Is Exelon "The Boy Who Cried Wolf"

Right, would the plant fade away one by one...or would it be a race to the door?

Everyone it the energy sector is advocating for massive increases in prices...while the middle class and poor have a very poor increase in income. Usually the highest price sets the price for everyone else?

April 23, 2014, 3:01 p.m. EDT

Exelon Urges Lawmakers to Take Hard Look at Energy Policies to Preserve Benefits of Nation’s Nuclear Plants

William A. Von Hoene, Jr. explains to USEA public policy forum what’s at stake for the nation’s nuclear fleet

WASHINGTON, Apr 23, 2014 (BUSINESS WIRE) --Unless policymakers take action soon, a series of additional early nuclear power plant retirements could threaten the reliability of the nation’s electric grid and hinder the country’s ability to meet its carbon reduction goals, Exelon Senior Executive Vice President and Chief Strategy Officer William A. Von Hoene, Jr. told members of the United States Energy Association (USEA) today.
In a keynote address at the 2014 USEA Annual Membership Meeting & Public Policy Forum at the National Press Club, Von Hoene said that current government policies and market structures fail to account for the full value that nuclear power provides as an always-on source of carbon-free energy.
“The unfortunate reality for nuclear right now is that despite being the largest, most reliable and lowest-emitting power plants – and among the lowest cost – they are not getting recognized or compensated for those attributes,” he said.
In addition to low natural gas prices and slow demand growth, which have driven down wholesale electricity prices, Von Hoene pointed to market-distorting policies that subsidize renewable generation as part of a perfect storm of challenges threatening the continued operation of many nuclear plants.
“Renewable energy is an important and growing part of our own generation portfolio and a critical component of our efforts to advance clean energy,” he said, “but government policies designed to incent investment in low-carbon resources end up threatening that very goal by putting increased economic pressure on certain nuclear plants.”
Von Hoene said the performance of the nation’s generating fleet during the severe cold of the past winter underscored the critical role of nuclear plants in ensuring the reliability of the electric grid. At the height of the polar vortex, he explained, when some fuel sources faltered, the U.S. nuclear fleet continued to generate electricity at its usual, industry-leading productivity rates.
“Our nuclear fleet proved critical to keeping the lights and heat on for millions of homes and businesses,” he said. While the PJM electricity market serving large swaths of the Midwest and Northeast experienced record winter demand, most other resources experienced higher-than-expected outages rates. In fact, Von Hoene said, “many natural gas-fired plants didn’t run, either because they couldn’t get fuel, couldn’t start, or because other units were more cost-effective. Similarly, wind was generating at only about one-quarter of its nameplate.”
On the day after Earth Day, Von Hoene emphasized that, in the absence of a federal, market-based carbon policy, closing nuclear plants prematurely would deal a major setback to the nation’s efforts to reduce carbon emissions.
“We simply cannot achieve our emissions reduction goals without the U.S. nuclear fleet,” he said. “The loss of 25 percent of existing nuclear facilities would cut U.S. progress toward achieving its 2020 climate change goals in half. In fact, closing even a few nuclear plants could make achieving state and national carbon reduction goals difficult or impossible.”
Von Hoene emphasized the urgent need to repair policy shortcomings if the nation wishes to safeguard the value of existing U.S. nuclear plants and their role in ensuring a future energy supply that is reliable, clean and affordable. He also commended policymakers, including those at the Federal Energy Regulatory Commission, Department of Energy and state commissions, who have acknowledged the need for action.
“Our state and federal lawmakers need to seriously examine, now, how their policies must change if they want to preserve the benefits of the nation’s nuclear fleet,” he said. “This is a national challenge, and so we need attention of all of the nation’s policymakers to solve it.”

April 15, 2013 Comments of Exelon Corporation

Committee on Ways and Means

Energy Tax Reform Working Group
United States House of Representatives

Exelon's been blackmailing or threatening to shut down Quad Cities and Dresden for decades.

Coal and Nuclear Nearly Invisible at Platts Global Power Markets

The headline of this event report should come as no surprise. Although the event was kicked off by Exelon Generation President & CEO Kenneth Cornew, who sang the praises of his company’s “largest and best-run nuclear fleet,” otherwise only passing mention was made of the new nuclear units under construction in the U.S.

Cornew made the case for keeping nuclear in the fleet. This past winter demonstrated the need for reliable“always-on generation,” he began. With nuclear plants swerving into uneconomic positions as a result of low natural gas prices, even the Department of Energy is concerned about the viability of some of Exelon’s fleet, he said. However, retiring nuclear plants will make it “difficult to impossible” to reach the administration’s greenhouse gas (GHG) reduction goals—not to mention the goal of maintaining grid reliability. In the question and answer period, Cornew added that Exelon has three nuclear plants with economic problems—unless federal policy incentivizes nuclear clean energy as well as solar, he said. In another intriguing hint of what may lie ahead, Cornew noted they’d “have to see” if Exelon is “the right owner” of those nuclear plants, implying that that they might be better off under a regulated generator.

Despite the merits of nuclear capacity, nuclear was clearly not where other participants saw any business or market action. In the Wednesday project finance session, Donald Kyle, senior managing director of GE Capital Markets Inc., said his company sees a lot of greenfield gas projects ahead. And he was not alone in that view. Another field with enormous growth potential: energy storage. RES Americas Chief Development Officer Rob Morgan claimed, “We’re scratching the surface on storage.” (For a look at the state of energy storage technology and implementation, see “The Year Energy Storage Hit Its Stride” in the forthcoming May issue of POWERat powermag.com.)

What Exelon wants is for the high cost producers setting the price for all of the sources and then they could all gang up on the government. We should subsidize the rate payers and never Exelon's profits.

Chair Jerry Bloom of law firm Winston & Strawn LLP followed up by saying, “Everything is subsidized. . . . Shouldn’t we acceptsubsidies and just ensure they are available to all?” A little later, Todd Carter, president and senior partner of Panda Power Funds, said he didn’t think there should be any subsidies. Next into the fray was Exelon’s Cornew, who said we need to get the market rules right “for all technologies.”But how, asked Morgan of RES Americas, do we deal with externalities? Taxing carbon to level the playing field was his solution, even though there was limited optimism among his fellow panelists that the U.S. would see a carbon tax in the foreseeable future.

Exelon must shoulder financial burden of its nuclearplants

State bailout would insulate utility from cost of its decisions

March 30, 2014

A Tribune analysis has found that Exelon's six nuclear power plants in Illinois have failed to turn a profitduring the past five years. Exelon, the Chicago-based parent of Commonwealth Edison, said it may announce plant closings. We asked Exelon and the Citizens Utility Board to address the future of nuclear power in Illinois:

Over the last decade, Exelon has reaped more than $21 billion in profits, running a fleet of nuclear plants that benefited from high electricity prices.

But thanks to a surge in natural gas supply and increased energy efficiency, wholesalepower prices have fallen, and Exelon's business model isn't necessarily the winner it used to be.

As a result, the company is reportedly threatening to close as many as three of its six Illinois nuclear plants, unless state legislators force consumers to pay more to boost Exelon profits and minimize its market risk.

A bill that would insulate Exelon from the costs of its business decisions, while obligating consumers to pay the consequences, would be the financial equivalent of nuclear waste. Lawmakers should reject any one-sided proposal that causes this kind of fallout for consumers.

Not only does it pose risks for our pocketbooks, but it's also hypocritical. After all, Exelon advocated for the same energy markets it now bemoans.

And Exelon has opposed state support for its competitors' plants, suggesting that such aid illegally interferes with federal jurisdiction over power markets.

Though Exelon asserts the virtues of competitive markets in its rhetoric, its actions suggest that what it really wants is privatized profit and socialized risk — the worst of all worlds for consumers.

Yet it would be a mistake to assume that a deal would collapse simply because it's hypocritical.

Exelon has political power. And closing nuclear plants would threaten good-paying jobs, large amounts of carbon-free electricity and the local tax revenues generated by the sites.

So it is possible that Springfield will entertain proposals that leave ratepayers accountable for Exelon's plants.

If they do, lawmakers should follow three principles to protect consumers:

•First, risks and rewards should be shared equitably. If Exelon gets protection from market forces when prices are low, consumers must get protection when prices rise.

•Second, the state's power portfolioshould prioritize cost-effective clean energy resources. The clean energy economy — based on energy efficiency, the smart grid and alternative sources like solar — is key if we are to maximize consumer and environmental value.

•Third, any support must be based on a thorough and transparent analysis of Exelon's financial situation. We can't simply take its word that plants are losing money, especially when its overall fleet remains profitable.

Without these safeguards, consumers might be forced to consider taking shelter. Anything resembling a full-fledged bailout of Exelon's plants would be radioactive for our pocketbooks.

Kolata is executive director of the Citizens Utility Board, a nonprofit group that represents the interests of residential utility customers of Illinois.

 

Exelon CEO calls for US electricity market reform

10 April 2014 by Will Dalrymple

In a keynote address to the 29th Annual Platts Global Power Markets Conference, Exelon Generation president and CEO Kenneth W. Cornew said that competitive market rules and state and federal energy policies need immediate reforms to ensure a diverse, clean, reliable and affordable energy supply.

Cornew said the energy industry has experienced seismic shifts in how energy is produced and consumed, with an influx of low-cost natural gas, rapid expansion of subsidized renewable generation, smart grid deployment, behind the meter technologies and low demand growth combining to reshape the energy landscape. Market rules have failed to keep pace, he said.

"Rules that are in place today were designed for a fundamentally different energy market," Cornew said. "They need to be reformed to reflect our current environment and recent changes in how we produce and use energy."

He said that electricity demand during a cold snap this past winter demonstrated the problems with the current regime. Grid operators struggled to keep up with demand as many resources had high forced outage rates or were otherwise unable to perform. A large number of natural gas plants across the country were unable to get access to fuel, highlighting the consequences of an overreliance on gas generation. But nuclear plants, which have 18 months to 24 months of fuel on site, performed at a 95% capacity factor, a key measure of reliability.

"The current patchwork of state and federal energy policies subsidizing renewable energy do not properly compensate nuclear for its unrivaled reliability and 24/7 emissions-free energy"

However, flawed market rules and the current patchwork of state and federal energy policies subsidizing renewable energy do not properly compensate nuclear for its unrivaled reliability and 24/7 emissions-free energy, Cornew said. The problem is exacerbated in regions where low load growth and an oversupply of subsidized wind generation are driving wholesale energy prices even lower.

The combination of competitive market forces and artificial price suppression resulting from well-intended but poorly-designed energy policies could force some highly-efficient nuclear plants to shut down, threatening grid reliability and setting back efforts to meet the nation's carbon reduction goals, Cornew said.

"The economic viability of these highly reliable, low-carbon generation sources is at risk, not because they can't compete in the marketplace, but because they can't compete when the playing field is uneven," he said.

Exelon has long advocated for market-based policies that treat all carbon-free resources equally, regardless of technology, Cornew said.

"We need to better align our energy policies with our competitive market rules to ensure we have a clean, reliable and economic energy supply going forward," he said.

Power price recovery may be too late to aid its nuclear plants: Exelon exec

Las Vegas (Platts)--9Apr2014/1033 am EDT/1433 GMt

While Exelon expects a recovery in power prices, it may not come in time to save some of the company's nuclear plants, a senior company executive said in Las Vegas Tuesday.

"Nuclear power has taken the biggest punch" of all generation sources in the current low power price environment, Kenneth Cornew, president and CEO of Exelon Generation, said in an interview.

Exelon owns the largest fleet of nuclear power stations in the US. Of the company's total 35-GW power generation capacity, nuclear accounts for 55%. But several of those plants are "financially challenged," Cornew said.

The smaller, single unit plants, such as its 610-MW Ginna plant, are particularly challenged as are three of its five nuclear plants in Illinois. The Illinois plants are primarily challenged because of location. They are in places where large amounts of low-priced wind power comes into the system, depressing wholesale power prices, Cornew said. The busbar price at the Quad City plant on the western side of Illinois, for instance, has been $5-6/MWh below prices at the NiHub prices, he said.

In addition, the capacity revenues available from the Midcontinent Independent System Operator, are "negligible," Cornew said. That environment is even a challenge for Exelon's single reactor plant in Clinton, which is one of the newest nuclear plants in MISO, he said.

The owners of some power plants in MISO are able to earn higher capacity prices by exporting their capacity to the PJM Interconnection market. MISO's most recent capacity auction cleared at about $1/MW-day. PJM's last capacity auction cleared at $59.37/MW-day.

The problem is that a transmission link to PJM could be very expensive, but "we are exhausting every option, including linking the [Clinton] plant to the north or the east," Cornew said.

POWER PRICES 'TOO LOW'

Meanwhile, Exelon still believes power prices are too low. Forward prices are not reflecting market fundamentals in part because of a lack of liquidity in the market, which Cornew said is "as bad as it has been."

He attributed that to the fact that many banks are getting out of power trading and many participants are only buying for the short term because of the uncertainty created by the prospect of large numbers of coal plants retiring in the next couple of years due to pending environmental regulations.

As the level of coal retirements unfolds in 2015 and 2016, power prices should recover with the prospect of a "$2 to $4 expansion of heat rates," Cornew said. But, he added, "We can't afford to lose money until the recovery comes."

In the meantime, Exelon is advocating for changes in the way reliability is priced in the market, particularly in capacity markets. "Price formation this winter was a very positive sign," he said, with prices shooting up above the $1,000/MWh cap, he said.

That is an indication that more attention needs to be paid to winter peaks and suggests that there should be some sort of seasonal capacity market, Cornew said. The polar vortex events of this winter showed that the grid is vulnerable in the winter, not just during the summer peak season, he said.

One of the key issues that needs to be addressed is that all capacity should be treated equally, Cornew said. For instance, demand response should be required to bid into the day-ahead market just as other resources are and there should be limits on the ability of bidders to buy out their positions in the incremental auctions RTOs conduct in the periods between capacity auctions.

"As a trader it hurts me to say this, but capacity markets should focus on physical not financial assets. It is too easy to bid into PJM and buy back at a low price through the incremental auction or to only face a small penalty. Until that is fixed, we should focus on physical assets, not financial," he said.

Cornew had no specific, detailed recommendations for how such reforms should be implemented, but said that Exelon would continue to work through the stakeholder process to achieve those goals.

Ultimately, however, "if we cannot find a solution, we would move toward the option of closing plants," Cornew said. "We would focus on other technologies and businesses we can be good at and grow in." He mentioned that Exelon already has investments in both in the upstream and retail side of the gas business.