With lawmakers in Illinois at an impasse on providing further support for in-state nuclear generation, the future of two Exelon Corp. plants looks increasingly bleak.
Exelon plans to shut down the two-unit, 2,346-MW Byron Generating Station in September and the two-unit, 1,805-MW Dresden nuclear plant in November unless the Illinois General Assembly approves subsidies to keep the plants from losing money. The legislature adjourned in June without passing a bill to financially support the units.
"There has been no progress toward enacting of legislation since the session ended, and the retirement dates for the plants are now only weeks away," Exelon President and CEO Christopher Crane said Aug. 4 on the company's second-quarter earnings call. "We don't want to close these plants, but we cannot make decisions based off of hope of legislation being passed in the future. ... We must act on the economic facts as they exist today where no legislation has been passed by the General Assembly or signed into law by the governor. Absent legislation, closing the plants is the right economic decision but not an easy one."
Exelon also said it could retire the 2,384-MW Braidwood Generating Station and 2,313-MW LaSalle County Generating Station "in the next few years" if the operating economics do not improve.
"After many months of very tough negotiations, we were able to reach agreement with the governor and his administration that would provide support to the Byron, Dresden and Braidwood facilities, allowing them continued operation, and LaSalle would also be preserved," Crane said. "Unfortunately, the state leaders and other stakeholders are at an impasse at this point on provisions related to the nuclear issues in the legislation."
"I remain hopeful that the outstanding differences can be resolved and a bill will be passed very soon that would allow the units to continue to deliver the carbon-free power to the grid, but time is really running out on that becoming achievable," the CEO added.
Asked whether a recent uptick in power prices could help delay the shutdown of the plants, the CEO said this does not "give us what we need" to keep the units online.
"It really isn't that simple," Senior Executive Vice President and CFO Joseph Nigro added. "We've seen an uptick in energy prices many times before. Never have they held."
"The stability and certainty provided by a contract ... clearly better addresses the financial challenges of these plants without being exposed to all this market volatility," the CFO added.
While Exelon has applauded efforts at the federal level to support nuclear generation, the company said more is needed to save the plants.
The bipartisan infrastructure bill recently unveiled in the U.S. Senate proposes $6 billion as part of a four-year credit program for nuclear units in merchant power markets at risk of closure.
In addition, U.S. President Joe Biden's budget includes support for existing nuclear plants while efforts are underway in the U.S. House of Representatives and the U.S. Senate on legislation that would provide a $15/MWh production tax credit to existing nuclear power plants.
"This progress is encouraging," Crane said. "If the [production tax credit] is included in the legislation that passes later this year, it will make an enormous difference for climate and for our nuclear plants. Unfortunately, though, that will be too late for the Byron and the Dresden nuclear facilities."
On Aug. 4, Exelon reported second-quarter 2021 adjusted operating earnings of 89 cents per share, up from 55 cents per share in the second quarter of 2020. The results trumped the S&P Capital IQ normalized consensus EPS estimate of 67 cents per share.
The company reaffirmed full-year adjusted operating earnings guidance of $2.60 per share to $3.00 per share.
