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Illinois lawmakers approve subsidies to keep Exelon nukes online


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Illinois lawmakers approve subsidies to keep Exelon nukes online

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Exelon will keep its two-unit Byron Generating Station online as Illinois lawmakers approve comprehensive energy legislation with nuclear subsidies.
Source: Exelon Corp.

On the day Exelon Corp. prepared to permanently shut down its two-unit, 2,346-MW Byron Generating Station, Illinois lawmakers approved legislation that will keep the nuclear plant online for several more years.

The Illinois Senate voted 37-17 on Sept. 13 to approve an amended version of Senate Bill 2408, a massive energy bill that includes nearly $700 million in subsidies for Exelon's Byron, 1,805-MW Dresden and 2,384-MW Braidwood nuclear plants.

Illinois Gov. J.B. Pritzker, a Democrat, has signaled he will sign the legislation passed late Sept. 9 by the Illinois House of Representatives.

"After years of debate and discussion, science has prevailed, and we are charting a new future that works to mitigate the impacts of climate change here in Illinois," Pritzker said in a Sept. 13 written statement. "I look forward to signing this historic measure into law as soon as possible, because our planet and the people of Illinois ought not wait any longer."

Exelon subsidiary Exelon Generation Co. LLC, which owns and operates the plants, said in a Sept. 13 news release that it is now preparing to refuel the Byron and Dresden nuclear plants as it anticipates the bill being signed by the governor.

The bill provides support for the state's carbon-free nuclear generation through a competitive "carbon mitigation credit procurement plan" administered by the Illinois Power Agency. The contracts for winning bidders would begin June 1, 2022, and end May 31, 2027. The carbon mitigation credit is defined as a "tradable credit that represents the carbon emission reduction attributes of one megawatt-hour of energy produced from a carbon-free energy resource."

The legislation states that the Illinois Power Agency "shall not accept bids for contracts that exceed a customer protection cap equal to the baseline costs of carbon-free energy resources." These baseline costs begin at $30.30 per MWh in 2022 and increase to $34.50/MWh beginning June 1, 2026.

Exelon warned it could retire the Byron nuclear plant Sept. 13 followed by Dresden in November absent government-approved subsidies to keep the plant from losing money. "Once signed by the governor, the legislation will strengthen Illinois' clean energy leadership, protect the state's economy by preserving tens of thousands of jobs and prevent an increase in pollution and energy costs that would harm consumers if the plants closed," Exelon Generation said.

Exelon has also said it could retire Braidwood and the 2,313-MW LaSalle County Generating Station "in the next few years" if the operating economics do not improve. All four plants operate in the PJM Interconnection market.

"This new policy offers a better future for the employees who have run these plants at world-class levels, the plant communities that we are privileged to serve and all Illinoisans eager to build a clean-energy economy that works for everyone," Exelon President and CEO Christopher Crane said in the news release.

Exelon added that the bill will "mitigate widely acknowledged flaws in regional energy markets and compensate nuclear plants for their clean-energy benefits in much the same way that wind and solar are compensated today."

After the bill is signed into law, Exelon Generation said it "will move to immediately fill hundreds of vacant positions and resume capital projects required for long-term operation," and alert the U.S. Nuclear Regulatory Commission and PJM of its decision to continue operating the plants.

Republican opposition

Republican lawmakers that spoke out against S.B. 2408 noted the nearly 1,000-page bill was full of provisions and regulations that far exceeded support for the nuclear plants.

S.B. 2408 calls for the 1,630-MW coal-fired Prairie State Energy Campus and all "public" greenhouse gas emitting units to reduce their carbon emissions by 45% no later than Jan. 1, 2035, and "permanently reduce" carbon emissions to zero no later than Dec. 31, 2045.

A late amendment states that if the emissions reduction requirement is not met by the 2035 deadline, "the plant shall retire one or more units or otherwise reduce its [carbon] emissions by 45% from existing emissions by June 30, 2038."

The bill calls for privately owned units that "use coal or oil as a fuel" to eliminate carbon emissions by Jan. 1, 2030.

"We're going to trade carbon for carbon but this time we're paying more," Republican Sen. Chapin Rose said on the Senate floor. Rose and other lawmakers raised concerns about how Illinois will be forced to rely on out-of-state, fossil-fueled energy from Kentucky and Indiana while paying to subsidize cleaner energy resources.

Republican Sen. Dave Syverson called the bill a "lose-lose proposition" and noted lawmakers should have been given the choice to focus solely on the nuclear support.

The massive clean energy measure is designed to transition Illinois to 50% renewable energy by 2040 and 100% clean energy by 2050. It provides funding for electric vehicles and as part of a "coal to solar" transition.

"SB 2408 puts the state on a path toward 100% clean energy and invests in training a diverse workforce for the jobs of the future. Illinois will become the best state in the nation to manufacture and drive an electric vehicle, and equity will be prioritized in every new program created," Pritzker said.

The bill also includes provisions to help ease approval of the Grain Belt Express transmission line over Republican concerns around the power of eminent domain. The controversial transmission line would run about 780 miles from western Kansas, through Missouri and Illinois, and into Indiana. It would deliver 500 MW of largely wind-generated power to customers in Missouri and another 3,500 MW to states farther east.

In addition, S.B. 2408 authorizes the Illinois Commerce Commission to investigate whether Exelon's Chicago-area utility subsidiary, Commonwealth Edison Co., used ratepayer funds in connection with its role in an alleged bribery scheme in Illinois or to pay the $200 million penalty in the deferred prosecution agreement with federal authorities.