Independent Auditors Recommend Financial Support for Illinois Factories: Corporate
April 20, 2021
An independent financial audit commissioned by the state of Illinois found that nuclear power plants in Byron and Dresden face a “real risk” of becoming unprofitable in the short term. State support could help keep factories safe to be part of a strategy for Illinois to switch to less carbon-emitting resources, according to the report.
Exelon’s six nuclear power plants in Illinois (Image: Exelon)
Exelon Generation announced last year that the two-unit nuclear power plants in Byron and Dresden would both be decommissioned in 2021, citing unfavorable market rules during the PJM capacity auction. At the time, the company warned that other factories were also at risk of prematurely closing due to these unfavorable market rules. In January, the Illinois Environmental Protection Agency commissioned Synapse Energy Economics Inc, based in Cambridge, Mass., To audit Exelon Corporation’s claims regarding the financial outlook of its plants in Byron, Dresden, Braidwood and LaSalle over a period of five and ten years. period of this year. Redacted from Synapse report has now been released by the state of Illinois.
The report uses a Monte Carlo simulation to identify a range of possible Net Present Values (NPVs) for the future operation of the units, representing a range of potential future market and operating conditions.
“As a private entity, Exelon will have profitable years and unprofitable years,” the report notes. Having said that, our analysis shows that Byron and Dresden face a real risk of becoming unprofitable in the short term. This has implications for Illinois policy goals as the power plants produce carbon-free electricity that is currently undervalued or even ignored in today’s wholesale electricity markets. The Braidwood and La Salle Exelon factories have not been identified as at risk of becoming unprofitable.
“State support for Exelon nuclear power plants could help provide certainty for the plants during the risk anticipation period,” he said, adding that such support could be part of a strategy for as the Illinois economy shifts to less carbon-intensive resources.
A program to provide financial support to existing factories – if Illinois decides it is “in the interest of the state’s public policy” – does not need to extend beyond five years because the 10-year NPV for all four plants is positive, Synapse said in its recommendations.
Exelon’s Clinton and Quad Cities factories are already receiving financial support in the form of zero-emission credits (ZECs) under legislation passed in 2016.
Exelon announced in February that it intends to separate its regulated utilities and competitive energy businesses into two publicly traded companies, and previously announced that it would withdraw its unprofitable assets.
Research and writing by World Nuclear News