Illinois agrees to subsidise Exelon NPPs

6 December 2016

US power company Exelon Corp’s Quad Cities and Clinton NPPs in Illinois have been given a $235m-a-year grant by the state. Legislation designed to rescue Exelon’s loss-making reactors from shutdown was passed by the Illinois House and Senate on 1 December. The bill, which also needs Republican Governor Bruce Rauner’s approval, secures about $235m a year for 10 years for the nuclear plants that generate zero-emissions electricity. Following the governor’s signature, zero emission subsidies for nuclear will go into effect in mid-2017.

All US NPPs are straddling economically in face of competition from cheap natural gas and a sharp rise in wind and solar generation. Five nuclear units have retired in the past five years and more are projected to close. As well as Illinois, New York state has approved subsidies worth about $500m a year for unprofitable reactors, and other may now follow. Exelon may also seek nuclear subsidies in Pennsylvania, where it co-owns a plant, according to Bloomberg.

Exelon said in June that it would shut its two-unit Clinton plant by 2017, and single unit Quad Cities plant a year later, after an earlier measure aimed to promote zero-carbon energy failed in a regular legislative session. According to Exelon, Quad Cities and Clinton have incurred a combined loss of $800m over the past seven years, because they continued to be challenged by low electricity prices and competition from natural gas generation and subsidised renewables.

Critics argued that the new legislation would increase customer bills and was a bail-out for Exelon. However, Exelon said the costs of the subsidy are capped at 25 cents a month for the average residential customer. The bill has the potential to preserve 4,200 jobs at the two NPPs and prevent the loss of $1.2bn in economic activity expected from the announced closures of the facilities, an Exelon statement said.

Exelon operates 11 nuclear reactors in Illinois, which produce nearly half the state's electricity and 90% of its zero-carbon energy. Exelon president and CEO Chris Crane said: "This forward-looking energy policy levels the playing field and values all carbon-free energy equally, positions Illinois as a national leader in advancing clean energy, and will provide a major boost to the Illinois economy." 

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