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Exelon's Clinton nuclear plant clears MISO auction, but future remains in doubt

Louisville, Kentucky — Exelon's 1,065 MW Clinton nuclear plant in Illinois will keep operating through May 31, 2017, after clearing a Midcontinent Independent System Operator auction last week, but without an "urgent' policy fix, its days may be numbered, according to the Chicago-based company.

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Some analysts have predicted Exelon will announce plans later this year to close Clinton, the company's only power plant in MISO, and the grid operator's latest auction did little to change their views.

In all, Exelon owns six nuclear plants in Illinois totaling more than 11,000 MW of generation.

Exelon, the nation's largest nuclear generator, has claimed for more than a year that Clinton is losing money in the persistently low US power price environment. The company continues to push for legislation in Illinois to reward low-carbon generators. Currently, nuclear power is excluded under the state's renewable energy law.

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Despite the MISO auction, "without urgent action on the policy front, we will have no choice but to prepare for a potential early retirement in the face of continued financial losses at our Clinton nuclear plant," Exelon President and CEO Chris Crane said in a statement.

Clinton's absence from the state's generation landscape "would have significant economic impacts on southern Illinois and erase the environmental benefits equal to 80% of the wind installed in Illinois, making it significantly harder and more expensive for the state to meet its carbon-reduction goals," Crane asserted.

For months, Exelon has been working with Illinois lawmakers and other stakeholders to design s comprehensive energy bill it says would promote clean energy and advance development of the next-generation power grid.

A bill proposing the creation of a low-carbon portfolio standard was introduced in the 2015 General Assembly, but failed to pass before lawmakers adjourned in November. Successor legislation has not yet been filed in the 2016 Legislature in Springfield, where a high-stakes fracus over the state budget has dominated discussion.

Republican Governor Bruce Rauner and Democrats, led by House of Representatives Speaker Michael Madigan, are at loggerheads over efforts to fill a more-than-$5-billion hole in the new budget. As a result, Exelon spokesman Paul Adams said Tuesday that the legislature has been slow to coalesce support around the new energy bill.

"It obviously has been difficult to move anything" because of the bitter budget disagreements, he said, adding it is understandable the budget is getting so much attention from state leaders.

Paul Patterson, a Glenrock Associates analyst in New York, said in a Tuesday email he suspects that if Exelon does not "get what it feels is enough" in support for its nuclear plants from the legislature, "it might shut down a plant like Clinton."

Earlier this year, UBS analyst Julien Dumoulin-Smith in New York predicted Exelon would announce plans in September to shut Clinton. The MISO auction and Illinois legislative impasse have not altered his opinion.

The Clinton closing announcement probably will come in "late summer rather than fall," with September still a good possibility, Dumoulin-Smith said in a Tuesday email.

Exelon has pointed to an analysis the state conducted a year or so ago that found closing Clinton would cause wholesale energy prices to rise $236 million to $341 million a year for families and businesses in the region.

Those increases "do not include hundreds of millions of dollars that wold need to be spent on new transmission lines," the company noted. Clinton's shutdown also would result in the loss of nearly 1,900 direct and indirect jobs and raise carbon emissions in Illinois by almost 8 million mt/year, the company said.

Exelon is the parent company of Commonwealth Edison, Peco Energy, Baltimore Gas & Electric and Pepco.

--Bob Matyi, newsdesk@platts.com
--Edited by Valarie Jackson, valarie.jackson@platts.com