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Nuclear giant Exelon shrugs off 'doomsday' warnings about EPA rule

U.S. EPA isn't alone in rejecting doomsday predictions about the effects its Clean Power Plan will have on the nation's energy sector and sprawling electric grid.

Exelon Corp., the nation's largest nuclear operator, also doesn't think the sky is falling.

"Some of our colleagues in the industry have argued that the regulation of carbon pollution is illegal, that EPA is moving too quickly, and that Americans must confront a choice between protecting the environment ... and affordable and reliable electricity," Kathleen Barrón, Exelon's senior vice president of federal regulatory affairs, told U.S. EPA chief Gina McCarthy in public comments filed last week. "The industry data developed over the last six months demonstrates that their doomsday predictions are simply not correct."

Instead, Exelon said EPA was "well within" its legal authority to issue the proposal, which would require existing plants to reduce carbon dioxide emissions 30 percent from 2005 levels by 2030. The Clean Power Plan was "legally and scientifically required," Barrón said in Exelon's comments.

The Chicago, Ill.-based utility has aligned with other major U.S. companies within the Clean Energy Group -- a coalition of electric utilities and electric generating companies that includes National Grid, Nextera Energy, PG&E Corp. and Calpine Corp. -- in defending the rule while calling for nuclear plants to receive more credit.

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But Exelon -- and the nuclear industry as a whole -- is far from fully satisfied with the EPA proposal.

David Brown, Exelon's senior vice president, government affairs and public policy, said during an interview this week that the EPA rule, as it stands, doesn't do enough to support nuclear energy. Brown's sentiment reflects earlier comments from the Nuclear Energy Institute (Greenwire, Dec. 1).

"Renewables get full credit; we get 6 percent credit," he said. "We think ideally they would treat all nonemitting sources the same."

Exelon has also joined the Edison Electric Institute, large environmental organizations, think tanks and major academic institutions in calling for some states to qualify for a "safe harbor" -- and essentially comply with EPA's rule -- if they implement a "Smart System Dispatch" program by 2020.

That program would allow grid operators to dispatch cleaner power sources such as nuclear, solar, wind, gas and hydropower before fossil-fired generation.

"This point of agreement across the stakeholder spectrum is an important opportunity for EPA to bridge the divisions regarding this rule and ensure on-time, affordable implementation of carbon pollution reductions," Barrón wrote. "It could also be considered through a Notice of Data Availability without jeopardizing the June 2015 target date for the final rule if EPA preferred to seek additional public comment on this specific option."

For now, Exelon's major focus is on four of its plants in Illinois that could be shuttered, units that Brown said continue to face challenges from a surge of cheap wind, a dearth of transmission and other market factors. The closure of those plants and others, he said, will affect the country's ability to lower emissions.

"Just do the math: You can't get there without nuclear," Brown said. "We're hopeful that there will be some changes."

'Federal lever'

Despite the industry's concerns with the EPA proposal, top Obama administration officials have repeatedly insisted that nuclear power plays a central role in the president's climate plan.

Pete Lyons, the Energy Department's assistant secretary at the Office of Nuclear Energy, today reiterated his concerns about the effect the early retirement of plants could have on national emissions levels.

But finding the mechanism to help those floundering plants on the federal level appears to be perplexing administration officials.

Lyons told a House Science, Space and Technology subcommittee this morning that closure of nuclear plants represents a "significant blow" to zero-carbon electricity generation and the loss of baseload electricity supply and diversity.

"Adverse economic conditions contributed to the early closure of four reactors in 2013 and are a factor in the imminent retirement of the Vermont Yankee plant," Lyons said. "Complex market factors, falling alternative generation costs and lower electricity demand forecasts have made operating nuclear power in plants uneconomical in some parts of the country."

But Lyons told the Subcommittee on Energy that DOE hasn't identified a "federal lever" that could be used to protect plants in jeopardy -- mainly smaller, single-unit sites -- and said solutions are likely to be found on the state level. Lyons pointed to processes underway within Exelon's bases of Illinois and New York, and PJM Interconnection's review of market mechanisms to support nuclear's baseload nature.

"We've been discussing if there's a direct federal action, and we haven't found one yet," he said.

But when pressed on the point following the hearing, Lyons expanded on what role the EPA rule and a price on carbon could play in the nuclear industry.

"The price of carbon has been debated for years. It sounds good when you say it fast, but when you look at how it would be implemented ... it certainly is a potential lever, but it would be a major challenge," Lyons said.

Lyons said he's certainly aware that the nuclear industry has raised concerns within the more than 1.2 million public comments about the proposal, which is still in draft form. Ultimately, he said, the rule could also serve to support nuclear, even the singular small units threatened with early closure.

"[The EPA rule] is set up to reduce overall carbon emissions, so in that sense, yes, it's very much a lever," Lyons said. "And I think the president has tried many times to move toward a value on carbon."

Twitter: @HMNorthey | Email: hnorthey@eenews.net

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