Exelon: Still Time for Pennsylvania to Help Three Mile Island

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By Rebecca Kern

Pennsylvania’s legislature still has time to help keep Exelon Corp.'s financially struggling Three Mile Island nuclear plant operating, Exelon’s Joseph Dominguez told Bloomberg BNA.

“We’re continuing the discussion with policymakers that we really began six or seven months ago: talking about the value proposition of nuclear, both from an environmental standpoint, as well as from fuel diversity and grid resilience standpoint,” Dominguez, Exelon’s vice president of governmental and regulatory affairs and public policy, told Bloomberg BNA May 31.

Exelon announced May 30 that it plans to prematurely close Three Mile Island by Sept. 30, 2019, due to financial losses at the plant from low wholesale power prices tied to the natural gas shale boom. In a statement announcing those plans, the company identified some potential policies that could keep the plant viable, including amendments to the state’s Alternative Energy Portfolio Standard and the creation of a zero-emissions credit program.

“We’ll see if there’s interest among policymakers to do the things that Illinois and New York were able to do,” Dominguez said. “We still have some time to have this discussion, but there is a sense of urgency in terms of starting to introduce policymakers to the subject.”

Last year, the Illinois Legislature approved a $235 million-a-year lifeline for Exelon’s Quad Cities and Clinton reactors after the company announced they would close. Also, New York’s Public Service Commission’s Clean Energy Standard—passed last summer—will issue credits for zero-emitting resources, such as nuclear plants, starting this June. Both those policy changes have triggered lawsuits and complaints to the Federal Energy Regulatory Commission, which has been without a quorum since February.

Three Mile Island, located about 90 miles west of Philadelphia, was the scene of the worst commercial nuclear accident in U.S. history in 1979, with the partial meltdown of one reactor at the plant and a small release of radioactive material. The second reactor has been in operation since 1974.

‘Hundreds of Millions’ in Losses

Dominguez told Bloomberg BNA that the plant has lost “hundreds of millions of dollars” during the past six years. Dominguez said, however, even though the company has announced the closure, “it’s not too late” for the plant to be saved by legislation or action from the Pennsylvania Public Utility Commission.

“Generally speaking, about a year before the shutdown date is a critical date,” he said.

Dominguez said Exelon would like to see state lawmakers introduce a bill to amend Pennsylvania’s Alternative Energy Portfolio Standard to include nuclear energy as a carbon-free energy resource. The standard was signed into law in 2004 and provides credits on a tiered level for solar, wind hydropower, and other “alternative energy” sources.

This isn’t the first time that Exelon has cautioned states about the potential closure of nuclear plants: The company announced last June that it would close its Clinton and Quad Cities plants in Illinois by 2017 and 2018, respectively. State lawmakers passed legislation to bail out the plants in December.

“This is the firing shot in the big game of chicken in the state of Pennsylvania,” Rob Barnett, senior energy policy analyst at Bloomberg Intelligence, told Bloomberg BNA May 31. “They’re trying to say: ‘If you don’t give us some type of fix or subsidy, we’re going to close this plant.’ And if you look across the other states, [the] nuclear industry writ large has had a pretty good track record.”

Consumer Prices

Three Mile Island hasn’t cleared the regional grid operator PJM Interconnection LLC’s annual capacity market for the past three years. PJM’s capacity auctions, held annually, ensure that enough power generation resources are available to meet demand in the region comprising 13 states and the District of Columbia.

If Three Mile Island were to close, this would not affect PJM’s capacity auction plans, since the plant hasn’t been included in them for the past three years, according to William Nelson, U.S. power market analyst at Bloomberg New Energy Finance. Nelson told Bloomberg BNA that the plant’s closure could affect electricity prices for consumers down the line, however.

Exelon sent a letter notifying PJM of its intent to close the plant May 30, wherein the company said it has lost $300 million during the past five years. The company would have to notify the Nuclear Regulatory Commission by June 30 of its decision to close the plant.

A move to notify the Nuclear Regulatory Commission would be reversible, a company spokeswoman told Bloomberg BNA in an email. Dominguez’s description of one year before the plant’s closure as a “critical date” referred to the latest point in time when the company would be able to buy more fuel for the plant, the spokeswoman said.

Lawmakers Looking for Solution

Douglas Giuffre, IHS Markit’s director of North American power and renewables, told Bloomberg BNA that there is time for Exelon to find a solution that would keep Three Mile Island open.

“Exelon’s announcement was for fall 2019, so they’ve got time to lobby the legislators to find support,” Giuffre said.

Currently, there is no legislation introduced in the Pennsylvania Legislature. Dominguez said, however, that a bicameral Nuclear Energy Caucus, with nearly 80 members, was formed in March by state Sens. Ryan Aument (R) and John Yudichak (D) and Reps. Becky Corbin (R) and Rob Matzie (D).

Jake Smeltz, Aument’s chief of staff, told Bloomberg BNA May 31 that there is no imminent legislation in mind, but the goal of the General Assembly would be to find a policy that would embrace all of the technologies to the benefit of the state and its residents.

“We admit there’s a problem, now we need to figure out what would be most the appropriate solution within the confines of the Federal Power Act, the goals of state, and long-term best interests for consumers, the environment and the state economy,” Smeltz said. “If the General Assembly were to pursue some other level of compensation from the state, is that really resolving the underlying issue or are we are going to distort the market further?”

Governor: Let’s Talk

Pennsylvania Gov. Tom Wolf (D) said through spokesman J.J. Abbott that he is willing to talk with lawmakers about the issue.

“Pennsylvania is a major supplier of energy and we need a diverse energy sector,” Abbott told Bloomberg BNA in a May 31 email. “Governor Wolf is concerned about potential layoffs and empathizes with these employees.

“As we move forward, we expect a robust conversation about the state’s energy sector. Governor Wolf is open to these conversations and looks forward to engaging with the General Assembly about what direction Pennsylvania will go in regards to its energy sector, including the future of nuclear power.”

To contact the reporter on this story: Rebecca Kern in Washington at rkern@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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