Three of Exelon’s Nuke Plants Fail to Clear PJM Auction Despite Jump in Payments
Exelon's embattled nuclear fleet got more bad-though far from unexpected-news on Aug. 21 as the Oyster Creek, Quad Cities, and Three Mile Island nuclear power plants failed to clear in the 2018-19 PJM capacity auction. This means that the three plants will not receive capacity payments during that delivery year.
This was despite a big jump in payments as a result of changes PJM put in place this year to avoid a repeat of the chaos that occurred during the winter of 2014, when bad weather caused widespread fuel shortages and unplanned shutdowns. The higher payments are intended to incentivize better planning and preparations. Payments from the auction will be $164.77/MW per day, a 37% increase over the $120/MW result from the 2017-18 auction.
Payments in two supply-constrained regions were even higher, with the eastern mid-Atlantic region-where Oyster Creek and Three Mile Island are located-clearing at $225.42/MW.
Exelon has warned repeatedly that some of its nuclear plants are at risk of premature shutdown as a result of low power prices and competition from subsidized renewable energy. Oyster Creek is already slated for retirement in 2019, while Quad Cities has been repeatedly identified as being among U.S. nuclear plants most threatened by the current market.
Quad Cities has been losing money for several years. Exelon said last month that it would make a decision on retiring the plant in September. It has sought support from the state of Illinois, but the legislature has not acted on the request, and CEO Chris Crane said at the time that future action would not come in time to save it.
Still, Crane had some positive thoughts about the PJM auction results. "The PJM market reforms are a step in the right direction to recognize nuclear energy's high reliability, and while three of our plants in PJM did not clear, we view the auction results as an encouraging sign that these reforms will begin to level the playing field," he said. "We will consider auction results, along with other data points, including EPA's Clean Power Plan, as we make decisions about the future of these critical long-life assets."
-Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).
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