"Exelon's Proposed Acquisition of Pepco: Corporate Strategy at Ratepayer Expense"

The Institute for Energy Economics and Financial Analysis has released a new report, Exelon's Proposed Acquisition of Pepco: Corporate Strategy at Ratepayer Expense.

Here’s an overview, and here's a snapshot:

• The deal, if it goes through, would expose customers to rate increases aimed at supporting Exelon’s struggling business model;
• it would undermine the District of Columbia’s renewable-energy initiatives;
• and it would expose ratepayers to long-term risks that are significantly larger than the short-term protections and public benefits claimed by Exelon.

Exelon's "struggling business model"? Dirty, dangerous, expensive, age-degrading, and ever less competitive nuclear power plants, most of which are nearly a thousand miles away from Pepco's service area in D.C. and Maryland!

The full report is posted here.

Davis-Besse: Economic powerhouse, or house of cards?

"Nuclear power burning money" image, created by Gene Case of Avenging Angels, was featured on the cover of The Nation magazine. Used with permission of the artist.As reported by FierceEnergy, First Energy Nuclear Operating Company (FENOC) commissioned the Nuclear Energy Institute (NEI, of which it is a leading member utility) to publish a report on the economic benefits brought by the problem-plagued Davis-Besse atomic reactor to the Ohio economy.

Apparently, unlike in Illinois, where Exelon pressured th state legislature to order state agencies to write the report, FENOC had to turn to its own trade association and lobbying arm to do it. So much for even the pretense of objectivity. (But even the IL state agency reports showed the sky would not fall if Exelon's five reactors closed!)

Here is what Tim Judson, Executive Director of NIRS, had to say about the FENOC/NEI report:

"FirstEnergy and NEI are out with their own Exelon-like report claiming that Davis-Besse is indispensable. Might be good to cite to the Illinois agencies’ report yesterday saying Exelon and NEI basically exaggerated their doomsday predictions. The fact that Davis-Besse is only like 5% of the state’s generation capacity ought to make this whole thing laughable – especially given the untapped renewable energy and efficiency potential after the state suspended them last year – but the [FierceEnergy] article below also leaves out the piece that FirstEnergy is demanding at least a $182 million/year subsidy to keep [Davis-Besse] and its coal plants online.

That is actually based on the average contract price for all four plants FirstEnergy is trying to include in the contract. In reality, [Davis-Besse's] operating costs are higher than the coal plants – especially considering [FirstEnergy] is likely including the cost of replacing the steam generators (and, who knows, the shield [building] wall?). So the portion that is Davis-Besse costs are probably at least at the $71/MWh level Exelon is likely seeking for Ginna in New York, and maybe higher. But at that level, the ratepayer subsidy for Davis-Besse would be more in the $225 million/year range. Again, that would be a total cost above the market price of electricity."

"Has Exelon been crying wolf?"

A map of Nuclear Illinois, prepared by NEISAs reported by Kari Lydersen of Midwest Energy News in an article entitled "Illinois report says Exelon nuclear straits not so dire," a massive bailout of $580 million per year at ratepayer expense may not be justified. Chicago-based Exelon, the country's single largest nuclear utility, has lobbied the Illinois legislature for the hand out, in order to prop up five (of 11 still operating) atomic reactors in the state, at risk of closure due to their inability to economically compete on the open market. This report was mandated by a legislative resolution rammed through over public objections earlier this year due to Exelon lobbyist pressure.

David Kraft, Executive Director of Chicago-based Nuclear Energy Information Service (NEIS), was quoted:

“It’s only as bad as the state losing any other large employer...With proper response and planning, Illinois can get through this, and be stronger and further ahead in developing a true long-term energy plan than it otherwise would have done.”

Kraft said nuclear critics are still furious about the process resulting from the House resolution, which he characterized as “panic-peddling” driven by “half-truths.” He was upset there was no public input or oversight involved in the agencies’ report, but he is encouraged by the result nonetheless.

“Even though Exelon did their best to convince everyone that the sky is falling here in Illinois,” he said, “Even a poorly mandated, non-funded, abstract-model-heavy analysis could not reach that conclusion.”

See the map of Nuclear Illinois, prepared by NEIS (above, left). To see a larger format version of the map, and to learn more about Nuclear Illinois, visit NEIS's website section devoted to the topic.

Update on January 9, 2015 by admin

The Chicago Tribune has also reported on this story, in an article by Julie Wernau entitled "State plan would help nuclear plants by punishing carbon-based providers."

David Kraft is again quoted:

David Kraft, director of the Nuclear Energy Information Service, a Chicago-based watchdog group, said Wednesday that given that the report amounts to little more than free lobbying materials for Exelon, he felt the state agencies did a good job.

"We have been critical of this pseudo-process from its inception, pointing out early on its incomplete investigative scope, failure to provide for public comment, and lack of funding and resources to do a proper study that would yield valid results," he said.

Update on January 9, 2015 by admin

Both David Kraft of NEIS, and Tim Judson of NIRS, have pointed out that the IL state agencies' report focuses on the negative economic impacts of five atomic reactors closing, while ignoring the negative economic impacts of the $580 million/year ratepayer bailout mentioned above, as well as another $560 million/year subsidy sought by Exelon via PJM Independent System Operator market rule changes in favor of nuclear power.

David Kraft also points out that while Exelon brags about its reliability during last year's Polar Vortex, nuclear power's summer vulnerabilities -- to heat waves, droughts, and thermal discharge limitations. He pointed to NEIS's backgrounder "It's the Water, Stupid!", as well as David Lochbaum of UCS's "Got Water?" and "Nuclear Heat," as documenting these vulnerabilities.

Update on January 10, 2015 by admin

Even the conservative Chicago Sun Times editorial board has spoken out against the massive bailouts sought by Entergy, at ratepayer expense, in light of the IL state agency reports showing clearly that nuclear power plant shutdowns would not be the end of the world.