WASHINGTON (Reuters) - Electricity generator Exelon Corp is likely to strike a deal with Illinois to keep two nuclear power plants in the state running even though the company announced plans to close them next year because of poor economics, analysts said on Friday.
Exelon on Thursday announced the planned closures of the Byron and Dresden plants, blaming market rules that it said favor plants fired by coal and natural gas over carbon-free nuclear energy. Chicago-based Exelon operates six nuclear plants in Illinois.
Faced with competition from plentiful natural gas, nuclear power plant operators have threatened to close plants in five states in recent years in attempts to win subsidies. The strategy failed only in Pennsylvania, where Exelon closed the Three Mile Island plant last year.
“We think it is more likely that Illinois lawmakers and Exelon could find a policy compromise that keeps these two plants in operation than letting the plants retire next year,” said Tim Fox, an analyst at ClearView Energy Partners.
While a deal appears likely, it could be complicated by a recent scandal, Fox said. Exelon’s ComEd unit agreed last month to pay $200 million to resolve an investigation over lobbying practices. That could mean the “threats of closures alone may not be enough to drive legislators to the table,” Fox said.
The plants support more than 1,500 mostly union jobs and generate about 10% of the state’s power.
Josh Price, an analyst at Height Commentary, called Exelon’s tactics “hardball” but said he expects the plants to remain open. Price said if Democratic presidential candidate Joe Biden, whose climate plan supports nuclear power, defeats Republican President Donald Trump on Nov. 3 in the U.S. election, it “may change Exelon’s perspective on the plant closures.”
Exelon’s decision to shut the plants came after Illinois Governor J.B. Pritzker outlined a plan for 100% clean energy by 2050 that would sunset the state’s nuclear subsidy programs upon implementation of a price on carbon.
Exelon did not immediately respond to a request for comment.
Reporting by Timothy Gardner; Editing by Will Dunham
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