Exelon Corp. announced Tuesday that all of its Illinois nuclear plants in PJM's territory, including the Quad-Cities Generating Station, cleared in the power grid operator's transition capacity auction.
The news means the plants, including the economically troubled Cordova plant, can sell supplemental power to the grid in the 2016-2017 planning year. It is positive news for the Quad-City facility, which a week ago, lost out on its bid to sell power to the grid in PJM's 2018-2019 planning year.
The Quad-City facility is one of three Illinois nuclear plants that Exelon has threatened could face a premature closure because they are not competitive with other energy producers that are collecting billions in state and federal subsidies. The other Exelon plants are Byron and Clinton.
"Clearing this auction was vital to Quad-Cities station," said Bill Stoermer, Exelon communications manager. "This ensures that Quad-Cities has a financial commitment with PJM to sell power into 2017."
"These auction results as well as other factors are being considered as we continue to analyze the current and future economics of Quad-Cities station."
PJM administers the wholesale power market for the upper United States and holds capacity auctions annually to ensure enough power is being generated to meet demand. The grid operator's region covers all or part of 13 states and the District of Columbia. Transitional auctions supplement the prior base capacity auctions.
The other Illinois Exelon plants to clear the auction are Braidwood, Byron, Dresden and LaSalle.
"We continue to be encouraged by these auction results, which along with EPA's Clean Power plan, begin to properly value nuclear power for the reliability and low-carbon benefits," Exelon president and CEO Chris Crane said in a news release announcing the latest auction results.
Exelon has said Illinois cannot achieve the new EPA regulations for states to reduce emissions by 2022 without all of the current nuclear plants remaining in operation.
While calling the auction results "great news for Quad-Cities Station," Stoermer added, "the crisis we continue facing involving the long-term future operation of the plant has many components. The future of 800 Quad-City region full-time jobs and millions (of dollars) in economic activity hang in the balance, while consumer prices and reliability across the state of Illinois will be negatively impacted if the plant were to close."
According to Exelon, this is the first of two transitional auctions PJM is holding to supplement its previous base capacity auctions for the 2016-17 and 2017-18 planning years under PJM's new capacity performance reforms.
The new capacity auction rules were ordered by the Federal Energy Regulatory Commission, or FERC, to ensure reliability given the changing nature of the generation fleet as more intermittent renewable and gas-fired generation comes online. The reforms also are designed to spur investment in power plants to ensure reliability during extreme weather events and to have sufficient fuel on hand.
Exelon has said it spends nearly $1 billion annually to upgrade its nuclear plants with the latest technologies and to keep them operating safely and reliably.
According to Stoermer, Illinois' 11 reactors produce nearly half of the state's electricity "with no carbon emissions, and we believe the state needs to enact an energy policy that ensures the future for Illinois power generators."
Exelon has been lobbying Illinois legislators for a proposed Low Carbon Portfolio Standard, which would require utilities with 100,000 customers or more to buy an amount equal to 70 percent of the electricity used on the distribution system from low-carbon sources, including nuclear, wind, solar, hydro, tidal and clean coal.
"Current energy policies completely fail to value the tremendous environmental and economic benefits of 24/7 nuclear power," Stoermer said.
Exelon said the capacity market reforms are being implemented at a time when the PJM region is experiencing its lowest wholesale electricity prices in 10 years.
The company declined to disclose whether its plants outside Illinois cleared the auction, citing competitive reasons. The 2017-2018 transition auction will be next week.