Exelon CEO endorses nuke bailout, punts on leaked DOE memo
The CEO of the largest U.S. nuclear operator on Wednesday urged the federal government to take urgent action to halt the retirement of nuclear power plants, but stopped short of endorsing the framework for emergency action outlined in a Department of Energy memo leaked last week.
Exelon CEO Chris Crane said there is “not enough information to pass judgment” on the DOE memo, which advocated the agency use its emergency authority and a Cold War-era law to keep plants online, but he said federal authorities need to act "before we lose these units and they can never come back."
Crane’s comments at the annual convention of the Edison Electric Institute came a day after he told Utility Dive that conditions in PJM, the largest U.S. electricity market, do not constitute a grid emergency that warrants immediate action. Crane said ISO-New England may be “starting to see” emergency conditions in winter, but did not alter his statement on PJM.
A day after he questioned the justification for emergency intervention in wholesale power markets, Crane said Wednesday he aimed to “clarify” his company’s stance on saving coal and nuclear plants.
“I don’t know whether you call it emergency or non-emergency. We want action,” Crane told reporters after a panel appearance at the EEI conference. “This administration supports action. We support this administration.”
Last week, President Trump directed Secretary of Energy Rick Perry to recommend steps to save coal and nuclear plants from closing. The order came a day after the release of a DOE memo outlining how the agency could bail out the generators using its emergency authority under the Federal Power Act and the Defense Production Act, a 1950s law that allows the DOE to nationalize parts of the power sector in wartime.
Crane declined to comment on the specifics of the memo, which appears to be an addendum to a draft DOE order that was not released, saying there is “not enough information for us to pass judgment on it.”
“That gives us the framework but it doesn’t give us enough to know to say that is the right design,” he told the EEI audience.
Exelon owns 16 nuclear plants across the Eastern U.S., including four slated for closure in the coming years. Crane on Tuesday said he wants to work through established processes at regional grid operators and the Federal Energy Regulatory Commission to save his plants, particularly FERC’s open proceeding on grid resilience, set up in January when regulators rejected an earlier subsidy plan from DOE.
Crane on Wednesday urged FERC to complete that initiative quickly, before nuclear plants retire.
“We need to get the insight on what the design basis needs to be and expedite the resilience review before we lose these units and they can never come back,” he said. “Today, the way the markets are designed in New England and PJM, they do not take fuel diversity and resiliency into capacity market design to the level it needs to be to maintain the resiliency of the system.”
DOE officials argue subsidies are justified because the retirement of coal and nuclear constitutes a grid emergency that threatens national security. Crane on Tuesday said PJM’s high reserve margin — 22% in its latest auction — makes it “hard to declare an emergency” in that market, but said ISO-New England faces bigger challenges.
Crane did not address his PJM comments on Wednesday, but said emergency conditions could emerge soon in ISO-NE.
“How do you define an emergency? Well, we’re starting to see that in New England, the filings in New England where they’re saying we have to put fuel into the mix on resiliency and the design for reliability,” Crane said.
One of those filings directly involves Exelon. ISO-NE last month asked FERC to provide cost recovery to a Boston gas plant owned by the company, arguing its retirement would likely mean the closure of a nearby LNG import facility the grid operator says is essential to supply generators during the winter.
Crane on Wednesday praised efforts from DOE and FERC to enhance planning between the power and gas sectors, which he said “have never been designed and coordinated together.”
“What’s the vulnerability if one or two gas lines go down from a natural disaster or a terrorist attack?” he asked. “That analysis has to be done and that’s the analysis the government is taking on.”
The Exelon CEO also called for greater resource planning in wholesale power markets, saying he sees the DOE’s national security review of coal and nuclear plants as part of that effort.
“When you take the Eastern Interconnect, you look at the different ISOs that operate, the seams that we have, and we don’t have resource planning to say this is the type of power — the baseload, the mid-merit, the peaking, the renewables — to work into it,” Crane said. “That’s I think what the administration is doing now on really pushing not only price formation to make sure the units are adequately compensated, but the resiliency review for the unintended consequences of driving plants out of the stack that we need for reliability.“
“Getting the market design right and looking at the resiliency is really a part that we need federal intervention on,” he said.
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