BUSINESS

Exelon to shut down Byron and Dresden nuclear plants

Kevin Haas
khaas@rrstar.com
Exelon plans to close the Byron Nuclear Generating Station in September without the passage of legislation in Illinois.

BYRON — The Byron Generating Station is slated to close next year, a move that will put hundreds of people out of work, strip millions of dollars in tax revenue from the community and potentially disrupt the state’s efforts to reduce carbon emissions.

Exelon, the power company that owns the Byron station, said Thursday that it intends to retire the plant in September 2021 and the Dresden Generating Station in Morris in November 2021.

Dresden was licensed to operate for a decade longer and Byron for 20 more years. The two plants employ more than 1,500 people full time, including roughly 730 in Byron.

Gov. JB Pritzker’s office noted Thursday that the company had threatened shutdowns before — most recently in 2016 — but reversed course after favorable legislation was passed under his predecessor. Any future legislation will be centered on consumers and the climate, Pritzker’s office said, adding that Exelon’s latest plans for closure must be accompanied by an open review of the company’s finances.

The Byron and Dresden plants, along with Braidwood Generating Station in northeast Illinois, have long been considered at risk of early closure because of persistently low power prices. In a filing with the Securities and Exchange Commission last year, Exelon said early retirement of all three plants was possible if they were not adequately compensated for “their ability to produce large amounts of energy without carbon and air pollution.”

Altogether, the two stations produce enough carbon-free emissions to power more than 4 million homes, according to the company. They account for roughly 30% of the state’s carbon-free energy.

“Although we know in our heads that shutting down the uneconomic Illinois plants is necessary to preserve even more jobs elsewhere, our hearts ache today for the thousands of talented women and men that have served Illinois families for more than a generation and will lose their jobs because of poorly conceived energy policies,” Christopher Crane, president and CEO of Exelon, said in a news release. “But we are only about a year away from shutdown and we need to give our people, the host communities, and regulators time to prepare.”

The two stations also generate millions of dollars in tax revenue and provide hundreds of thousands in charitable contributions to the two communities. Exelon pays $38 million a year in property taxes on the Byron facility, Ogle County tax records show, and the station contributes more than $300,000 to local charities each year, the company said.

“The plant really does provide kind of an economic baseline for the community,” Byron Mayor John Rickard said. “It feeds around the community a lot. Should this closure happen ... it will be devastating.”

The closure would cause ripples through the community of roughly 3,600 people. The city has worked to diversify its tax base and Thursday’s news adds urgency to that quest, Rickard said.

“The plant wasn’t always here. Byron was a community before the plant was here. It became a larger and different community with the plant here,” Rickard said. “Should the plant go away, we will continue to be a community of people who support each other, look after each other and try to look for the well-being of the city of Byron. It will be different, and I don’t know what that different is, but we will still be a community and we’ll just go into our next incarnation.”

Rickard said the city will reach out to state lawmakers to urge them to pass legislation that supports the plant.

Nuclear power stations have been unable to compete with the cheap power being produced from shale gas, often extracted through hydraulic fracking. Exelon has shut down other plants in recent years, including its Oyster Creek station in New Jersey in 2018 and Three Mile Island in Pennsylvania in 2019, as shale gas extraction has increased in the U.S.

Exelon has pushed for lawmakers to take over a critical part of establishing power prices in order to allow carbon-free sources of energy like nuclear plants to be paid more than natural gas and coal plants. But there’s been little movement on any legislation, and the company’s hopes for action in Springfield may have been upended by the bribery scandal embroiling its ComEd subsidiary.

ComEd’s admission in a deferred-prosecution agreement with federal prosecutors that it orchestrated a “yearslong bribery scheme” involving jobs and other payments to allies of House Speaker Michael Madigan has created trust issues for all Exelon entities, Crane told Crain’s Chicago Business earlier this month. Lawmakers are wary of taking any action that could be perceived as helping ComEd and Exelon, he acknowledged.

Before COVID-19 upended the world, Pritzker had made passing energy legislation one of his top priorities. The goal is to put Illinois on track for a carbon-free power industry by 2050. He revived that clean-energy push late last week, although he’s skeptical of Exelon’s proposal, Crain’s reported.

Instead, Pritzker supports a plan that sets a price on carbon emissions from power plants and lets the market determine which plants survive.

“The governor has been clear that establishing a program to reward clean energy sources and phase out dirty energy is a critical part of any comprehensive energy framework, but that framework needs to be developed based on a transparent understanding of the economics involved with the nuclear plants,” Jordan Abudayyeh, Pritzker’s press secretary, said in a statement emailed to the Register Star. “Any financial benefit to the nuclear plants must be right-sized and protect Illinois ratepayers.”

Exelon receives a ratepayer-funded subsidy of $235 million a year to run nuclear plants in Illinois as part of the Future Energy Jobs Act that was approved in 2016 and signed by then-Gov. Bruce Rauner. The bill provided Exelon with 10 years of subsidies in the form of zero-emissions credits.

“While they couch their messaging in their desire for a clean energy future, their primary purpose is to dramatically increase those subsidies on behalf of their shareholders,” Abudayyeh said. “Like the governor said earlier this year, transitioning to a clean renewable energy economy is a top priority for his administration, but the utility companies will not write the legislation to get the state there.”

In 2016, Exelon announced plans to shut down its nuclear plants in Clinton and the Quad Cities. Those closures were ultimately canceled after the passage of the Future Energy Jobs Act.

“We have seen these threats before, and this time Exelon’s threats will need to be backed up by a thorough and transparent review of their finances — including why the profits of the company as a whole cannot cover alleged operating losses at a few plants,” Abudayyeh said.

The Illinois Chamber of Commerce also called for Exelon to open its books to an independent third party.

"The Illinois Chamber was disappointed to learn that Exelon has once again threatened to close two of their nuclear facilities next year — plants that it has acknowledged continue to be profitable — unless they receive another bailout funded by ratepayers," Illinois Chamber President and CEO Todd Maisch said.

Crane said Exelon agrees with Pritzker on the need for policy reform to advance the state’s clean energy goals. He said that is separate from the decision to retire the Byron and Dresden plans, “which was not a decision made lightly and is one that has been in the works for some time.”

He said Exelon was willing to open its books to lawmakers, as Pritkzer has asked.

“We recognize this comes as many of our communities are still recovering from the economic and public health impacts of the pandemic, and we will continue our dialogue with policymakers on ways to prevent these closures,” Crane said. “To that end, we have opened our books to policymakers and will continue to do so for any lawmaker who wishes to judge the plants’ profitability.”

The Byron station has been online for 35 years. Construction of the facility began in 1975, and the Unit 1 reactor came online in 1985. The second reactor followed in 1987.

The plant generates enough electricity to power more than 2.3 million homes while preventing the release of nearly 12 million metric tons of carbon dioxide each year, according to Exelon.

Kevin Haas:khaas@rrstar.com; @KevinMHaas

Visitors take photos of a double rainbow that appeared above the twin cooling towers of the Byron Generating Station on Aug. 28, 2017, during an open house at the power plant.