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article imageExelon CEO — No grid emergency to justify DOE coal, nuke bailout

By Karen Graham     Jun 6, 2018 in Politics
The CEO of the largest nuclear generator in the U.S. says the retirement of coal and nuclear plants does not constitute a grid emergency that warrants urgent intervention from the federal government, as President Donald Trump directed last week.
Exelon CEO Chris Crane said its difficult to make a case for a grid emergency in the PJM Interconnection when there are so many potential retirements - and when its reserve margin remains so high — 22 percent in its latest capacity auction. The company has not advocated for emergency action to save plants from retirement, he said.
The PJM Interconnection procures electricity to meet consumers’ demands both in real time and in the near term. It includes the sale or purchase of energy in PJM’s Real-Time Energy Market (five minutes) and Day-Ahead Market (one day forward).
Crane would rather see Exelon working with Federal Energy Regulatory Commission (FERC) and regional grid operators in creating market-based plans that would take into account the resilience of generators. Crane also suggests the Department of Energy and other federal agencies need to work with grid operators in defining the "specific nature of national security threats to the grid."
Order to halt the closure of coal and nuclear plants
Last Friday, President Donald Trump directed Secretary of Energy Rick Perry to recommend steps to bail out coal and nuclear power plants that he claims are being pushed offline by cheaper natural gas and renewable energy sources.
The president's directive came on the same day the DOE released a 40-page draft memo, obtained by Bloomberg News.
The memo advocates a two-year plan to bail out failing coal and nuclear power plants using its power under Section 202 of the Federal Power Act and the Cold War-era Defense Production Act.
According to the memo, the Energy Department is to instruct grid operators to purchase power from a list of designated plants. This intervention would last for two years, allowing time for a federal study of vulnerabilities in the U.S. energy delivery and grid system.
The move is also in line with many of Trump's top supporters, including coal moguls Robert E. Murray and Joseph Craft of Alliance Resource Partners, who donated a million dollars to the president’s inauguration.
Oyster Creek Nuclear Power Plant in 1998  at the time it was owned and operated by GPU. Oyster Creek...
Oyster Creek Nuclear Power Plant in 1998, at the time it was owned and operated by GPU. Oyster Creek is scheduled to be permanently shut down by October 2018.
Exelon's position
Exelon owns all or part of 16 nuclear power plants across the Eastern United States. The company generates revenues of approximately $33.5 billion and employs approximately 34,000 people, according to the company website.
Exelon and other nuclear power plant operators contend that zero-carbon nuclear plants are much better than natural gas or coal at fighting climate change, a well-known point in their favor. However, there are 99 licensed nuclear power plants in the United States and five has been shut down in the last five years.
Even so, Crane would not like to see the DOE enact any recovery or subsidy arrangements for generators under threat of closure.
"We would much prefer a market fix that is based on a design basis that says 'Here's your vulnerability' and here's what plants should be compensated at,'" Crane told Utility Dive Tuesday on the sidelines of the Edison Electric Institute's annual conference in San Diego.
While DOE Secretary Rick Perry argues that the retirement of "fuel secure" coal and nuclear power plants constitute a grid emergency and a threat to national security, Crane disagrees. "It's hard to declare an emergency in PJM when you have a high reserve margin," he said.
More about Bailout, coal and nuke plants, Electrical grid, Doe, Exelon
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