In Illi­nois, a Warn­ing for Coal and Nu­clear Plants

En­ergy ▶ Cheap wind and nat­u­ral gas drive old power plants out of busi­ness ▶ To­day’s power price “is so much lower than it used to be”

Bloomberg Businessweek (North America) - - Global Economics -

For a snap­shot of the woes of U.S. coal and nu­clear power plants, take a look at Illi­nois. In the past month, power com­pa­nies an­nounced the clo­sure of coal and nu­clear fa­cil­i­ties that ac­count for more than 10 per­cent of the state’s power-gen­er­at­ing ca­pac­ity. The shut­downs come as cheap wind power surges and plants burn­ing low-cost nat­u­ral gas of­fer more com­pe­ti­tion.

Ex­elon and Dyn­egy, the two big­gest power gen­er­a­tors in Illi­nois, made a last-minute plea to state law­mak­ers to help res­cue their money-los­ing nu­clear and coal plants. Ex­elon, which runs 11 nu­clear re­ac­tors in the state, wanted leg­is­la­tors to pass a bill al­low­ing it to charge higher rates for its car­bon-free out­put, whereas Dyn­egy sup­ported a mea­sure that would let it sell power from its eight Illi­nois coal plants to an­other mar­ket, where its elec­tric­ity could fetch higher prices. Nei­ther bill was taken up for a vote be­fore the ses­sion ended on May 31, leav­ing the com­pa­nies stuck with un­prof­itable power plants. “You’ve got free wind power com­ing from the west and cheap gas com­ing from the east, and that’s not a good place to be for coal and nu­clear power plants,” says Travis Miller, an an­a­lyst for Morn­ingstar.

The power in­dus­try up­heaval is play­ing out across a large part of the U. S. (page 24). Over the past 20 years, more than a dozen states dereg­u­lated their elec­tric­ity mar­kets to let power com­pa­nies com­pete to sell whole­sale elec­tric­ity across state lines. That ex­tra com­pe­ti­tion, plus the ad­vent of cheap power from wind turbines and nat­u­ral gas plants, has helped push whole­sale power prices down by dou­ble- digit per­cent­age points in some places.

The im­pact has been pro­found in the Mid­west, where the share of wind power added to the grid has risen from 2 per­cent to 12 per­cent in the past four years, ac­cord­ing to en­ergy re­search firm Gen­scape. The av­er­age an­nual whole­sale elec­tric­ity price in the Mid­west has fallen 43 per­cent since 2008, ac­cord­ing to Bloomberg data.

These fac­tors have put big pres­sure on ag­ing, higher- cost coal and nu­clear plants. Like Dyn­egy and Ex­elon in Illi­nois, power com­pa­nies in Ohio and New York have asked state reg­u­la­tors for the abil­ity to col­lect mil­lions of ex­tra dol­lars from con­sumers to keep coal and nu­clear units run­ning. In Ohio, Amer­i­can Elec­tric Power and Firsten­ergy won guar­an­teed rates

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