Not so long ago, Exelon, which runs six nuclear energy plants in Illinois, was extolling the merits of an open market for power as its profits rolled in.
Now, with power prices plunging, Exelon has lost enthusiasm for the open markets it championed in the 1990s and wants the Legislature to devise a new formula that will protect its profits, quite likely driving up utility bills for homeowners and businesses. The company says it needs to pull in as much as an extra $580 million to avoid having to close several of its power plants. Suddenly, a little government intervention is looking good.
We’re not sure the Legislature should even bite. But before doing anything, it should insist that Exelon prove its case. If Exelon is hard up, they can show us. The company should open its books to show how its nuclear fleet is performing. Right now, Exelon won’t even say whether its nuclear plants are making money as a group. If the Legislature does decide to give Exelon an assist, it should insist on a rate cap to protect consumers. There is no way the Legislature should bail out a company whose nuclear plants are profitable — according to an analysis by Crain’s Chicago Business — in such a way that ratepayers get hammered.
Exelon says three of its nuclear facilities — the Byron, Clinton and Quad Cities plants — are losing money. The company says it could simply close the facilities decades short of their normal operating lives, but then Illinois would lose a dependable source of low-carbon power generation. The six plants generate about 48 percent of the state’s energy and about 90 percent of its low-greenhouse-gas power. The company argues that Illinois, now the leading state for low-carbon power generation, would benefit environmentally by doing what’s necessary to keep those plants open, although Exelon won’t commit to keeping all six going even if it gets government help. Just how could the Legislature intervene? Exelon says it’s too soon to spell out specifics, but one general option it has suggested is the creation of a set of clean energy standards that would allow the charging of an extra fee for energy from nuclear plants. Another option being floated is a carbon dioxide cap-and-trade system similar to the Regional Greenhouse Gas Initiative in nine eastern states.
If properly designed, either option could provide Exelon with extra revenue to keep its nuclear plants running. But either option also could drive up rates for consumers in the short run and lead to windfall profits for Exelon when energy prices rise again. Forget that.
Moreover, nuclear plants aren’t the only relatively green alternative to fossil-fuel-based energy. Springfield must ensure anything it does to help nuclear power doesn’t undermine the viability of renewable energy sources, such as wind and solar energy, which also are low carbon — and don’t create highly radioactive waste. The real question is whether money spent on a bailout might be better invested on conservation and renewable energy.
Higher energy prices aren’t just a matter of individual ratepayers having to pay utility bills that could jump by as much as 8 percent. Higher energy prices also could do harm to our state’s business climate, which already is weak. Large employers, especially manufacturers, understandably loathe high utility bills.
What’s good for Exelon doesn’t much matter if it’s bad for the rest of Illinois. Let’s see, to begin with, if Exelon even has a case.