Study Urges $350 Million Nuclear Bailout For Exelon

Byron Nuclear Plant
This March 16, 2011 photo shows steam rising from cooling towers at Exelon Corp.'s nuclear plant in Byron, Ill. Associated Press / Associated Press
Byron Nuclear Plant
This March 16, 2011 photo shows steam rising from cooling towers at Exelon Corp.'s nuclear plant in Byron, Ill. Associated Press / Associated Press

Study Urges $350 Million Nuclear Bailout For Exelon

Two northern Illinois nuclear power plants that Exelon Generation intends to mothball deserve roughly $350 million in ratepayer subsidies over five years to keep open, according to an analysis commissioned by Democratic Gov. JB Pritzker’s administration.

The study obtained by WBEZ represents an important marker by the governor’s office about how far it’s willing to go in helping the power-generating company prop up its financially ailing Dresden and Byron nuclear plants during the ongoing spring legislative session in Springfield.

Exelon repeatedly has argued both plants are economic white elephants under current economic conditions. But they help generate enormous volumes of non-fossil-fuel energy, aligning with Pritzker’s desire to expand clean-energy options for the state.

Last August, Exelon Generation announced it would prematurely close both plants this fall due to revenue shortfalls in “the hundreds of millions of dollars” caused by declining energy prices and market rules favoring fossil fuel producers.

The plants supply power to more than 4 million homes in northern Illinois and account for about 30% of the state’s carbon-free energy supply, according to Exelon. Together, they employ about 1,500 full-time workers.

The Pritzker administration’s study, released Thursday, found the plants “do face real risk of becoming uneconomic in the near term.

“This has implications for Illinois’ policy goals because the plants generate carbon-free electricity that is currently undervalued or even ignored within current wholesale electricity markets,” the report by Cambridge, Mass.-based Synapse Energy Economics concluded.

“In addition, the plants employ hundreds of workers directly and contribute to the economies of numerous Illinois communities,” the report continued. “Illinois could reasonably determine that it is in the public interest for the plants to remain in operation, warranting public support.”

Pritzker has expressed a desire to pass a clean-energy package this spring, and the nuclear subsidies are expected to be incorporated into the governor’s push. The plants carry strong political clout with labor unions, particularly the International Brotherhood of Electrical Workers.

But whether the company believes roughly a $70 million increase in annual ratepayer subsidies is enough, as Synapse recommends, is another question. Legislation pushed by labor unions aligned with Exelon recommends subsidy levels roughly quadruple what Synapse proposes for the two plants, administration sources said.

“To anyone who’s making a proposal on this that says these numbers are too low, we’re going to want to see their math,” said Deputy Gov. Christian Mitchell, the governor’s point person on utility legislation.

“The governor is deeply committed to keeping these plants open. They’re 54% of our power in the state of Illinois. They are a massive percentage – like the lion’s share – of our clean power,” Mitchell said. “But we want to do it at the lowest possible cost to ratepayers.”

Passing a utility bill is a delicate walk in Springfield this spring because of the legal troubles of Commonwealth Edison, which distributes Exelon Generation’s power.

ComEd acknowledged last summer in a $200 million settlement of a criminal probe by U.S. Attorney John Lausch’s office that it engaged in a long-running bribery scheme in Springfield aimed at influencing ex-Democratic House Speaker Michael Madigan. The scheme ultimately was aimed at advancing ComEd’s statehouse agenda.

One of its big victories during a nearly decade-long span when the bribery scheme was unfolding was the 2016 Future Energy Jobs Act, which the state legislature approved. It enabled Exelon to collected $2.3 billion from ComEd’s customers over a decade to maintain two other nuclear plants.

As a result of the lobbying scandal, Pritzker and some lawmakers want an energy package this spring to beef up ethics and transparency standards involving utility companies.

Dave McKinney covers Illinois politics and government for WBEZ. Follow him on Twitter @davemckinney.