In ‘power play,’ Exelon vows to close Byron and Dresden nuclear plants
The company says the job-killing decision can be avoided if lawmakers opt to change rules to benefit carbon-free energy sources.
Exelon said Thursday it will close its Byron and Dresden nuclear power plants in fall 2021 unless it gets a change in state law, a demand that will be intensely scrutinized because of the bribery scandal that ensnared the company’s ComEd division.
Byron must shut down in September 2021 and Dresden in November 2021 because they can no longer operate at a profit in the face of falling energy prices and competition from fossil fuel plants, Chicago-based Exelon said.
It said the closures will eliminate 1,500 full-time jobs and reduce work for 2,000 supplemental employees hired during refueling.
Exelon said it was making the announcement to provide notice to communities, employees and regulators. But its audience also includes state legislators and the governor, who are being asked to change Illinois law to increase purchases from the nuclear plants.
Critics have warned against bailouts of Exelon’s aging nuclear operations, but the company insists state purchasing laws can be changed without saddling ratepayers with more costs. Keeping the plants going holds down electricity prices by adding market competition, Exelon has said.
In a written statement, Exelon CEO Christopher Crane said the company wants to discuss legislation to avoid the closures but did not get into specifics.
“We recognize this comes as many of our communities are still recovering from the economic and public health impacts of the pandemic, and we will continue our dialogue with policymakers on ways to prevent these closures,” Crane said.
“To that end, we have opened our books to policymakers and will continue to do so for any lawmaker who wishes to judge the plants’ profitability.”
The Byron plant is outside Byron, southwest of Rockford, and dates from the mid-1980s. It is licensed to operate through 2046. The Dresden plant is in Morris, about 65 miles southwest of Chicago, and was started in 1970. It is licensed through 2031.
Jordan Abudayyeh, Gov. J.B. Pritzker’s press secretary, said Exelon made similar threats before it won subsidies in 2016 to keep its Clinton and Quad Cities plants open. The company must submit to “a thorough and transparent review of its finances,” she said.
“First, let’s remember that Exelon already receives a ratepayer-funded subsidy of $235 million dollars per year to run nuclear plants in Illinois,” Abudayyeh said. “While they couch their messaging in their desire for a clean energy future, their primary purpose is to dramatically increase those subsidies on behalf of their shareholders. Like the governor said earlier this year, transitioning to a clean renewable energy economy is a top priority for his administration, but the utility companies will not write the legislation to get the state there.”
The company isn’t shy about applying legislative pressure. It said its Exelon Generation unit, which operates the plants, must start shutdown preparations in the coming weeks.
That includes scaling back refueling outages this fall, reducing the hiring of union labor associated with the work. Most of the plants’ 1,500 full-time workers are members of the International Brotherhood of Electrical Workers.
The fate of the plants will be a prime topic for the General Assembly, which will labor in the shadows of the ComEd bribery scandal.
The utility confessed in July to paying associates of Illinois House Speaker Michael Madigan $1.3 million to buy his favor. Madigan has not been charged, but ComEd, as part of a deferred prosecution agreement with the federal government, agreed to a $200 million fine and said it would continue cooperating in the probe.
It confessed to bribes over eight years through 2019, a period that covered major legislative victories for ComEd. They included the 2011 passage of the Energy Infrastructure and Modernization Act, which granted ComEd more power to bypass regulators and charge rates based on current interest rates. It also required utilities to install “smart meters” that encourage conservation and modernize the power grid.
ComEd CEO Joseph Dominguez has said the legislation benefited consumers, resulting in recent rate reductions and a 70% improvement in reliability. Critics such as the Illinois Public Interest Research Group have called for the act’s repeal, saying it unduly fattened ComEd’s profits.
The watchdog Citizens Utility Board opposed the original law but has praised its emphasis on “smart grid” technology that can help people control their own utility bills.
Reacting to Thursday’s announcement, CUB said Exelon needs to open its books but doesn’t deserve a blank check. Exelon’s nuclear plants “are an essential part of the state’s formula for lowering electricity bills” and reducing pollution, according to the utility board.
Illinois PIRG director Abe Scarr said, “Any additional support for Exelon’s aging, expensive power plants must come within a comprehensive plan to transition Illinois to 100 percent renewable energy, including firm closure dates for nuclear power plants.”
But state Rep. Lawrence Walsh Jr. (D-Elwood) said Illinois needs to protect the jobs associated with the nuclear plants and ensure they can export power to other states. Walsh, chairman of the House Public Utilities Committee, said lawmakers have been working with Exelon and others to establish a “balanced” energy policy, a discussion that will get new urgency because of the closure threat.
Crane and Dominguez have apologized for the bribes and said they have rooted out those responsible. Also, Crane has emphasized the charges applied to ComEd and not Exelon or Exelon Generation, a distinction skeptics are unlikely to see.
Exelon said Byron and Dresden can be retired without jeopardizing power capacity when Illinois hits peak demand. Together, they account for 30% of Illinois’ carbon-free energy output and are essential to the state’s goals of using more clean energy, the company said.
The plants are efficient and reliable, Exelon said, but are at a disadvantage from market rules that allow fossil fuel plants to underbid them. It said the same rules also threaten the viability of its LaSalle and Braidwood nuclear plants. In all, Exelon Generation owns six nuclear plants in Illinois.
The company is critical of rules in the electricity markets run by PJM, an organization that routes power and conducts auctions of plant capacity affecting Illinois, 12 other states and the District of Columbia. Exelon asserts Illinois should enact a law taking itself out of the PJM market and setting its own purchasing rules that benefit nuclear as a zero-emissions source.
A 2019 study by the Brattle Group, funded by Exelon Generation and prepared for the IBEW and the Illinois AFL-CIO, concluded shutting the Byron, Dresden, LaSalle and Braidwood facilities would cost Illinois ratepayers $483 million a year through 2029 and increase air pollution.
The study said fossil fuel plants step up their output when nuclear plants close.
“Although we know in our heads that shutting down the uneconomic Illinois plants is necessary to preserve even more jobs elsewhere, our hearts ache today for the thousands of talented women and men that have served Illinois families for more than a generation and will lose their jobs because of poorly conceived energy policies,” Crane said.
U.S. Rep. Adam Kinzinger (R-16th), whose district includes the Byron plant, called Exelon’s announcement a “gut punch to the people of Illinois” and blamed it on Madigan-led corruption in Springfield. Madigan and ComEd “put millions of dollars into their own pockets by hiking up prices on Illinois taxpayers, and throwing our nuclear power plants into the crosshairs of their backroom deals,” Kinzinger said.
He called on U.S. Sen. Dick Durbin (D-Ill.) to help him with legislation that would re-appropriate ComEd’s $200 million fine to benefit the communities surrounding the Byron and Dresden plants.