Three Mile Island nuclear plant to close in 2019 absent policy reforms

Wednesday, May 31, 2017

Exelon Corporation has announced that it will retire its Three Mile Island Generating Station on or about September 30, 2019, unless energy policies change.  

Located in Pennsylvania, the Three Mile Island plant Unit 1 features a nuclear pressurized water reactor, feeding steam to generation with a net capacity of 837 megawatts.  Its license issued by the Nuclear Regulatory Commission allows operation until 2034.  Unit 1 is now over 40 years old, with construction having started in in 1968 and the plant being placed in-service in 1974.  (The former Unit 2 reactor partially melted down in 1979 and was closed; the Unit 2 complex is now owned by an affiliate of FirstEnergy Corporation.)

While the Three Mile Island plant has previously earned revenue by providing capacity to the PJM wholesale market, Exelon says the plant has not cleared in the past three PJM base residual auctionsPJM's most recent capacity auction results, for the 2021/2021 delivery year, were announced last week, and came in below the previous year's results.  For generators, demand resources, and other sources of capacity bidding into the market, this means more expensive resources did not clear -- and those that did clear will receive lower revenues than if the auction yielded a higher price.

On May 24, shortly after the PJM auction results were announced, Exelon noted that Three Mile Island's failure to clear in the auction placed it "at risk of early retirement":
TMI remains economically challenged as a result of continued low wholesale power prices and the lack of federal or Pennsylvania energy policies that value zero-emissions nuclear energy. Exelon has been working with stakeholders on options for the continued operation of TMI, which has not been profitable in five years.
Exelon pointed to the "challenge nuclear energy continues to face without compensation for its ability to produce electricity without harmful carbon and air pollution and to contribute to grid resilience."

Six days later, Exelon announced that "it will prematurely retire its Three Mile Island Generating Station (TMI) on or about September 30, 2019, absent needed policy reforms."  Exelon announced that it is "taking the first steps to shut down the nuclear plant," including sending deactivation and shutdown notifications, terminating capital investment projects required for long-term operation of the plant, and canceling 2019 fuel purchases and outage planning.  

In its statement, Exelon noted that nuclear power is emissions-free, but is not included in Pennsylvania's Alternative Energy Portfolio Standard (AEPS).  The AEPS requires that 18 percent of the electricity supplied by Pennsylvania’s electric distribution companies and electric generation suppliers come from qualified alternative energy resources by 2021.  Under the current AEPS, eligible resources include solar PV, solar thermal, wind, low-impact hydro, geothermal, biomass, biologically derived methane gas, coal-mine methane and fuel cell resources, new and existing waste coal, distributed generation (DG), demand-side management, large-scale hydro, municipal solid waste, wood pulping and manufacturing byproducts, and integrated gasification combined cycle (IGCC) coal facilities, with specific set-asides for some categories of resources -- but not nuclear.  Exelon suggested that potential solutions could include amending the AEPS to include nuclear resources, or establishing a zero emissions credit (ZEC) program similar to the approach being implemented in Illinois and New York, among others.

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