Exelon Wants Help To Save Dresden, Byron and Braidwood Nuclear Power Plants

Byron nuclear power plant

Byron nuclear power plant

Exelon could close three nuclear plants in northern Illinois, which together power the equivalent of 5.5 million homes in the region. Exelon issued the warning about the potential for “early retirement” of its Byron, Dresden and Braidwood nuclear stations in a Feb. 8 Securities & Exchange Commission filing. 

Braidwood, located in Will County, and Byron, near Rockford, have operating licenses from the Nuclear Regulatory Commission that don’t expire until the late 2040s. One of Dresden’s two reactors in Grundy County is licensed until 2029 and the other until 2031.

Dresden, Byron, and Braidwood nuclear plants in Illinois are showing increased signs of economic distress, which could lead to an early retirement, in a market that does not currently compensate them for their unique contribution to grid resiliency and their ability to produce large amounts of energy without carbon and air pollution.

The earliest the company could move to shutter Dresden is 2021. It’s committed to operating Dresden until June 2021 with regional grid managers. But Dresden bid was too high to qualify for “capacity” payments from consumers in northern Illinois in the most recent auction held by PJM Interconnection, which is responsible for managing wholesale power markets in all or part of 13 states and the District of Columbia from Illinois east to the mid-Atlantic.

The earliest Exelon could move to close Byron and Braidwood is mid-2022. Those plants have committed with PJM to operate until then.

Dresden nuclear power plant

Dresden nuclear power plant

That gives the state some time to determine what to do about potential closures. Springfield could act on wide-ranging energy legislation as early as this session, but its timetable depends at least in part on actions not yet taken by federal energy regulators.

Braidwood nuclear power plant

PJM has proposed changes to its capacity auction—how it determines prices all consumers and businesses pay to plants for their promise to produce during the highest-demand periods of the year. State energy regulators have criticized those proposals as “punishment” for Illinois’ 2016 decision to subsidize two other Exelon-owned nukes that were slated to close, its Quad Cities station on the Mississippi River and its Clinton plant in central Illinois. If the Federal Energy Regulatory Commission approves PJM’s changes, the state could well move to take over the responsibility of adequate power generation from PJM.

In the short term, it’s highly unlikely that Exelon would be permitted to close all three plants should it come to that. The loss of all three could well jeopardize adequate power supplies to the nation’s third largest city.

But recent capacity auctions have made clear that northern Illinois enjoys a glut of power supplies currently. The closure of a single nuke clearly wouldn’t jeopardize that.

Braidwood nuclear power plant

Braidwood nuclear power plant

Capacity isn’t the only issue, though. Nuke closures could threaten Gov. J.B. Pritzker’s goal of eventually powering Illinois only through sources that don’t emit carbon. Exelon has been successful arguing that carbon-free nukes are a crucial component of state plans to address climate change by “de-carbonizing.”

Pritzker’s predecessor, Gov. Bruce Rauner, signed the last wide-ranging energy bill, the Future Energy Jobs Act, which slaps a surcharge on electric bills statewide to funnel more than $200 million a year to Exelon’s Quad Cities and Clinton nukes.  (Crain’s Chicago Business, 2/19/2019)

Pennsylvania Nuclear Power

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Gov Tom Wolf

Gov Tom Wolf

Pennsylvania Governor Tom Wolf has signed an executive order to reduce carbon pollution 26 percent by 2025 and 80 percent from 2005 levels by the year 2050. The executive order is designed to strengthen the state’s Alternative Energy Portfolio Standard, which requires state utilities to purchase certain amounts of power from alternative sources.

In Pennsylvania, one important energy resource that is necessary to achieve Wolf’s goals is the continued use of nuclear power throughout the commonwealth. The reductions needed to achieve an impact on the threat of climate change are not possible without embracing every source of carbon-free energy, including the energy provided by our existing fleet of nuclear power plants.

Nuclear power plays an enormous role in Pennsylvania’s energy landscape. The state’s five nuclear power plants produce 93 percent of the state’s carbon-free electricity, rendering the resource mission-critical to decarbonization.

Moreover, Pennsylvania is second in the nation, behind Illinois, in nuclear power generating capacity and has one of the largest networks of suppliers and businesses supporting the industry throughout the world.

Operating Nuclear Power Reactors

To further underscore the vital role nuclear power plays, the state’s five nuclear power facilities help prevent 37 million tons of carbon pollution annually. That is equivalent to taking 8 million passenger cars off the road, which happens to be about the same as the number of registered vehicles in the state.

Despite the importance of nuclear power to Pennsylvania’s clean energy future, the Three Mile Island and Beaver Valley Generating Stations will shut down beginning this year. And the state’s three remaining nuclear power plants are on a trajectory to prematurely close.

Unfortunately, this may only make it harder to meet the carbon-reduction goals. Across the country when nuclear energy facilities are closed, they are most likely to be replaced by carbon-emitting sources.

For Pennsylvania families not only may this lead to worsening air quality, but also the loss of up to 16,000 direct and related jobs supported by the existing nuclear power plants.

Gov. Wolf’s plan to reduce carbon pollution will be more difficult to achieve without the carbon-free power delivered by Pennsylvania’s existing nuclear power.

Maintaining the state’s nuclear fleet is key to achieving his decarbonization goals in the most expedient and cost-effective way possible.

Wolf’s executive order puts the state in a league with 20 other states that already set targets.

The order is nonbinding and does not require future governors to follow it after Wolf leaves office when his second term ends in 2023. Making major progress will likely require agreements with the Republican-controlled Legislature.

The order comes as operators of nuclear power plants in Pennsylvania seek a subsidy to remain open and Wolf's administration works to get tougher on methane emissions from Pennsylvania's vast natural gas exploration fields.

A 180-page draft plan produced in November by Wolf's administration gives a roadmap for how to achieve the emission-reduction goals. The biggest cuts, it says, would come from boosting the use of renewable energies, creating incentives to expand electric vehicle use and keeping nuclear power generation at current levels.

But maintaining nuclear-power generation is a key to achieving those goals, according to Talen Energy Corp., which owns the Susquehanna nuclear plant in Luzerne County. Susquehanna would experience a “financial shortfall” in 2020 without a subsidy, according to a state legislative report on nuclear energy released last year. In addition, Three Mile Island nuclear plant outside Harrisburg is set to close in September, and at least one other plant, Beaver Valley in western Pennsylvania, has threatened to shut down without state or federal assistance. (The Morning Call, 1/25/2019, The Morning Call, 1/8/2019)

President Trump Signs Nuclear Energy Innovation & Modernization Act

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President Trump has signed S. 512, the Nuclear Energy Innovation and Modernization Act (NEIMA), into law. The senators cosponsoring the bipartisan nuclear legislation include: Senators John Barrasso (R-WY), chairman of the Senate Committee on Environment and Public Works (EPW) and committee ranking member Tom Carper (D-DE), along with Shelley Moore Capito (R-WV), Sheldon Whitehouse (D-RI), Jim Inhofe (R-OK), Mike Crapo (R-ID), Deb Fischer (R-NE), and Joe Manchin (D-WV).

This law will:

  • make sure the United States remains a leader of nuclear energy innovation

  • create jobs

  • reduce carbon emissions in a meaningful way

  • bring greater transparency and accountability to the Nuclear Regulatory Commission’s spending

  • establish a licensing process for advanced nuclear reactors and other new technologies

  • create a new licensing framework for advanced reactors

  • adjust the fee structure as it applies to both traditional nuclear power plants and innovative reactors

  • ensure that the NRC will operate efficiently

  • provide the public greater clarity into the process by which the Nuclear Regulatory Commission (NRC) develops its budget and recovers its costs through fees

  • require the NRC to establish performance metrics and milestones for licensing and other regulatory actions.

  • equire the commission to develop a regulatory framework for America’s innovators, who seek to deploy advanced nuclear technologies.

  • direct the NRC to establish a pilot project to provide uranium producers predictable fees for routine licensing matters.

NEIMA was also cosponsored by Cory Booker (D-NJ), Bob Casey (D-PA), Tammy Duckworth (D-IL), Jeff Flake (R-AZ), Mike Rounds (R-SD), Chris Coons (D-DE), John Cornyn (R-TX), Orrin Hatch (R-UT), Gary Peters (D-MI), John Kennedy (R-LA), and James Risch (R-ID).

On March 22, 2017, the EPW committee passed NEIMA. On December 20, 2018, the Senate passed the bill by voice vote. On December 21, 2018, the House of Representatives passed the bill by a vote of 361-10. (Senate Environment and Public Works Committee)

Petition Asks Supreme Court To Deny New York ZEC Program

Several power producers joined the Electric Power Supply Association (EPSA) on Monday in petitioning the U.S. Supreme Court to review appellate court rulings upholding the New York and Illinois zero-emission credit programs.

Last September, both the 2nd and 7th U.S. Circuit Courts of Appeals rejected claims by EPSA and others that New York’s and Illinois’ ZECs, respectively, intrude on FERC jurisdiction. (See Appeals Court Upholds NY Nuclear Subsidies and 7th Circuit Upholds Ill. ZEC Program.)

EPSA on Jan. 7 petitioned the Supreme Court for writs of certiorari to review both decisions. The group was joined on the 2nd Circuit petition by NRG Energy, with the New York Public Service Commission and Exelon — and its three New York nuclear plants — named as defendants. Calpine joined the 7th Circuit petition in the case against the Illinois Power Agency, the Illinois Commerce Commission and Exelon.

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Exelon’s Byron Generating Station’s two nuclear reactors in Illinois produce more than 2,300 MW of electricity.

The New York PSC created the ZEC program in August 2016 as part of its Clean Energy Standard, which set a goal of reducing greenhouse gas emissions by 40% by 2030.

The PSC said it designed the program to avoid the issues behind the Supreme Court’s April 2016 ruling in Hughes v. Talen, which voided Maryland regulators’ contract with a natural gas plant as an intrusion into federal jurisdiction over wholesale power markets. (See NY Attempts to Thread Legal Needle with Clean Energy Standard, Nuke Incentives.)

The 2nd Circuit said that ZECs, like renewable energy credits, are certifications of an energy attribute separate from the purchase or sale of wholesale energy. Although the ZEC program “exerts downward pressure on wholesale electricity rates, that incidental effect is insufficient to state a claim for field pre-emption under the” Federal Power Act.

The court noted that the PSC avoided the defects of the Maryland contract for differences, which required the generator to participate in PJM’s capacity market.

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But EPSA attacked ZECs from a different angle in its petitions.

“The question presented is whether the FPA pre-empts only state subsidies that explicitly require a wholesale generator to sell its output in FERC-approved auctions, or whether the FPA also pre-empts state subsidies that lack such an express requirement but that, by design, subsidize only generators that sell their entire output via such auctions, thereby achieving the same effect,” both petitions said.

“This is not a situation in which further percolation in the courts of appeals is warranted. Indeed, delay risks long-term distortion of the energy markets,” the petitioners said. “The programs already in place are causing multibillion-dollar distortions and skewing decisions about long-term investment in energy generation.”

In addition, the petition on the Illinois ruling said the 7th Circuit’s “decision also rests on an erroneous understanding of the structure and operation of the Illinois ZEC program,” and that while “these factual and procedural errors were addressed in a rehearing petition, the court took no corrective action.”

U.S. Supreme Court

Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, said, “These arguments about the text of the FPA and the court’s 2016 Hughes decision largely repeat the generators’ briefs filed at the 2nd and 7th Circuits. In rejecting these arguments, the 2nd Circuit panel found it ‘telling that [the generators] cannot persuasively explain why FERC’s holding [disclaiming jurisdiction over RECs] does not apply equally to ZECs.’”

Peskoe pointed out that amicus briefs filed at the appellate courts explain that “a decision endorsing petitioners’ sweeping view of FERC’s authority over all payments received by generators would threaten existing renewable energy programs and deny FERC the opportunity to harmonize its market regulation with state programs.”

The 7th Circuit’s opinion cited the Hughes ruling, in which the Supreme Court said it did not intend “to foreclose [states] from encouraging production of new or clean generation through measures ‘untethered to a generator’s wholesale market participation.’”

“And that’s what Illinois has done,” the 7th Circuit said. “To receive a credit, a firm must generate power, but how it sells that power is up to it. It can sell the power in an interstate auction but need not do so. It may choose instead to sell power through bilateral contracts with users (such as industrial plants) or local distribution companies that transmit the power to residences.”

EPSA had contended that that Illinois’ ZEC program infringed on FERC’s jurisdiction by indirectly regulating interstate energy markets by using average auction prices as a component in a formula that affects the cost of the ZECs. But the 7th Circuit found the value of ZECs does not depend on the generators’ auction offers. (RTO Insider, 1/10/2019)

CPUC Adjusts San Onofre Settlement

The California Public Utilities Commission (CPUC) yesterday (July 26) made an adjustment to an agreement where ratepayers would pay $3.3 billion, or 70 percent, of the $4.7 billion decommissioning costs of the shuttering of the San Onofre nuclear plant. Subsequent lawsuits and events showed clearly that the closing of the plant was caused by management mistakes. 

Yesterday’s meeting trimmed only $750 million from ratepayer costs.

Duane Arnold Nuclear Plant in Iowa to Close Early

Duane Arnold Energy Center in Palo, Iowa’s sole nuclear power plant, will shut down in late 2020 — five years sooner than the current power purchase agreement between NextEra Energy Resources and Alliant Energy.  That agreement, which requires approval from the Iowa Utilities Board, means the plant is expected to cease commercial operations in 2020.  Alliant’s agreement with NextEra originally was set to run until 2025.

Duane Arnold, which first began producing power in 1975, is located about nine miles northwest of Cedar Rapids and is one of the larger employers in Linn County with 500 highly skilled employees.

Officials for both Alliant and NextEra said the existence of cheaper forms of energy prompted the decision to close Duane Arnold.  

As part of the new agreement, Alliant will make a $110 million buyout payment to NextEra in September 2020. That payment will cover the costs of shortening the power purchase agreement by five years.

Alliant said it had planned to submit an application to the Iowa Utilities Board to receive approval for the buyout.

NextEra owns a 70 percent stake in Duane Arnold, and 70 percent of the electricity produced there — about 430 megawatts — goes to Alliant. Des Moines-based Central Iowa Power Cooperative, or CIPCO, and Humboldt-based Corn Belt Power Cooperative own 20 percent and 10 percent stakes, respectively.

Duane Arnold

Duane Arnold

Under the new agreements, Alliant will purchase about 340 megawatts of energy from four existing NextEra-owned Iowa wind facilities.

After Duane Arnold shuts down and stops energy production in late 2020, the plant will have to go through a decommissioning process.  That process will include moving fuel rods from the plant’s reactor to a spent fuel pool, where it will cool for four to five years.  Once the rods are cool, they will be moved to dry storage at Duane Arnold.   (The Gazette)

Millstone to Compete In Zero Carbon RFP

Millstone

Millstone

In its request for proposals for zero carbon energy released Tuesday evening, the Department of Energy and Environmental Protection (DEEP) said it would let energy producers try to convince regulators they're "at risk" of closure before 2022. That could boost Millstone's proposals, as they'll be scored on environmental and grid benefits along with price.

DEEP's decision means as early as 2019, Millstone could potentially gain an advantage over facilities competing in the RFP, which is open to hydropower, solar and wind producers. Just a few weeks ago, DEEP said it wouldn't consider facilities "at risk" until 2023, igniting outcry from lawmakers and warnings from plant owner Dominion Energy that without full consideration of Millstone's benefits in the zero carbon market next year, the plant could face premature closure in a wholesale market dominated by natural gas.

Regulators created the "at risk" designation and let Millstone compete in the zero carbon RFP after state-hired consultants said premature Millstone closure would spark heavy job losses, grid unreliability and spikes in greenhouse gas emissions from replacement power sources. Millstone's two operating units are licensed until 2035 and 2045.

Dominion in May submitted a petition for "at risk" treatment with the Public Utilities Regulatory Authority (PURA), which included a full accounting of Millstone's audited financials. PURA is the agency that regulates the rates and services of utilities and telecommunications companies in the state. 

PURA signaled in July that Millstone could be "at risk" earlier than DEEP believed. PURA urged DEEP to "consider permitting more flexibility in its bidding and evaluation requirements" and to evaluate "on a case-by-case basis ... whether and when a resource is 'at risk.'"  Fuel security and economic impact were also among the factors weighed by regulators evaluating proposals from "at risk" facilities.

By October, PURA must determine whether confidential financial data turned over by Dominion proves Millstone is in financial peril.

DEEP says it will pick winners among zero carbon companies by late 2018 or early 2019. PURA will approve final contracts between energy producers and utilities by spring of 2019.

DEEP said it will hold a bidders' conference on Monday, Aug. 13, in New Britain. Proposals are due to DEEP by Sept. 14.  (The Day, 7/31/2018)

Entergy Agrees to Sell Pilgrim and Palisades

Entergy Agrees to Post-Shutdown Sale of Pilgrim, Palisades Nuclear Power Plants to Holtec International for Decommissioning

Pilgrim

Pilgrim

Entergy Corp. has agreed to sell the subsidiaries that own the Pilgrim Nuclear Power Station in Plymouth, Massachusetts, and the Palisades Power Plant in Covert, Michigan, after their shutdowns and reactor defuelings, to a Holtec International subsidiary for accelerated decommissioning.  The sales include the transfer of the licenses, spent fuel, and Nuclear Decommissioning Trusts (NDTs), as well as the site of the decommissioned Big Rock Point Nuclear Power Plant near Charlevoix, Michigan, where only the Independent Spent Fuel Storage Installation (ISFSI) remains. The transactions are subject to conditions to closing, including approvals from the U.S. Nuclear Regulatory Commission (NRC) of the license transfers. 

Palisades

Palisades

Assuming timely regulatory approvals, Holtec expects to initiate prompt decommissioning of Pilgrim in 2020, with the expectation that all major decommissioning work will be completed in approximately eight years.  A timeline for the decommissioning of Palisades will be developed closer to its shutdown.  For both Pilgrim and Palisades, Holtec expects to move all of the spent nuclear fuel out of the spent fuel pools and into dry cask storage within approximately three years of the plants’ respective shutdowns.

Entergy is seeking regulatory approvals to sell its subsidiary that owns the shutdown Vermont Yankee site by the end of this year.

Holtec and Entergy expect to file a license transfer request with the NRC in the fourth quarter of this year for Pilgrim, with transaction closing targeted by the end of 2019. For Palisades, the license transfer request would take place closer to its planned shutdown in the spring of 2022, with transaction closing expected by the end of that year.  (Entergy Press Release)

Arizona Renewables Ballot Initiative Violates Single Subject Rule?

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The Arizona Constitution contains a separate vote requirement provision that applies only to initiated constitutional amendments. This requirement states that multiple amendments must be voted on separately.  Arizona features rules preventing multiple changes to the constitution from being included in one initiated constitutional amendment.

The Renewable Energy for a Healthy Arizona Amendment violates this rule because it addresses two separate items: 1) 50% renewable energy requirement by 2030 and 2) Credit transfer program.   According to the Single Subject Rule, there should be a separate vote requirement for the credit transfer part of the REHAA.  The REHAA initiative has a provision that could 'sever' the Credit Transfer Program from the percentage renewables requirement, but the transfer component is so intricately intertwined with the other part of the initiative that it cannot be severed.  The initiative states:

Section 3. Severability

The People of Arizona declare their intention that the provisions of this Constitutional Amendment is held invalid for any reason, the remaining provisions of this Amendment shall be severed from the void portion and given the fullest possible force and application.

Renewable credits are transferable:

C. Renewable Energy Credits

          3. An owner of a renewable energy credit or distributed renewable energy credit may transfer such credits to another party.

Such a renewables credit transfer authorization basically establishes an alternative for meeting the annual renewable energy resources requirement.  There isn't much guidance in the transfer clause so there could be wide interpretations as to how participants can meet their annual renewable energy requirements.  The bottom line is that the credit provision appears to violate the Single Subject Rule.

In fact, participating utilities are required to use the credit system:

Section D. Annual Renewable Energy Requirement

          1. Each affected utility shall be required to satisfy an annual renewable      energy requirement by obtaining renewable energy credits from eligible renewable energy resources.

In fact, the credit transfer program is in direct competition with other credit trading programs:

D. Annual Renewable Energy Requirement

3.  An affected utility that trades or sells environmental pollution reduction credits or any other environmental attributes associated with KWH produced by an eligible renewable energy resource may not apply renewable energy credits derived from that same KWH to satisfy the requirements in this section.

The initiative clearly recognizes the transfer as being similar to Cap and Trade programs.  The important point is that it is a separate issue item that violates the Single Subject Rule.

This requirement clearly weds the credit trasfer portion of the initiative so closely to the 50% provision that it cannot be separated out via the severability section.  This conflict renders the ballot initiative null and void and the Secretary of State or the Attorney General should remove it from the November ballot.  (Ballotpedia)

Arizona House Bill 2005

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House Bill 2005 (HB 2005) was designed to make violations of the Renewable Energy for a Healthy Arizona Amendment a civil penalty, meaning electric utilities that violate the standard would be fined between $100 to $5,000.

On March 21, 2018, the Arizona State Senate passed the bill 16-12.

On March 22, 2018, the Arizona House of Representatives approved the bill 34-24.

Governor Doug Ducey (R) signed the bill on March 23, 2018.

The measure would require electric utilities that sell electricity in Arizona to acquire electricity from a certain percentage of renewable resources each year. The amount would increase each year from 12 percent in 2020 to 50 percent in 2030 and each year thereafter.

The measure would define renewable energy to include solar, wind, biomass, certain hydropower, geothermal, and landfill gas energies.

Clean Energy for a Healthy Arizona reported filing 480,464 signatures on July 5, 2018. At least 225,963 (47.03 percent) of the filed signatures need to be valid for the initiative to make the ballot.  (Ballotpedia)

Note: If the cost of noncompliance is cheaper than the cost of compliance, entities will pay the fines.