Nuclear bailout

By Drs. Robert & Sonia Vogl
President and Vice President, Illinois Renewable Energy Association

Last May, Illinois legislators, responding to Exelon’s warning that it may have to close its nuclear plants in Byron, Quad Cities and Clinton as they were unprofitable, ordered the relevant four state agencies to propose “market-based solutions” that would keep the plants open. Such measures could include a carbon tax, a carbon tax-and-trade program, or remuneration for the carbon-free energy produced at nuclear power plants. Exelon also points to the reliability of nuclear power plant production.

Of course, the areas in which the plants are located would be adversely affected by the loss of jobs and the taxes that support community services such as schools, parks and businesses. Local officials were quick to express their concerns to state officials.

Exelon expects to make the decision regarding plant closings this coming May, awaiting any new laws. The decision will occur before the federally mandated state plans for reducing carbon emissions from electrical production. The plans, due in 2016, could incorporate solutions that recognize the benefits of carbon reductions from operating nuclear power plants.

The earnings of Exelon’s nuclear fleet have fallen as a result of a drop in electrical demand, increased output from wind farms and the low cost of natural gas caused by the dramatic increase in natural gas supplies from the upsurge in fracking of gas deposits. Although an increase in the price of natural gas is likely based on historic price trends, Exelon officials believe gas prices will not rise quickly enough to prevent the closing of the nuclear plants.

Last year, four nuclear power plants closed in the United States because they were either no longer profitable or needed costly repairs. Another Exelon nuclear plant in New York is losing money; the company estimates the plant would need an 83 percent increase in wholesale rates to become profitable, according to an article in Bloomberg.

A lengthy article by Keri Lydersen provides an overview of the recently released report from the agencies that was ordered by state legislators last May. While it sheds light on whether the state should intervene to help Exelon, it fails to provide clear conclusions. She indicates the findings “generally support the idea that Illinois could weather nuclear plant closures, and such shutdowns could even bolster clean energy generation and jobs.”

In a recent Crain’s article, former member of the U.S. Nuclear Regulatory Commission Peter Bradford expressed alarm at Exelon’s request for a $580 million per year rate increase to keep its plants running. Bradford estimates the rate increase could raise the average customer’s annual bill several hundred dollars. He believes that subsidizing nuclear power plants instead of taxing carbon could result in paying too much for too little climate improvement. Yet, he warns that closing many nuclear plants abruptly is not in the climate’s best interest.

Implied in Bradford’s perspective is the need to design a state energy strategy for a cost-effective transition out of fossil fuels and our aging nuclear power plants. For such a transition to be sustainable, it would include cost-effective renewable sources.

Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. E-mail sonia@essex1.com.

From the Jan. 14-20, 2015, issue

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