Without Subsidies, Three Mile Island Could Go Dark, Operator Asserts

In an argument that mirrors the one made by PSEG, Exelon says it can’t afford to keep TMI in service without help from Pennsylvania ratepayers

three mile island
Three Mile Island may be the next nuclear power plant to be shuttered by its owner unless it gets financial help to keep the facility afloat.

Exelon Corp., the owner of the Pennsylvania generating station, announced yesterday it will retire the plant by or about September 30, 2019 absent any change in that state’s policies dealing with nuclear power.

The announcement is the latest by an owner of a nuclear plant to threaten or close its facility unless given financial assistance to make the facility profitable, a drama that could play out soon in New Jersey with its three nuclear units operated by the Public Service Enterprise Group in South Jersey.

If Exelon follows through on its threat, it would mean the Oyster Creek plant in Lacey Township, also owned by the Chicago energy giant, could outlast TMI, the site of the nation’s biggest nuclear accident when it had a partial meltdown in 1979.

Oyster Creek, the country’s oldest commercial nuclear plant, agreed to shut down at the end of 2019 under a settlement worked out with the Christie administration in 2010.


Competing with natural gas

Nuclear power plants face difficulty competing with cheap natural gas, which has led to the premature closing of a handful of facilities around the nation. To avoid that prospect, some states, including New York and Illinois, have asked ratepayers to subsidize with payments similar to those that solar and wind-power projects receive.

In New Jersey, PSEG is lobbying lawmakers and policymakers for financial assistance for its three units in South Jersey, saying it will close the plants if the economics do not improve. Executives argue the plants deliver electricity without greenhouse-gas emissions and provide needed diversity should natural gas supplies be disrupted. The company declined comment yesterday on Exelon’s announcement.

Exelon’s announcement follows an auction run by the regional operator of the power grid in which the nuclear units failed to secure for the third year in a row lucrative capacity payments, on top of being paid for the energy the plants produce. 

Echoing PSEG’s arguments

Many of the arguments made by Exelon’s CEO Chris Crane echo the case made by PSEG. If TMI closes, consumers will face increased energy bills and the state will lose thousands of good-paying jobs.

“In general, these plants are not economic,’’ said Paul Patterson, an energy analyst with Glenrock Associates. “If they are not going to shut down, they are going to get a subsidy. It worked in Illinois and New York.’’

Opponents of handing out subsidies to nuclear units acknowledged some of these facilities are facing economic pressure. “That doesn’t mean the entire nuclear fleet needs to get bailed out,’’ said Doug O’Malley, director of Environment New Jersey.

Generally, consumer advocates and other energy companies oppose handing out subsidies to nuclear units, saying PSEG has yet to prove that its plants are not profitable.
In its announcement, Exelon pledged to continue talks to avoid retiring the plant, which has an operating license until 2029. It is seeking assistance similar to what other energy sources, such as solar, wind, and hydro power, receive, or a so-called zero emission credit adopted in neighboring New York.

“Like New York and Illinois before it, the Commonwealth has an opportunity to take a leadership role by implementing a policy solution to preserve its nuclear energy facilities and the clean, reliable energy and good-paying jobs they provide,’’ Crane said.

Environmentalists oppose extending the incentives renewable sources obtain to nuclear, because unlike solar, wind, and water, the former is not sustainable. “It’s not renewable; you have to keep buying the fuel,’’ said Jeff Tittel, director of the New Jersey Sierra Club.