Exelon announced that its nuclear plant in Pennsylvania will close in 2019 unless lawmakers follow New York’s example and provide financial support
by Janis Kreilis
On Monday, May 29, Exelon, one of the nation’s largest operators of nuclear plants, announced that its Three Mile Island nuclear plant in Pennsylvania had not cleared the PJM capacity market auction for 2020/2021 and would, therefore, close in 2019. The 852-MW facility is one of the largest generators in the state, and closing it would eliminate jobs and increase carbon emissions as nuclear would most likely be replaced by natural gas plants.
Low natural gas prices thanks to the shale gas boom and falling demand for energy pushed the prices down by almost a quarter – from $100/MWd last year to $76.50/MWd this year – in the PJM capacity auction in most of the regional transmission organization (RTO) area. Several areas suffering from transmission congestion and a lot more concentrated demand reached a price almost double that.
Since nuclear plants have much higher operating costs than modern gas-fired generators, two nukes fell short in the auction, including another plant of Exelon, Quad Cities in Illinois. Last year, the company said it would close the facility unless the state would subsidize it. Illinois followed suit with a zero emissions standard. New York, too, introduced zero emissions credits in its clean energy standard last year to save its upstate nuclear plants.
After the auction, Exelon called upon the Pennsylvania legislators to either include its plants in the Alternative Energy Portfolio Standard, which requires the state’s utilities to get almost 20% of their power from wind, solar, and hydro by 2020, or follow Illinois and New York’s footsteps and pass a zero emissions credit program.
However, the subsidies have become a major source of controversy in the wholesale markets, where operators and independent generators have sued state regulators for market distortion. In a technical conference in the beginning of May, FERC proposed three ways to solve the issue: litigate, change the market rules to include subsidized resources, or reregulate. Even though the majority of participants seemed to prefer the second option, no consensus emerged on how this integration should be achieved.
Pennsylvania, home to most of the Marcellus shale, has been one of the top natural gas producers in the country in recent years. At the same time, the Quaker State is also the number two nuclear state in the nation, after Illinois. The other operators, FirstEnergy and PSEG, have either expressed intentions of selling their nukes or closing them down if they started losing money in the long term.
So far, no bill in the Commonwealth has emerged but that has not stopped both sides in the debate from lobbying for or against subsidies. And, judging by the lawmakers’ comments, the decision could go either way.