Exelon to close Byron and Dresden plants in 2021

August 27, 2020, 1:56PMNuclear News

Exelon Generation, operator of the largest nuclear reactor fleet in the United States, intends to downsize that fleet next year by retiring its Byron and Dresden plants. In an announcement released early this morning, Exelon said that the two-unit Byron, located near Byron, Ill., would be permanently closed in September 2021, followed in November by the two-unit Dresden, located in Morris, Ill.

Byron is licensed to operate for another 20 years; Dresden, a much older facility, is licensed for another decade.

What they’re saying: “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,” said Christopher Crane, president and chief executive officer of Exelon Corporation. “But we are only about a year away from shutdown, and we need to give our people, the host communities, and regulators time to prepare."

Crane added, “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. 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.”

Exelon’s explanation: Byron and Dresden, despite being efficient and reliable units, face revenue shortfalls in the hundreds of millions of dollars because of declining energy prices and market rules that allow fossil fuel plants to underbid clean resources in the PJM Interconnection capacity auction. The plants’ economic challenges are further exacerbated, the company said, by the December 2019 Federal Energy Regulatory Commission order regarding PJM’s forward-looking capacity auctions, which instructed PJM to expand its minimum offer price rule (MOPR) to include new and existing energy resources, such as nuclear, that receive state subsidies. In Exelon’s view, the MOPR will discourage clean energy resources from entering the capacity market.

Not really a surprise: Exelon warned last year that it would be forced to shutter nuclear plants in Illinois unless state lawmakers passed legislation in 2020 to aid the utility’s financially troubled facilities. In a third-quarter earnings call with analysts last October, Crane made the company’s position abundantly clear, stating, “Plants will shut down. That’s the reality if something doesn’t happen in the spring. … Something we’re not going to do is sit around and damage the balance sheet. We can’t sit here and bleed cash and build up debt.”

Readers may recall that following a June 2016 statement from Exelon regarding its intention to close its Clinton and Quad Cities plants, legislation ensuring their continued operation was signed into law in Illinois in December that year.

Why it matters: Byron and Dresden supply zero-emissions energy to more than four million homes and businesses in northern Illinois and, according to Exelon, employ more than 1,500 full-time staffers and 2,000 supplemental workers during refueling outages and pay nearly $63 million in taxes annually to support local schools, fire, police, and other services.

Next: Exelon said that in the days and weeks ahead, it will file a deactivation notice with PJM and inform key stakeholders and regulatory agencies of the retirements. In addition, the company plans to make official shutdown notifications to the Nuclear Regulatory Commission within 30 days, terminate capital investment projects required for long-term operation of Byron and Dresden, and scale back the refueling outages scheduled for this fall at the plants. The move will result in spending reductions of $50 million and the elimination of up to 1,400 of more than 2,000 mostly union jobs typically associated with the two refueling outages, according to the company.


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