Exelon to close two NPPs

7 June 2016

US Exelon Corp said on 2 June that it will close two Illinois NPPs with a combined capacity of 2,949MWe in face of competition from renewable energy and low-cost natural gas. The Clinton NPP, a single-unit 1,065MWe boiling water reactor (BWR), began commercial operation in 1987, and the Quad Cities NPP comprises two 940MWe BWRs that began operating in 1973. Clinton will shut on 1 June 2017 and the Quad Cities on 1 June 2018. The plants had lost a combined total of $800m over the past seven years.

Exelon said in early May it would close Clinton and Quad Cities unless the state adopted new policies by 31 May to make them profitable. The state legislature did not vote on a measure that would promote zero-carbon energy and create a more equitable utility rate structure. "While the Illinois legislative session has not ended, the path forward for consideration of the Next Generation Energy Plan (NGEP) legislation is not clear," Exelon said in its statement. "As a result, Exelon has begun taking necessary steps to shut down the two nuclear plants."

The NGEP involves nearly doubling energy efficiency programmes and will provide $1bn in funding for low-income assistance, among other things. Exelon president and CEO Chris Crane said: "We have worked for several years to find a sustainable path forward in consultation with federal regulators, market operators, state policymakers, plant community leaders, labour and business leaders, as well as environmental groups and other stakeholders. Unfortunately, legislation was not passed, and now we are forced to retire the plants."

Permanent shutdown notices for the reactors will be filed with the Nuclear Regulatory Commission within 30 days, and their fuel purchases will be cancelled. Exelon will record a one-time charge of up to $200m against 2016 earnings, as well as accelerated depreciation and amortisation of about $2bn until the announced shutdown dates. Exelon employs nearly 700 workers at Clinton and 800 at Quad Cities. Employees will operate the reactors until the retirement dates, with staff transitions expected within six months after that, the statement said.

Exelon said it will still work towards getting the NGEP passed by the Illinois legislature. If passed, the NGEP would make Illinois one of the first states to recognize the zero-carbon benefits of nuclear energy. It would also nearly double energy efficiency programs and boost the development of solar power in the state, growing it from less than 60MWe to more than 1,650MWe by 2030.

In April, Exelon said it was committed to operate the Clinton plant until 31 May 2017 after clearing the annual capacity auction of the Midcontinent Independent System Operator regional transmission organization. In May, Quad Cities - together with Exelon's Three Mile Island plant - failed to clear in the PJM Interconnection regional capacity auction for the 2019-2020 planning year, meaning those units will not be able to receive capacity revenue for that period.

The short-term nature of deregulated electricity markets have left other US nuclear power plants at risk of premature closure for economic reasons, despite their long-term future and their potential contribution to achieving greenhouse gas emissions targets. In April, Entergy announced that its Pilgrim plant in Massachusetts will close permanently in May 2019, while its FitzPatrick plant in New York State is to close in January 2017. Entergy Corp closed its Vermont Yankee Reactor in 2014. The Omaha Public Power District in Nebraska is scheduled to vote on 16 June on closure of its Fort Calhoun reactor.

"The lesson here is that there's not going to be much subsidising of merchant nuclear plants," said Kit Konolige, a utilities analyst for Bloomberg Intelligence. "Those plants have zero emissions and one would think they'd fit very well with what policy makers would want."



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