UI expert: Clinton shutdown would have little effect on energy prices, reliability

UI expert: Clinton shutdown would have little effect on energy prices, reliability

CHAMPAIGN — A University of Illinois expert on energy policy says the shutdown of the Clinton nuclear plant probably would have little effect on Midwestern electricity prices or the reliability of the Midcontinent Independent System Operator Inc. system, which includes downstate Illinois.

"MISO's wholesale prices are depressed. They were last year and they're continuing this year," said George Gross, a professor of electrical and computer engineering at the UI. "The demand in many places has still not come back to pre-2008 levels. And so the demand is not there. There is a surplus of energy."

The Clinton plant has a generating capacity of 1,069 megawatts, which is less than 1 percent of the approximately 135,000 megawatts of capacity in MISO's system, Gross said. The MISO territory covers 15 central states from North Dakota to Louisiana.

"It's a very important drop in the local bucket but in terms of the MISO bucket, I think it's not going to have major implications," Gross said. "And the competition is the fact that we have this tremendously cheap (natural) gas continuing and the price of solar and wind have really come down. The advancement of the technology has really brought these prices down."

The effect on prices will be minimal, he said.

"There's no basis to say that the wholesale price of electricity is going to go up, given that you're removing a thousand megawatts of generation when we're riding all those renewables," he said. "I don't believe that this will have an impact on the prices in the market because it's a relatively small amount of capacity, compared to the total amount, and also the amount of energy it generates. It's not exactly a huge amount."

As a reliable baseload plant, Clinton would be missed, he said.

"Its energy is very good. So from the point of view of reliability I think it hurts the system. It's a baseload unit and it's on 24/7, close to 365 days a year. So I agree that it worsens the reliability," said Gross.

But he said Exelon Corp., the owner of the Clinton plant, has been unable to persuade customers in Illinois that the plant's reliability and its low-carbon output are worth higher electric rates, about 25 cents a month for the typical residential customer, according to Exelon.

The company's Next Generation Energy Plan went nowhere in the Legislature last month, not even advancing out of the Senate Energy Committee where it got a single hearing but no vote.

"The problem is that when Exelon makes the point that it's not really a subsidy and that ratepayers are paying for this additional reliability, well, the ratepayers are not exactly crying that the reliability of the system is bad and that it needs improvement," Gross said. "And they haven't been asked whether they want to pay for it or not. They're being told that as part of the legislation they would. I'm not sure that we want this stuff legislatively established, as opposed to the (Illinois Commerce Commission) which has all of the expertise and the skills to judge.

"I would argue that doing it by legislation, particularly in a state which cannot pass a budget and would try to pass something even more controversial, it's not clear to me that that's the way to go."

Gross said he expects Exelon will follow through with its decision to close the plant.

"Today's environment is to shut it down. They are going to be basically losing less than if they continued operating it," he said. "That's what we have to surmise. From the point of view of their shareholders, it's a good decision. From the point of view of the (DeWitt County) community, it's a terrible decision.

"You know those kids in any community where they have a nuclear plant, the kids get computers on every desk and those communities have tremendously high incomes. Their schools are well-financed. That's definitely going to hurt. And then you're going to have an increase in unemployment. Given that the state is losing population we can surmise that the employees will go to places where there is still employment. Those are deleterious effects. They're not good from the point of view of the governor or any politician.

"But I think what Exelon's going to say is, 'Where were your voices when the Legislature was in session? You didn't do anything so don't blame us. We said we were going to do this and now we're doing it.' I don't think for a politician this is good. But I think it's a business decision."

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mstook423 wrote on June 03, 2016 at 11:06 am

What is not explained is the historic volatility of natural gas in the last 15 years. It's price over that time period has at times been 5 to 6 times the price it is now.  If the price of natural gas returns to these high historic prices then the price of power will spike.  If we lose the energy mix of coal, nuclear, natural gas, etc.that can soften the price spike.  That is why we need a mix of energy sources on the power grid so that prices and supply is kept more constant.  

Renewables, while they should be part of the mix, are not suitable for a constant supply of base load power.  We still need large base load plants to supply the base electric load.