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”
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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