Dive Brief:

• All of Exelon's nuclear facilities in Illinois have cleared the PJM Interconnection transition capacity auction for the 2016-2017 planning year, the generator announced this week.
• The auction was the first of two transitional auctions PJM is holding to supplement prior base capacity commitments; the results will take effect in June 2016.
• It is a shot of good news for Exelon, which a week ago said its Oyster Creek, Quad Cities and Three Mile Island nuclear power plants did not clear in the PJM capacity auction for the 2018-19 planning year.

Dive Insight:

It's been a rough stretch for Exelon. Between regulators in the District of Columbia nixing its merger with Pepco Holdings, and three nuclear plants not clearing the 2018-19 auction, the generator needed some good news. 

“We continue to be encouraged by these auction results, which along with EPA’s Clean Power Plan, begin to properly value nuclear power for their reliability and low-carbon benefits,” Chris Crane, Exelon president and CEO, said in a statement. “These auction results, as well as other factors, will come into play as we analyze the current and expected economics of each of our plants.”  

PJM is holding transitional auctions for delivery years 2016 through 2018, to enhance supply using new rules put in place following supply disruptions caused by extreme cold weather. The new rules allow for enhanced payments to generators in return for stricter capacity standards. But because two auctions have already been held, PJM is going back and holding transitional auctions which will allow market participants to resubmit bids for higher payments.

For competitive reasons, Exelon said it could not disclose whether its plants outside of Illinois cleared the auction, given the 2017-18 transition auction taking place.

Last month Exelon revealed that its Oyster Creek, Quad Cities and Three Mile Island nuclear power plants did not clear in the PJM capacity auction for the 2018-19 planning year. That means the plants will not receive capacity revenue from the auction.  While Exelon said capacity revenue in a single year is "an important consideration in a plant’s long-term viability," the company stressed it is just one of many factors Exelon will use to make decisions about its plants’ future operations.

Exelon must tell PJM this fall if any of its nuclear plants will not be participating in the auction next year.

“The PJM market reforms are a step in the right direction to recognize nuclear energy’s high reliability, and while three of our plants in PJM did not clear, we view the auction results as an encouraging sign that these reforms will begin to level the playing field,” Crane said after that auction. “We will consider auction results, along with other data points, including EPA’s Clean Power Plan, as we make decisions about the future of these critical long-life assets.”