US Exelon fails to clear capacity auction

30 May 2016

US power company Exelon's Quad Cities and Three Mile Island NPPs have failed to clear in the PJM regional capacity auction for the 2019-2020 planning year, which means they will be unable to receive capacity revenue for that period. PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. Its annual capacity auction ensures enough power generation resources are available to meet predicted future energy demand in that region. Generators that clear the auction receive capacity revenue for reliably delivering power for electricity customers when needed, especially during power system emergencies.

PJM procured 167,306MWe in the auction. PJM said payouts to suppliers who can guarantee capacity in the year starting June 2019 cleared at $100 a megawatt-day - down 39% from $164.77 in a sale last year. PJM senior vice president for markets Stu Bresler said, "The load forecast is lower, and there was a large amount of new gas-fired combined-cycle generation clearing for the first time in the auction." The drop will hit suppliers already under pressure from record low power prices because of slumping natural gas costs. The eight largest power generators in PJM will lose about $1.75bn in annualised payments due to the "surprisingly low" prices, Bloomberg Intelligence analyst Kit Konolige noted in research published on 25 May.

A portion of the capacity of Exelon's Byron NPP also failed to clear the auction, although the unit is committed to operate until May 2020. Exelon's other PJM NPPs cleared the auction, except Oyster Creek, which is due to close in 2019 and did not take part. It is the second consecutive year that Three Mile Island unit 1 has failed in the auction. Earlier in May, Exelon said it will proceed with the early retirements of its Clinton NPP, which operates in the Midcontinent Independent System Operator (MISO) RTO, and Quad Cities if the state of Illinois fails to pass the Next Generation Energy Plan (NGEP), which would support their continued operation. The two plants made combined losses of $800m over the past seven years despite among Exelon's highest-performing plants. Although Clinton cleared MISO's recent capacity auction, Exelon said that the plant will not receive enough revenue to avoid continued losses.

"The capacity market alone can't preserve zero-carbon emitting nuclear plants that are facing the lowest wholesale energy prices in 15 years," said Chris Crane, president and CEO of Exelon. "Without passage of comprehensive energy legislation that recognizes nuclear energy for its economic, reliability and environmental benefits to Illinois, we will be forced to close Quad Cities and Clinton, resulting in the loss of jobs and economic activity, higher energy prices for consumers, and a dramatic increase in carbon emissions that will make it harder and more expensive for Illinois to meet its clean energy goals."

Meanwhile, over 1500 people attended a rally at the Illinois state capital in Springfield in support of the NGEP bill, which is currently before the state legislature. This includes implementation of a zero emission standard that would benefit at-risk NPPs. If passed, the NGEP would make Illinois one of the first states to recognise the zero-carbon benefits of nuclear energy. It would also nearly double energy efficiency programmes and boost the development of solar power in the state, increasing it from less than 60MWe to more than 1,650MWe by 2030.



Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.