By STEVE DANIELS
Exelon will collect more than $270 million in additional revenue at its Illinois nuclear plants for the year beginning in June 2016, thanks to the results of a special auction just conducted by the grid manager for the 13-state region including Northern Illinois.
The Chicago-based power giant, which is asking lawmakers to hike electric bills throughout the state to keep the company from closing two of its six Illinois nukes, is benefiting from grid operator PJM Interconnection's new rules for setting the prices consumers pay generators to be available when electricity demand spikes due to extreme heat or cold.
The changes, which PJM says are in response to a close call the region experienced with power supply during the worst of the polar vortex in early 2014, are increasing the costs to consumers of reserving “capacity” during peak periods and hiking their electric bills.
PJM effectively is re-running the auctions it already had overseen to set those capacity costs for the 2016-17 and 2017-18 periods. This most recent auction, with results announced yesterday, is for the period from June 1, 2016, to May 31, 2017.
PJM's changing bidding rules are funneling hundreds of millions in additional revenue annually to Exelon's Illinois fleet, which has been pressured financially by low wholesale power prices. The boon to Exelon may complicate the company's continuing efforts to lobby the state for even more financial help, courtesy of ratepayers who already will be paying higher prices thanks to PJM.
The increase in capacity cost to $134 per megawatt-day from the previously set $59.37 per megawatt-day will hike the average bill paid by the typical household served by Commonwealth Edison by about $3.29 per month over what it would have been for the year beginning June 1, 2016, ComEd said today.
Meanwhile, Exelon's Illinois fleet will collect an estimated $495 million in capacity revenues in the year beginning in June, rather than the $219 million it would have taken in under the previous auction results.
A recent PJM auction to set the capacity price for the year beginning June 1, 2018, resulted in even higher prices. Exelon's Illinois nukes will collect an estimated $688 million in capacity revenue then, even though the Quad Cities plant didn't qualify because it had bid too high. (Quad Cities did qualify for 2016-17 capacity revenue.)
Exelon has proposed a new statewide surcharge on electric bills that would generate about $300 million in annual revenue for the next six years. Under the measure, which is aimed at rewarding low-carbon sources of electricity, Exelon's Illinois nukes would garner most of the proceeds.
The company has warned it will have to close two money-losing nukes—its Quad Cities plant and downstate Clinton plant—without state assistance. Company executives have said the hundreds of millions the Illinois nukes are getting because of PJM aren't enough to prevent the closures.
In a statement today, Exelon CEO Chris Crane said: “We continue to be encouraged by these auction results, which along with EPA's Clean Power Plan, begin to properly value nuclear power for (its) reliability and low-carbon benefits. These auction results, as well as other factors, will come into play as we analyze the current and expected economics of each of our plants.”
Exelon's bill stalled last spring amid the budget war between Democratic legislative leaders and Republican Gov. Bruce Rauner. But there are signs that lawmakers may take up a broad energy bill, including Exelon's nuclear provisions, in the fall veto session even if the budget stalemate continues.