Dive Summary:
- The Chicago-based Exelon Corp., the largest U.S. operator of nuclear reactors, got a surprise revenue blow due to the low price of capacity resources announced at the PJM Interconnections annual auction last week.Tuesday, Exelon's Exelon's stock dipped to $2.61 per share, or 7.5% to $32.04.
- PJM secured a record-breaking low price of capacity resources for the western half of the region including Chicago --of $59.37 per megawatt-day -- starting June 1, 2016. That's half the price analysts predicted, and a 56% drop from the $136 per megawatt-day set in a previously held auction for 2015-16.
- For Exelon, that means capacity revenue will fall by 41 % in the year beginning June 1, 2016, to $847 million from about $1.4 billion the previous year, according to the UBS Securities LLC in New York.
From the article:
"The capacity disappointment is the latest event fueling investor skepticism regarding Exelon's optimism that power prices are at a trough and will rise as old coal-fired plants close in the face of escalating air-pollution requirements.
PJM said that new natural gas plants, coupled with increasing energy efficiency and generators bidding into the PJM auction from outside the territory, were responsible for the ultra-competitive pricing."
