednesday, some 200 people crammed into a Public Utilities Commission of Ohio (PUCO) hearing in Cleveland “to vent rage about the company’s latest rate proposal, and at times, its actions over the last decade.”
As is the case elsewhere, some of FirstEnergy’s power plants, especially the Davis-Besse reactor and the Sammis coal plant, can’t compete with lower cost natural gas and wind power. Since FirstEnergy doesn’t own those gas and wind plants, it wants ratepayers to pay the much higher costs of keeping Davis-Besse and Sammis open.
And as was the case in Illinois, the Nuclear Energy Institute (NEI) jumped in with a study claiming that operating Davis-Besse through 2037 (although its license expires in 2017 and it has not yet received an extension; its application for an extension is being contested) would provide $30 Billion in economic activity for the state. NEI also claims that there are not only 700 jobs at the reactor, but its operation “stimulates” nearly 4600 more jobs in the area.
Of course NEI did not examine what would happen if Davis-Besse closed and its power were replaced by renewable sources. Renewable energy typically provides far more jobs per megawatt/hour of electricity produced than nuclear power. In Illinois, the state agencies charged with defending Exelon’s claims about its troubled reactors determined instead that closing reactors would lead to new jobs and new clean energy generation. The same almost certainly would be true in Ohio.
And NEI claimed (and presumably its economic figures are based on the notion) that “Davis-Besse is a highly reliable source of electricity,” pointing to its 98% capacity factor in 2013. What NEI did not mention is that Davis-Besse historically has been one of the most safety-troubled reactors in the country, responsible for two of the NRC’s five most serious safety events since Three Mile Island. The result of these problems–and there are still significant safety issues at the reactor, including cracking in its shield building–is that, through 2012, Davis-Besse’s lifetime capacity factor was 67.6%, according to the World Nuclear Association–one of the lowest figures for any reactor in the country.
In short, reliability is not exactly a selling point for Davis-Besse. Counting on one of its best years to be its norm for the next 30 years is somewhat akin to jumping into a car with a broken gas gauge for a long road trip and assuming the tank is full. Are you feeling lucky?
At the Cleveland hearing, a number of speakers said they would be willing to pay more for renewable-powered electricity–but not for Davis-Besse or coal plants. But that’s a problem in Ohio, which is the only state in the country that reversed its renewable energy and energy efficiency standards (although West Virginia is also about to do so). That stance, taken last year by a right-wing state legislature, already has cost a lot of jobs in the state, according to a report released last week from Pew Charitable Trusts, based on work from the consulting firm Navigant Research.
The American Legislative Exchange Council (ALEC), a far-right organization devoted to changing state laws across the country, waged a major, but mostly unsuccessful, campaign last year to overturn Renewable Energy Standards in numerous states. Only Ohio bit, and now it’s paying for that decision. Clean energy investment is fleeing the state to build elsewhere, meaning that replacing Davis-Besse with renewables would not be as easy as it would in most states.
But another fact NEI ignored in its “study” is that Davis-Besse accounts for only 5% of the state’s overall generation; its shutdown wouldn’t even be noticed. And that leaves plenty of time for the state’s energy policies to change again and for renewables to again be an important part of the state’s energy future. Indeed, a Davis-Besse shutdown might be just the thing needed to spur reconsideration of the RES and bring in a new era of clean, affordable energy for Ohio.
That's exactly what the American people want. 90% of them want more solar and wind power; 80% want a lot of it. As Harvard Professor Stephen Ansolabehere explained in a New Year's Day article on Forbes, “In order to get 90 percent, that means a lot of Republicans like solar and wind—more than coal. Everybody likes those sources. This is non-partisan.”
Americans aren’t stupid. Solar power simply makes sense, from any angle you look at it: it makes sense environmentally, it makes sense economically. Not only is solar now cheaper than grid electricity in 42 of the 50 largest U.S. cities, but “the numbers show money spent on a residential solar system earns a better return than investing in Standard and Poor’s 500 index fund.”
A new solar installation--mostly rooftop solar--is being installed every 2.5 minutes in the U.S. now; last year it was every four minutes, next year it will be 90 seconds. When it gets to every 15 seconds--or 1/2 million homes/year--which could happen as early as 2018, the 20th century utility business model of mammoth and dirty baseload power plants pumping out electricity to the masses will be upended as the 21st century smart grid based on distributed generation and technological advancement emerges.
The Exelons and FirstEnergys of the world are clinging to an outmoded business model based on an outdated electricity generation and distribution system that is being overtaken by modern technology and the ingrained American trait of independence and self-sufficiency. If Americans can provide themselves and their families with their own electricity, and the cost is competitive, they’re going to do that. That people now actually save money by installing rooftop solar is just accelerating the trend. That’s how you get the Tea Party forming coalitions with environmental groups in states like Florida and Georgia to encourage solar power. When “Green Tea” coalitions exist and grow in strength–and even Fox News covers it favorably–-you know it’s pretty much game over for the utilities that can’t shake themselves free of their 20th century stylings. The last time nuclear power was on a roll was the disco era of polyester and platform shoes. A retro return to that low point in fashion history is far likelier than the nuclear power industry ever returning to relevance.
This post is based on reporting that first appeared in several articles on NIRS' blog GreenWorld, at www.safeenergy.org