PHILADELPHIA _ Exelon Corp. announced Tuesday that it will "prematurely" shut down its Three Mile Island nuclear reactor near Harrisburg in two years unless it gets a bailout from the Pennsylvania legislature.
The announcement came a week after the reactor failed to clear the regional power grid's annual capacity auction for the third consecutive year, signaling that the facility is unable to compete in a low-price electricity market driven by an abundance of natural gas extracted from shale. Exelon said the plant has lost money for five years.
Exelon officials meet with the plant's 675 employees and informed community leaders of the decision, which has been well-telegraphed in the last year. The company has been ramping up lobbying efforts in Pennsylvania to enact some kind of support for nuclear power plants, similar to Exelon-led efforts in Illinois and New York.
"Today is a difficult day, not just for the 675 talented men and women who have dedicated themselves to operating Three Mile Island safely and reliably every day, but also for their families, the communities and customers who depend on this plant to produce clean energy and support local jobs," said Chris Crane, Exelon president and CEO.
"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 in statement. "We are committed to working with all stakeholders to secure Pennsylvania's energy future, and will do all we can to support the community, the employees and their families during this difficult period."
Exelon's Unit 1 is the surviving reactor at the site made famous in 1979 by the partial meltdown of Unit 2, the worst commercial nuclear power accident in the United States. Exelon acquired the reactor in 2003. It is licensed to operate until 2034.
The Chicago-based energy company has suggested Pennsylvania should give nuclear power similar preferential treatment and premium payments as those given to renewable energies, such as wind and solar. Nuclear power is by far the state's largest source of energy that does not produce harmful air emissions.
In a filing with the Securities and Exchange Commission on Tuesday, Exelon said the primary factors contributing to the plant's "deteriorating economic value" include significant declines in plant revenues due to prolonged periods of low wholesale power prices, the absence of federal or state policies that place a value on nuclear energy for its clean-energy attributes, and the plant's relatively high operating costs as a single-unit site. "All of these factors exacerbate the expectation for continued losses for the foreseeable future," it said.
Exelon and its generation subsidiary will recognize one-time charges of between $65 million to $110 million in the second quarter related to materials and supplies inventory reserve adjustment, employee-related costs, and construction work-in-progress impairment. The company also could recognize additional one-time charges in 2018 and 2019 of up to an estimated $25 million each year. Estimated cash expenditures related to the one-time charges primarily for employee-related costs are expected to range from $40 million to $70 million.
