ELECTRIC POWER returns to Chicago in April 2015, and the timing couldn't be better for what is shaping up to be a competitive battle between regulated utility Exelon and independent power producer NRG Energy.
Recall that earlier this year, Chicago-based Exelon said that it would consider shutting down nuclear plants if it didn't see a path to steady profits from those generating assets.The company’s fleet of nukes have struggled to remain profitable as they compete with renewable resources and natural gas-fired generation. The combination of subsidized renewable energy and low-cost natural gas have driven down wholesale electricity prices in the PJM region, where several Exelon nuclear plants operate.
At the same time, NRG Energy in early April completed its purchase of generating assets formerly owned by Edison Mission Energy, including several coal-fired power plants in and around Chicago. Those assets were known as Midwest Generation under Edison Mission's ownership. During a quarterly earnings conference call in early May, David Crane, NRG CEO, sought to clarify comments he made earlier this spring about Exelon's nukes. On the conference call, he said most media reports focused on the fact that he found it ironic that Exelon would seek a subsidy for its nuclear plants, on the grounds that the units provide zero-carbon energy, at the same time it was lobbying to end tax breaks for wind and solar, which also have no carbon emissions. Exelon's stance on subsidies for renewables got it kicked out of the American Wind Energy Association a couple of years ago.
Crane was quoted on the earnings confernce call as saying, "I am not fundamentally opposed to subsidies if the primary goal of the new subsidy is to ensure that enough existing base load capacity is retained in the market to provide reliability even during severe weather events affecting the system." He said NRG Energy's newly acquired coal plants near Chicago "can keep the lights on as well, if not better, than operationally inflexible nuclear plants located further away from the load center."
Coal plants may not be as operationally flexible as many gas-fired generating assets, but operators in recent years have learned how to ramp coal-fired units to follow load, a technique that remains difficult for nuclear units.
Crane continued, saying, "it is our opinion that any scheme devised… to keep existing solid fuel-fired capacity alive in Illinois as a necessary base load complement to all the wind generation coming into Illinois from the Dakotas, should treat Midwest Gen's fleet as well (as), if not better than, economically marginal nuclear plants."
He said that a clear trend exists that favors an all-gas-all-the-time system. "And so to us there is tremendous value in not only having gas plants but having coal plants continue and nuclear and even our oil plants." He concluded by saying, "So we certainly are going to try and do that but you can't keep plants open if they are just losing money hand over fist."
NRG Energy currently is evaluating its newly acquired Chicago-area assets. At the same time, Exelon is considering what the future may hold for its nuclear power plants. Decisions made by both companies in the coming months no doubt will be in play as ELECTRIC POWER 2015 convenes in Chicago April 21-23. http://www.electricpowerexpo.com/
–David Wagman, Content Director, ELECTRIC POWER
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