Exelon to Shut Three Mile Island Nuclear Plant

(Bloomberg) -- Exelon Corp. says it’s moving forward with plans to close the Three Mile Island nuclear plant in Pennsylvania after a bid to bail out struggling reactors has failed to advance in the state legislature.

Saying it’s clear legislation won’t pass in time to save the plant, Exelon will shutter the reactor -- site of the infamous 1979 meltdown -- by Sept. 30 as previously announced, according to a statement Wednesday. The company has lobbied for legislation to subsidize Pennsylvania’s nine reactors with an estimated $500 million a year from ratepayers.

Exelon to Shut Three Mile Island Nuclear Plant

Reactors have won subsidies in New York, Illinois and New Jersey as lawmakers decided that the value of pollution-free power and the need to preserve jobs outweighed concerns that nuclear operators were exaggerating their economic plight. In Pennsylvania, which sits atop a prolific shale gas formation, the effort to prop up reactors drew opposition from backers of both fossil fuel plants and renewable energy.

“Time may have run out for Three Mile Island, but the fight is not over for the rest of our nuclear fleet,” Representative Tom Mehaffie, author of the bill in the Pennsylvania House of Representatives, said in a statement.

Exelon to Shut Three Mile Island Nuclear Plant

Three Mile Island is a single-unit 837-megawatt reactor near Harrisburg, Pennsylvania that generates enough electricity to power 800,000 homes, according to Exelon’s website. It became infamous in 1979 when one of the units partially melted down, marking the worst nuclear accident in the U.S. history.

Some Pennsylvania lawmakers and regulators questioned the need to bailout every reactor in the state, most of which are profitable, according to Monitoring Analytics, the independent market monitor for the region’s power grid. Three Mile Island is the only one in the state that’s on pace to lose money through 2021, the monitor found.

Andrew Place, a member of the state’s Public Utility Commission, criticized the legislation in an April 18 letter to lawmakers, saying it failed promote renewable energy or require proof that reactors needed subsidies. Nonetheless, closing Three Mile Island is likely to increase pressure on lawmakers to pass a bill this fall, Height Securities LLC analyst Josh Price said in a research note.

What Bloomberg Intelligence Says

“Having won subsidies totaling $800 million a year in three states, nuclear giant Exelon’s loss in Pennsylvania sends a warning to financially shaky reactors.”

-- Kit Konolige, senior utilities analyst
Click here to view the research

“While these discussions are just beginning, the high-pressure environment catalyzed by the TMI closure announcement could produce the kind of grand bargain necessary to see a nuclear bailout bill pass this year,” Price wrote.

Exelon, which said it needed legislation to pass by June 1 before the company would invest in refueling Three Mile Island, said it will continue to press for state aid.

“While TMI will close in September as planned, the state has eight other zero-carbon nuclear units that provide around-the-clock clean energy, avoiding millions of tons of carbon emissions every year,” Kathleen Barron, Exelon senior vice president of government and regulatory affairs and public policy, said in the statement.

Only Three Nukes on America’s Biggest Grid Seen Losing Money

Even if lawmakers go back to the drawing board and come up with an amended bill that could gain support, it’s unlikely to be finalized by June 1, Exelon said. Barron said the company will continue to work toward a solution that will benefit the remaining eight reactors in the state.

A similar debate is playing out in Ohio, another gas-rich state. But there’s a key difference. Republicans control both chambers of the state legislature and the governor’s office. That leaves Democrats, who have pushed to support wind and solar, with little leverage. A measure to assist two struggling plants owned by bankrupt FirstEnergy Solutions Corp. would pay for subsidies by eliminating a mandate to fund renewable and energy efficiency programs.

“Ohio will enact some sort of program that provides support for nuclear power before the close of session this year,’’ said Timothy Fox, vice president at ClearView Energy Partners LLC. “Republicans with a three-way majority in the Ohio legislature appear united in moving this legislation.’’

©2019 Bloomberg L.P.