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Exelon blames ‘subsidized’ wind, markets for derailing nuclear projects

The LaSalle nuclear plant in Illinois. (Photo via NRC)

The LaSalle nuclear plant in Illinois. (Photo via NRC)

©2013 E&E Publishing, LLC
Republished with permission

By Hannah Northey

Exelon Corp. is scrapping expansion plans at nuclear plants in Illinois and Pennsylvania because of waning demand for electricity and competition with subsidized wind generators.

The country’s largest owner of nuclear reactors announced Wednesday it would sideline plans to add capacity to its LaSalle nuclear plant 75 miles southwest of Chicago and its Limerick plant 20 miles northwest of Philadelphia in a filing with the Securities and Exchange Commission.

Exelon has added about 1,400 megawatts of power to the grid by conducting “extended power uprates” at its nuclear plants, a process that involves installing larger pumps and valves with greater capacity to increase a reactor’s output by up to 20 percent.

That process at the LaSalle and Limerick plants, however, was derailed by market conditions and cheap wind, and Exelon has instead decided to take a $100 million hit in the second quarter, according to the filing.

“We removed these previously deferred extended power uprate projects from our program in response to market conditions and artificially depressed power prices resulting from subsidized wind energy,” Exelon spokesman Paul Elsberg said in a statement. “Extended power uprates are large investments with paybacks toward the end of plant life, and in this instance, we decided that the risk involved did not provide the necessary returns.”

Exelon has been front and center in the debate over whether the government should offer incentives for wind power, and last year was ousted from the American Wind Energy Association over its opposition to extending the production tax credit, a position that put it sharply at odds with the rest of the industry.

The utility’s executives have said wind energy tax credits are allowing companies to give away power for free or at negative prices at a time when gas supplies are historically low. Such factors, Exelon has said, are making it harder for nuclear reactors to compete in competitive markets (E&ENews PM, Nov. 27, 2012).

Exelon is mainly concerned with the federal tax credit of 2.3 cents per kilowatt-hour, which has allowed wind generators to pay consumers to take their electricity at certain points of low demand and excess capacity, such as overnight.

The industry won a one-year extension to the PTC in January and is now focusing on a longer-term strategy that doesn’t depend on the boom-and-bust reliance on federal support. Ongoing negotiations over comprehensive tax reform, which could include a PTC phaseout, are also a focal point (Greenwire, May 24).

AWEA took issue with Exelon’s reasoning today. “Exelon continues to use wind as a scapegoat for its significant financial woes,” said Rob Gramlich, AWEA’s senior vice president of public policy. “They made a losing bet on power market prices, which their earnings reports describe quite clearly. That is not a policy issue, it is a market issue unique to that company.”

Even so, Exelon continues to have a strong position in nuclear power, and Elsberg said the company is still on track to add capacity at its Peach Bottom plant in Pennsylvania and its Braidwood plant in Illinois for an additional 200 MW by 2016.

Comments (5)

I’m curious, did Exelon foot 100% of the bill for these plants (and the insurance on them?)

By Eric on Jun 13, 2013

Nuclear energy is the kingpin of subisidies!

BILLIONS of dollars are paid by taxpayers to insure nuclear power plants.

BILLIONS of dollars are paid by taxpayers to pay for agencies that oversee nulear energy like the NRC, DOE, NNSA…

BILLIONS of dollars are paid by taxpayers to pay for labs dealing with nuclear energy like Los Alamos, etc.

BILLIONS of dollars are paid by taxpayers to pay for a nuclear storage waste site.

TRILLIONS of dollars will be paid by taxpayers to store nuclear waste for the 20,000 generations that nuclear waste is dangerous. TALK ABOUT LONG-TERM DEBT!

And this is just a partial list of subsidies the nuclear energy receives.

By Ann on Jun 13, 2013

Soon there will be lot of plugin & electric vehicles and they will need lot of electricity. So these uprates will be required in addition to few more nuclear power plants.

By Max Reid on Jun 13, 2013

“That process at the LaSalle and Limerick plants, however, was derailed by market conditions and cheap wind”

And this is a problem ??? Why ?????

They forgot to mention that the federal government is trying to subsidize nuclear with loan guarantees among other things, yet no one seems interested in building more.

By Mark Odeen on Jun 16, 2013

All of you who are claiming that Exelon’s plants take subsidies don’t realize that load guarantees and subsidies for nuclear only apply to NEW nuclear plants.

Exelon’s plants were all built without ANY subsidies.

Nuclear power in the US has NO operating subsidies.

Nuclear pays for its own decommissioning fund, NOT THE TAXPAYERS. Nuclear manages their own decommissioning funds. Nuclear ALSO pays for its own spent fuel management fund to the government (although the government is horribly mismanaging that fund).

Current nuclear plants get NO subsidies.

If you are pro wind tax credit, you are anti nuclear and anti environment. That is the bottom line. These companies building wind are not only trying to snuff out the competition by selling negative, but they are building natural gas plants to back up their wind. WE ARE SUBSIDIZING NATGAS. Wind subsidies HARM the environment, they cause no emissions nuclear to come off line, cause natgas plants to come online (remember the ACTUAL efficiency of wind farms is around 25-35%, so that means the rest of the time low efficiency natgas is running), and skew market conditions for high efficiency plants. It also violates the free market conditions of the deregulated power grid, and causes a shift from long term price/energy stability to short term profits. This is not beneficial in any way.

By allyall on Jun 17, 2013