Nuclear Politics

US Shutdowns / Exelon Announces Plans To Retire Four Reactors At Byron And Dresden

By David Dalton
28 August 2020

Company blames revenue shortfalls in ‘hundreds of millions of dollars’ because of declining energy prices and market rules
Exelon Announces Plans To Retire Four Reactors At Byron And Dresden
The Byron nucler power station, where two reactors are to be shut down early. Photo courtesy Bobak Ha'Eri/Wikipedia.
Exelon Generation announced it intends to retire its Byron and Dresden nuclear power stations in Illinois next year 2021, resulting in the loss of four nuclear reactors with 4,333 MW of gross stalled capacity – enough to supply energy to more than four million homes and businesses.

The two units at Dresden are licensed to operate for another decade and two units at Byron for another 20 years. However, Byron now will close in September 2021 and Dresden in November 2021.

Exelon said it will file a deactivation notice with regional transmission organisation PJM Interconnection. The utility said the notification is necessary to give PJM time to conduct an analysis confirming that retiring Byron and Dresden will not cause a shortage of generating capacity in northern Illinois during times of peak demand.

In addition, the company will submit official shutdown notifications to the Nuclear Regulatory Commission within 30 days. It said it will terminate capital investment projects required for long-term operation of Dresden and Byron and scale back refuelling outages scheduled for later this year.

According to Exelon, despite being among the most efficient and reliable units in the nation’s nuclear fleet, Dresden and Byron face revenue shortfalls in the hundreds of millions of dollars because of declining energy prices and market rules that allow fossil fuel plants to underbid clean resources in PJM Interconnection capacity auctions, even though there is broad public support for sustaining and expanding clean energy resources to address the climate crisis.

The plants’ economic challenges are exacerbated by Federal Energy Regulatory Commission (Ferc) rules that “undermine longstanding state clean energy programmes and give an additional competitive advantage to polluting energy sources in the auction”.

“As a result of these market rules, Exelon Generation’s LaSalle and Braidwood nuclear stations in Illinois, each of which house two nuclear units and together employ more than 1,500 skilled workers, are also at high risk for premature closure,” the company said.

Exelon president and chief executive officer Christopher Crane said the company supports efforts by Illinois governor Jay Pritzker towards policy reform addressing climate change and advancing Illinois’ clean energy economy.

Exelon said that together the Byron and Dresden facilities employ more than 1,500 full-time employees and 2,000 supplemental workers during refuelling outages. They pay nearly $63m in taxes annually.

“The two plants supply 30% of Illinois’ carbon-free energy and are essential to meeting the state’s goal to achieve 100% clean energy,” the company said.

The Washington-based Nuclear Energy Institute reacted to the announcement with a statement saying that given the urgency of the climate crisis, it is “unacceptable” to lose more clean energy.

NEI president and chief executive officer Maria Korsnick said: “As our country’s largest source of carbon-free energy, nuclear is the backbone of our future electricity supply.

“It is in our nation’s best interest to reverse the troubling trend of premature closures of nuclear plants and push for policies that value the carbon-free electricity that nuclear energy provides.”

She said state legislatures and federal policymakers have reached a consensus that a clean energy future is not possible without all carbon-free technologies working together.

The US nuclear energy industry has long warned about the premature closure of nuclear plants and called for electricity markets to be reformed to recognise the ability of traditional baseload generation with onsite fuel supplies – including nuclear power plants – to provide grid resiliency during extreme events like hurricanes or extreme winter weather.

Four US nuclear power plants have shut down since 2018 with 3.3 of gross installed capacity lost. The four are Indian Point-2, Three Mile Island-1, Pilgrom-1 and Oyster Creek.

Nine plants are now scheduled to shut down from 2020-2025. Apart from the Byron and Dresden units they are Duane Arnold, Indian Point-3, Palisades, Diablo Canyon-1 and -2. The total list capacity will be about 9.3 GW.

Ferc’s Controversial ‘Minimum Offer Price Rule’ Explained

Ferc’s commissioners voted 2-1 in December to direct PJM – the nation’s largest regional transmission organisation whose wholesale competitive market covers all or parts of 13 states and the District of Columbia – to require that nearly all state-subsidized power resources, inside and outside PJM’s footprint, hit a PJM-determined price floor to participate in PJM’s forward-looking capacity auctions.

This is called the “minimum offer price rule”, or MOPR, and has been cited by Exelon as one of the reasons its nucear plants are struggling economically.

Ferc chairman Neal Chatterjee justified the move by saying that clean energy subsidies paid by PJM states to support out-of-market nuclear and renewable energy threatened the competitiveness of the grid operator’s capacity market.

Exelon at the time called the move “stunning,” saying it would undermine alternative and renewable energy, as well as unnecessarily raise electricity rates by $2.4bn annually. It said: “By granting the request of fossil generators, this order completely undermines state clean and renewable energy programmes, and will cost thousands of jobs, increase air pollution and unnecessarily raise electricity bills.”

The MOPR requires PJM to apply a minimum price to any state-sponsored resource – usually a utility – that participates in PJM’s annual capacity auction, a tool used to lock in the resources needed to meet the region’s resource adequacy requirements three years into the future.

Proponents of the MOPR argue that this price floor is necessary to counteract the market price impact of state policies such as renewable portfolio standards and zero emission standards, which provide revenue to certain resources, typically renewables.

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