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Fresh off a $2 billion profit in 2014, utility giant Exelon is attempting to strong-arm the Illinois legislature into placing new restrictions on lower-cost electricity competitors. If Illinois lawmakers don’t meet Exelon’s demands, it is threatening to shut down operations at three of its six Illinois nuclear power plants.
Exelon operates the nation’s largest nuclear power fleet, including the six plants in Illinois. Although Exelon is very profitable as a whole, the company claims three of its nuclear plants are not independently profitable and therefore deserve ratepayer bailouts or protectionist restrictions against Exelon’s electricity competitors.
Just how unprofitable are the three plants? Nobody knows, because Exelon refuses to open up its books to support its claims. Exelon asserts it should not have to prove the three plants are unprofitable as a condition of demanding sharp rate increases or having the government impose stifling new restrictions on its competitors. The company says its customers and Illinois legislators should be content to take its word for it and hand over the money.
Exelon’s first proposal was a rate increase of $300 million per year. When that proposal fell like a lead balloon, the company shifted gears and proposed low-carbon electricity mandates that would accomplish the same thing. By forcing people to give up affordable coal and natural gas power and purchase expensive nuclear power from Exelon’s fleet instead, Exelon could get an influx of new revenue without having to call it a “rate hike.”
There is no justification for either costly proposal. The owners of almost any large, profitable business can point to individual divisions or departments that are not independently profitable. As a whole, Exelon turns a multibillion-dollar profit with substantial assistance from taxpayers. There are many divisions and departments within Exelon that must be extremely profitable – one might say exorbitantly profitable – for the company to post a $2 billion profit last year. Is Exelon planning to return to taxpayers and customers the exorbitant profits from most of its power plant operations if it receives reparations for what it claims – but refuses to document – is a small subset of underperforming nuclear power plants? Of course not.
Taking Exelon at its word – that three of its nuclear power plants cannot turn a profit – why should electricity consumers be forced to reward Exelon for its failed business decisions by bailing out the utility giant? Instead of propping up Exelon and rewarding it for poor decisions and extortionist threats, Illinois legislators should reward Exelon’s competitors who are not demanding such subsidies and market-share mandates under the threat of retribution. The only “reward” Exelon’s competitors are asking for is the opportunity to compete without the state giving Exelon special treatment.
That would be a win-win for everyone: electricity customers, taxpayers, and every electricity supplier not trying to rig the system in its own favor. It’s a “nuclear option” that would benefit the entire state.