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Exelon’s case for how poorly its nukes are doing via Crain’s

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For nukes, costs consist of labor, scheduled maintenance and outages, fuel, capital spending, corporate overhead (legal, human resources, etc.) and the substantial property taxes paid to host communities. In addition, these plants budget for costs due to unanticipated outages, which contribute to Exelon’s figure.

At Exelon’s plant in Clinton—a single-unit generator between Peoria and Springfield—costs run higher, at $38 to $39 per megawatt-hour.

Revenue comes mainly from two sources. The first is energy prices paid by utility customers and businesses. The second is “capacity” charges covered by all consumers and set via a yearly auction of power generators conducted by PJM Interconnection, the power-grid administrator for northern Illinois and all or parts of 12 other states and the District of Columbia.

Round-the-clock energy prices right now for 2016 and 2017 are a little over $30.50 per megawatt-hour. That’s down from about $33 a year ago for those time frames. Capacity prices are on the rise thanks to auction changes PJM has engineered to increase them. The capacity price Exelon will get for the year beginning June 1, 2018—which PJM announced Aug. 21—is $215 per megawatt-day, which translates to about $9 per megawatt-hour.

Add $30.50 to $9, and most of Exelon’s plants can expect to see revenue of at least $39.50 per megawatt-hour beginning in mid-2018. The company didn’t say Aug. 21 which of its plants qualified for payments. Execs said previously that they expected Quad Cities would bid too high to qualify. Byron is a question mark. And Dresden, LaSalle and Braidwood were expected to qualify. Clinton isn’t in the PJM region and so isn’t eligible.

The higher capacity payments, which hit all businesses and residents, will hike annual electricity costs for the average household by more than $70.

But that’s not the end of the analysis. Each nuke has to pay to move its megawatts through various congestion points on the power grid. Those costs, which are quantifiable, are much higher for some plants than for others.

The two plants Exelon consistently has said are losing money each year are Quad Cities and Clinton. Not coincidentally, their congestion costs are by far the highest of any of the Illinois plants.

So Quad Cities paid nearly $10 per megawatt-hour in such costs last year and is projected to pay $9.60 this year. Making matters worse, Quad Cities bid too high to qualify for capacity payments, so it isn’t getting any beginning in 2017. Looking at net revenue of around $22.50 per megawatt-hour beginning in 2017, Quad Cities stands to lose $11 per megawatt-hour—about $170 million.

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Exelon has identified its Byron plant as a money-loser in the past, but if it cleared the PJM auction it will come out a modest money-maker thanks to the higher capacity payments. Byron stands to reap profits of around $26 million even if future energy prices remain this low.

Exelon’s Dresden, LaSalle and Braidwood plants, which are closer to Chicago, will continue to make money. All three have much lower congestion costs, from less than $1 to $2.50 per megawatt-hour. With the windfall from the capacity increase, their 2018 profits plus Byron’s (if it cleared) appear essentially to offset losses at Quad Cities and Clinton.

The final wrinkle: Exelon’s terrible forecast for Quad Cities may well be relieved somewhat by Commonwealth Edison’s new Grand Prairie Gateway transmission line under construction and scheduled to be in service in 2017. The line is designed to relieve power-grid congestion from the west, assisting both Quad Cities and Byron.

Read more at Exelon’s case for how poorly its nukes are doing

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