Illinois Nuke-Plant Exits Poised to Gut Small-Town Budgets

(Bloomberg) -- Two Illinois communities are getting a lesson in the dangers of relying too heavily on one taxpayer as Exelon Corp. prepares to close a pair of nuclear power stations next year, eliminating thousands of well-paying jobs and eviscerating local budgets.

Illinois’s largest electric utility announced in August it will close a money-losing plant near Byron next September and its Dresden generating station a hundred miles away two months later. The company blames federal regulators for changing rules and making nuclear power less competitive in the biggest U.S. regional power market that stretches across 13 states. Illinois Governor J.B. Pritzker has indicated he’s not going to let one company that’s looking for more subsidies dictate energy policy in his state.

The shutdowns underscore the deep financial risk to small communities with economies tethered to single employers or industries, a dependence that’s likely to get increasingly perilous nationwide as the deepest recession since World War II drives a wave of corporate bankruptcies. Carlton, Wisconsin, lost almost 70% of its revenue when a nearby nuclear plant was shut in 2013.

The Byron Community Unit School District 226, about 96 miles (154 kilometers) west of Chicago, relies on the local Exelon plant for about three fourths of its property taxes. Revenue from the stations also funds libraries, fire districts and forest preserves.

“It would be devastating,” said Buster Barton, superintendent of the school district, where roughly a quarter of the almost 1,500 students are low income.

Exelon and other nuclear operators have shut at least 11 U.S. reactors since 2013 and pressed legislatures for subsidies to keep others running. New York, New Jersey and Connecticut implemented subsidies to keep stations open. Exelon closed its Three Mile Island facility in Pennsylvania last year after a proposed bailout bill foundered.

The Byron plant has operated in Ogle County for three decades and the Dresden facility in Grundy County for 40 years, and the two counties together are home to about 102,000 residents. Combined the two plants employ more than 1,500 full-time and 2,000 supplemental workers and pay nearly $63 million in local taxes, according to Exelon.

“Nothing on the horizon that would replace that amount,” said Dean Marketti, treasurer for the Coal City Fire Protection District, which serves 10,000 residents from two stations. The Dresden station makes up half the tax receipts for the fire district and more than 10% of surrounding Grundy County’s gross domestic product.

Clean Energy

Tax revenue from the Dresden facility provides about $16 million of the $34 million annual budget for Coal City Unit School District 1. The district, which doesn’t get as much state aid as its peers for classroom needs or extracurricular activities, now has to figure out whether it will need to cut services, raise taxes or take on debt to make up for the loss.

“We are not going to be able to find enough revenue or cuts to keep everything stable,” said Superintendent Kent Bugg, who added many of the district’s families depend on the “high quality jobs and high quality benefits that are hard to come by.”

Illinois legislators were expected to consider a clean energy law this year that might have included subsidies to nuclear plants, but much of the legislative agenda has been derailed by the pandemic. Nuclear power is considered clean energy because it produces little carbon emissions.

To keep the plants open, the legislature now has about six months to vote on a bill and put on Pritzker’s desk. But helping Exelon comes with political risk after the company’s Illinois utility unit Commonwealth Edison admitted to bribery and agreed to pay $200 million to resolve a federal probe that’s entangled state House Speaker Mike Madigan.

Lawmakers have been looking at the creation of a market for clean energy that’s separate from the current auction process that looks for the cheapest priced fuel, which often isn’t nuclear, according to state Senator Sue Rezin. The Republican’s district includes three of Illinois’s six nuclear power plants.

“The clock is ticking,” Rezin said.

Snap Decisions

While Pritzker is all for adding more clean energy jobs, he’s not interested in increasing subsidies for Exelon, which has threatened to close plants before, said Pritzker spokesperson Jordan Abudayyeh. Exelon gets a ratepayer-funded subsidy of $235 million a year to run other Illinois plants, she said.

Michael Pacilio, chief operating officer of Exelon Generation, the company’s unit that oversees the Illinois plants, said plans to close the plants “aren’t snap decisions” and the decisions were made because they aren’t profitable anymore after fracking and natural gas changed the game, he said.

“It’s really a matter of recognizing the societal benefits those plants bring, to America and to the world, and compensating them,” Pacilio said.

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