The fate of two Exelon (EXC) nuclear power plants in Illinois is up in the air - and it will be up to the state's legislature this week to decide whether or not they will survive.
The Illinois General Assembly will meet today through Thursday in a special session. On the table is SB2814, the "Future Energy Jobs Bill," which proposes to give Exelon plants in Clinton and the Quad Cities large subsidies by purchasing "zero emission credits" from the nuclear facilities.
The zero emission credits essentially reward the nuclear plants for their low carbon outputs. Exelon successfully pursued the ZEC strategy in New York earlier in 2016. The New York State Public Service Commission approved a clean energy standard on Aug. 1 that gives ZECs to Exelon plants in Oswego and Ontario.
Exelon has warned that up to 4,200 jobs will be lost if the Illinois bill fails.
The plants will "definitely" shut down if the bill doesn't go through, Morningstar analyst Travis Miller said in a phone interview. "State support is critical if Exelon is willing to keep the plants running."
The bill failed to pass when it was first introduced in May after lawmakers balked at the potential electric rate hike that residential users would face as a result of the subsidies. The latest version of the bill, introduced on Nov. 15, contained tweaks that further enraged its opponents and drew the ire of environmental groups that had supported the bill in its original form.
The new bill included language which would have given subsidies to coal plants owned by Dynegy (DYN) and made it so that Illinois electric customers' bills would be calculated according to peaks in their consumption rather than by overall usage. Both provisions were later scrapped alongside other modifications, which dropped the total cost of the subsidy to about $235 million annually from $285 million.
The changes haven't pleased everyone, though the bill easily passed through Illinois' House Energy Committee.
"This enterprise began as a nuclear bailout and it will end as a nuclear bailout," BEST Coalition director Dave Lundy told the Chicago Tribune Monday. The BEST Coalition is an organization of business and consumer groups that says the bill will increase electricity rates by an average of $4.20 a month and hurt customers.
Exelon's electricity utility company in Illinois, ComEd, previously said that the bill would result in rate increases of 25 cents on average. ComEd senior vice president Thomas O'Neill told the Tribune that the bill as presently modified would cost consumers "substantially less" than 25 cents per month but that ComEd did not know exactly how much less.
"You can't please everybody all of the time," Miller said. "And Exelon is finding that out."
In the meantime, Exelon is touting business organizations that have thrown their support behind the bill, such as the Illinois Black Chamber of Commerce, Illinois Retail Merchants Association and Illinois Municipal League.
"We are encouraged by the strong and growing level of support from interests representing a broad cross-section of our economy," Exelon executive vice president Joe Dominguez said in a statement. "We will continue to engage with all stakeholders to refine the bill so that we can arrive at the best possible solution for our customers and the state of Illinois."
The bill will surely be modified further before it gets to Governor Bruce Rauner's desk for approval. In the meantime, the two plants face an uncertain future.
"Exelon is a top-tier operator of nuclear plants," Miller said. "If Exelon can't operate some profitably, no one can operate them profitably."