12/6/14 - CRAIN'S: New math to help Exelon's nukes

BY STEVE DANIELS

While Exelon prepares to ask state legislators to rescue its Illinois nuclear plants, new rules set by an obscure power-grid organization back East would send more than a half-billion dollars to those sites by significantly raising electric bills.

The changes raise questions about whether state action is even necessary.

PJM Interconnection, the Valley Forge, Pa.-based regional power-grid operator for all or parts of 13 states including northern Illinois, on Dec. 3 approved changes to the way electricity generators are compensated for their promise to deliver during peak-demand periods. The changes, which are subject to approval by the Federal Energy Regulatory Commission, will benefit Chicago-based Exelon more than any other power company in the 13-state region, analysts say.

When they take effect in 2018, those alterations will funnel more than $560 million in additional revenue that year to five of Exelon's six Illinois nuclear stations, according to an analysis by former Illinois Power Agency Director Mark Pruitt. (One, the downstate Clinton plant, isn't in the PJM region and wouldn't benefit from the special payments.) Spread across all six of Exelon's plants, that revenue would add roughly 22 percent to the net revenue they collected as a group in 2013.

Compared with what Commonwealth Edison customers pay today, the changes would hike the price of electricity 19 percent. Customers' total rates would increase by 11 percent, although that number is expected to rise with increases in the separate cost of delivering the juice.

Pruitt's analysis doesn't account for any changes in underlying wholesale power prices. But Exelon has projected that they will rise modestly over that period, which would hike rates further.

Exelon complains that market distortions have reduced wholesale power prices fetched by its nukes and has threatened to close as many as three of its six Illinois plants without a boost in revenue. It plans to lobby state lawmakers next year for financial assistance in the form of higher electricity rates, although it has yet to make a formal proposal.

But critics ask why the state should force households and businesses to pay Exelon more when the company appears to be in line for a major increase in revenue—courtesy of PJM—in three years.

“Why should the Illinois Legislature create another windfall for Exelon at the expense of Illinois ratepayers?” says Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center, which is often at odds with Exelon. “There's no good reason for that.”

(Read the rest of this article here.)