Dive Brief:
- Three of Exelon's nuclear power plants failed to get new contracts at the annual PJM Interconnection capacity auction for 2017-18, putting their future at risk.
- The plants, Byron and Quad Cities in Illinois and Oyster Creek in New Jersey, could now close after they were priced out of the market by cheaper competitors. Traditionally, the company has made between $1-8 per megawatt-hour in revenue from the sale of power from these plants.
- This year's PJM capacity auction saw power supply prices rise from last year's three year low of $59.37 per MW to $120 per MW.
Dive Insight:
Exelon relies on the capacity auction to keep funding the expensive nuclear facilities it operates. Without contracts, however, the utility could be forced to turn to federal and state regulators for a bailout.
Exelon has yet to seek such a resolution. Prior to the results of the auction being announced, an Illinois House Resolution charging the Environmental Protection Agency, the Federal Energy Regulatory Commission and grid operators to adopt more nuclear-friendly policies was floored.
The House directed state regulators to look at the "societal cost" of not promoting nuclear as a cleaner alternative to coal and natural gas, and also look at the damage that closing the plants would do to the state's economy.
The ball is now firmly in the state's court as to the future of these plants. "Clearly they're out of the money," said Julien Dumoulin-Smith, executive director for U.S. electric utilities for UBS Investment Research. "It's up to the state to decide if they want to keep these assets running or not."
