Absent Legislation, Exelon to Close Clinton, Quad Cities Nukes

As reported by RTO Insider, as well as the Wall Street Journal, Exelon Nuclear has threatened to permanently close its Clinton nuclear power plant by June 1, 2017, and its Quad Cities nuclear power plant a year later, unless the State of Illinois approves a large-scale bailout. Exelon's lobbyists seeks $300 million per year, for several years, amounting to more than $1.5 billion in subsidies. This, to prop up atomic reactors that cannot compete with less expensive sources of electricity, including wind power and energy efficiency.

35-year-old Chicago-based watchdog group Nuclear Energy Information Service (NEIS) has led the resistance to the billion dollar boondoggle, as by holding "Alms for Exelon" street theater parodies, as well as educating state legislators' offices. So far, NEIS has successfully staved off the public subsidies.

Exelon's latest money grab in IL comes after its lobbyists' success at winning a split decision from the Washington, D.C. Public Service Commission, approving its takeover of Mid-Atlantic utility Pepco. Exelon can now be expected to gouge not only D.C. ratepayers, but ratepayers throughout Maryland and the Mid-Atlantic, on their electricity bills, further helping to prop up failing Exelon atomic reactors throughout the country.

Public Citizen and DC Solar have appealed the DC PSC ruling; resistance, as by CCAN (Chesapeake Climate Action Network) and the State of Maryland Attorney General and state ratepayer advocate, also goes on in Maryland.

Exelon has made similar subsidy demands in NY, to prop up failing reactors there, as the RTO Insider article reports.

Any such subsidies would be in addition to hundreds of billions of dollars of public (ratepayer and taxpayer) subsidies the nuclear power industry has already enjoyed, over the past half-century, as reported by Union of Concerned Scientists in 2011.

Crain's Chicago Business: Why the state might raise your power bill

Map by Crain's Chicago BusinessAs reported by Steve Daniels at Crain's Chicago Business, the coal burner Dynegy has joined the atom splitter Exelon is seeking approval from the Illinois State Legislature for a mega-bailout, at ratepayer expense, to prop up dirty, dangerously old, and noncompetitive power plants (see the Crain's Chicago Business map, left, for plant locations in the state).

Ironically, Dynegy has critized such ratepayer-funded subsidies in Ohio. It has opposed efforts by FirstEnergy and American Electric Power to obtain above market rates Power Purchase Agreements from Ohio ratepayers, as in the proceeding before the Public Utilities Commission of Ohio. FirstEnergy's bailout would prop up both its problem-plagued Davis-Besse atomic reactor, as well as several coal plants (AEP's bailout would prop up exclusively coal plants).

The Federal Energy Regulatory Commission (FERC) has put a hold on the PUCO's approval of the FirstEnergy and AEP bailouts. Some analysts see this as the end of the proposals.

Adding to the irony, Exelon Nuclear, as well as Dynegy, offered bids to outcompete FirstEnergy before the PUCO. Exelon said it could provide the same amout of electricity for $2 billion less than FirstEnergy; Dynegy said it could do so for $2.5 billion less than FirstEnergy.

While Exelon Nuclear and Dynegy tout free market competition in electricity in Ohio, they are attempting to do the opposite in Illinois -- seeking state approval for massive ratepayer subsidies, to prop up age-degraded, noncompetitive plants.

FERC Blocks Ohio Power Plant Subsidy Deal

This still images comes from a U.S. Nuclear Regulatory Commission video. The yellow arrow shows a sub-surface crack in Davis-Besse's concrete containment Shield Building wall. The cracking was revealed during an October 2011 reactor lid replacement. The cracking grows by a half-inch, or more, in length, every time it freezes out, due to Ice-Wedging Crack Propagation, due to water locked in the walls by FENOC's 2012 "White Wash" weather sealant of the Shield Building exterior, 40 years too late.As reported by Thomas Overton at PowerMag, the Federal Energy Regulatory Commission (FERC) has cast a cloud of doubt over the decision by the Public Utilities Commission of Ohio (PUCO) to award a multi-billion dollar ratepayer subsidy to FirstEnergy Nuclear Operating Company's (FENOC) problem-plagued Davis-Besse atomic reactor on the Lake Erie shore near Toledo.

Although a significant development, the article reports that the hold may be temporary in nature:

On April 27, in a pair of rulings, FERC agreed with the groups challenging the PPAs, rescinding previous waivers it had issued to FirstEnergy and AEP allowing them to purchase power from their affiliate generators. Loss of the waivers effectively blocks the utilities from purchasing power under the PPAs until FERC has had a chance to review them. (emphasis added)

And, the article reports:

The ruling represents the second major blow this month against state efforts to support generating plants that have been unable to compete in interstate power markets. In two decisions, the U.S. Supreme Court blocked programs in Maryland and New Jersey that sought to incentivize power plant construction through subsidies keyed to PJM [Pennsyllvania-Jersey-Maryland] capacity auctions [the grid network which encompasses Ohio].

On March 31, the PUCO ruled in favor of FENOC's proposal that ratepayers subsidize its age-degraded Davis-Besse nuclear plant, and a number of aged, uncompetitive coal plants, to the tune of $3.9 billion over eight years, at ratepayer expense.

And, as reported by Dan Gearino at the Columbus Dispatch, PUCO Chairman Andre Porter, his dirty deed done in approving the FENOC nuclear and coal bailouts (as well as additional American Electric Power fossil fuel bailouts), is now seeking greener pastures, after only a year in the job.

Beyond Nuclear has been a vocal opponent of the PUCO's ratepayer bailout for Davis-Besse. It has submitted written and oral testimony in the relevant proceedings for the entire tenure of PUCO Chairman Porter's tenure.

In addition, Beyond Nuclear, in coalition with Citizens Environment Alliance of Southwestern Ontario, Don't Waste Michigan, and the Ohio Green Party, has officially intervened against Davis-Besse's 20-year license extension since December 2010. Toledo attorney Terry Lodge serves as legal counsel for the environmental coalition. Severe, and ever worsening, cracking of the concrete containment Shield Building was -- and still is -- a major concern (see photo, above left). In recent months, however, the U.S. Nuclear Regulatory Commission rubber-stamped the 2017-2037 license extension anyway.

Sierra Club also joined the coalition in officially intervening against the risky, experimental replacement of steam generators at Davis-Besse. Arnie Gundersen, Chief Engineer at Fairewinds Associates, Inc., served as the coalition's expert witness. NRC rubber-stamped the steam generator replacements regardless.

UBS: Despite ratepayer subsidies, closing Palisades early "could save money for Entergy and also for CMS consumers"

As reported by ElectricityPolicy.com:

UBS reported to clients last week on its latest conference call with the Nuclear Energy Institute to discuss the latest industry plan to bring costs back down to the 2002 level of $28/MWh by 2020, leveraging reductions on capital expenditures (capex), O&M, and nuclear fuel. UBS characterized the goals as aggressive, which many investors view with “justifiable skepticism.”  It noted that capex of almost ~$11B in 2012 could be high, as many plants were transitioning from 40- to 60-year timeframes and upgrading pricy steam generators and reactor vessel heads. O&M, it said, remains an area for significant improvement. It opined that declining nuclear costs will be a key upside driver for the likes of Exelon, PSEG, Entergy, NRG, and Talen, among others. A declining cost trend would benefit regulated portfolios as well, including Dominion, Duke Energy, NextEra, Southern, and SCANA. The bank analysts also focused on Michigan, where Palisades, Entergy’s remaining—and costly—single-unit plant, “continues to run with an above-market contract (in the 40's/MWh) with Consumers Energy. It said closing the unit early could save money for Entergy and also for CMS consumers.” With power prices across much of the country “now trending below $30/MWh—and capacity contributing an additional $5-10/MWh,” it said the implicit value of carbon “remains the key ‘discrepancy’ in justifying the economics of these plants.”  April 15, 2016 (emphasis added)

See the full UBS report, linked here.

It should be noted that, although the previous owner of the Palisades atomic reactor, Consumers Energy, had testified to the Michigan Public Service Commission in spring 2006 that reactor pressure vessel embrittlement concerns needed to be addressed at Palisades, and the reactor lid and steam generators needed to be replaced, none of these have happened since Entergy took ownership in 2007. (CMS is the parent company for Consumers Energy.) Thus, Palisades' woeful uncompetitiveness, and inability to turn a profit, has nothing to do with "upgrading pricy steam generators and reactor vessel heads," as reported above.

The U.S. Nuclear Regulatory Commission (NRC) is complicit, in not requiring Entergy to make these previously promised major repairs and replacements at Palisades.

A year after the Fukushima Daiichi nuclear catastrophe began, the Japanese Parliament's independent investigation into the root cause determined that collusion between regulator, nuclear utility, and government officials was the reason why the reactors were so vulnerable to the natural disasters that melted them down. Such collusion exists in spades at Palisades, between NRC, Entergy, and such government officials as Fred Upton, Chairman of the U.S. House Energy and Commerce Committee. Palisades -- as well as American Electric Power's Cook nuclear power plant, with two reactors -- is located in Rep. Upton's (R-MI) congressional district. Entergy has been a significant campaign contributor.

Tim Judson, Executive Director at Nuclear Information and Resource Service (NIRS), upon reviewing the UBS analysis, as well as the relevant 2007 Michigan Public Service Commission documents, commented:

“Looks to me like the prices in the contract are structured like those for Ginna and Nine Mile Point [nuclear plants in Upstate New York]. There is a base price that is adjusted by monthly and time-of-day factors. The adjustment factors average out to about 1.10 over the whole year. So the average price Entergy will be paid for Palisades’ power this year is 1.10 x $52.50/MWh [Megawatt-hour] = $57.75/MWh. That is by far the highest price PPA [Power Purchase Agreement] I've seen (I guess we knew that much). But if Palisades is losing money at that price that means to break-even, the operating cost has to be at least $60/MWh. Entergy cuts so many costs at their reactors, that means something is seriously out of whack (which we knew).” (emphasis added)

Thus, despite a sweetheart deal blessed by the Michigan Public Service Commission in 2007, locking in above-market prices for Palisades' electricity for 15 years, till 2022, Entergy's problem-plagued atomic reactor is nonetheless losing money, and starkly uncompetitive compared to market rates.

Such "public service" is akin to the MI PSC "serving the public," up for dinner, to Entergy and Consumers Energy.

Regional ratepayers have been forced to pay significantly higher electric rates than the free market would require, in order to fund ever increasing safety risks at the age-degraded Palisades atomic reactor. Apparently, the overriding priority for "the powers that be," including Entergy and Consumers Energy, as well as the Michigan Public Service Commission, is to pad the pockets of nuclear utility shareholders and executives, at ratepayer expense, and public risk. In this sense, the public is being asked to fund, at exorbitant rates, many more years of "radioactive Russian roulette" at Palisades.

Dr. Mark Cooper, energy economist at Vermont Law SchoolIn July 2013, Dr. Mark Cooper of Vermont Law School -- based in part of UBS, and other investment firms' analyses -- included Palisades in his short list of a dozen atomic reactors across the U.S. at highest risk of near-term, permanent shutdown, due to a variety of reasons: economic factors such as cost, its old age, its merchant plant status, and that is has less than 25 years of operations left, despite its license extension; operational factors, such as long term outages; and multiple safety issues.

UBS's and Cooper's previous predictions have proved correct, as with the permanent shutdown at Entergy's Vermont Yankee reator in Dec. 2014, as well as the impending shutdowns at Entergy's FitzPatrick reactor in NY in Jan. 2017, and Entergy's Pilgrim reactor near Boston in May 2019 (or hopefully sooner).

Public Citizen and DC SUN Challenge Exelon’s Takeover of Pepco

Sept. 17, 2015 PowerDC rally against Exelon takeover of Pepco, before marching to D.C. Mayor Muriel Bowser's office to deliver the hand-signed bannerAs stated in an Earth Day press release sub-headline:

Groups Tell D.C. Public Service Commission: Decision to Approve Was Based on Error; Stop Exelon From Moving Forward With Takeover.

 Earth Day just happened to be the deadline for motions for reconsideration to the D.C. PSC, regarding its March 31 split decision to allow Entergy Nuclear to takeover Mid-Atlantic utility Pepco.

As the Public Citizen and DC Sun press release puts it:

Summary of Application for Reconsideration:

• The commission’s most thorough reasoning in the case is in its August order rejecting the merger. Half a year later, the commission suddenly approved a similar merger without ever revisiting many of the key issues and explaining what changed.

• The commission denied the public the right to weigh in on a proposed settlement in the case by giving just 12 days’ notice of a public hearing, rather than the 45 days that DC law requires.

• The commission contradicted its own orders in the case without explanation, denying parties notice and the opportunity to participate fully. After the commission rejected the merger last August, it reopened the case at Exelon and Pepco’s request to consider a proposed settlement between some of the parties. The commission made clear it reopened the case only for the “very limited purpose” of deciding whether a particular settlement proposal was in the public interest. But in February, the commission suddenly expanded the scope of the case and proposed new terms to the settling parties. When nearly all parties rejected these terms, the commission adopted them anyway—approving different terms than it said it would consider, in the absence of any settlement at all.

• The commission applied the wrong standard for determining the public interest, placed the burden of persuasion on the wrong parties, and failed to make an independent finding that the acquisition terms as a whole are in the public interest.

The press release goes on to state:

The PSC has five days to respond. If the PSC fails to correct its decision, Public Citizen and DC SUN intend to appeal to the D.C. Court of Appeals. (emphasis added)