Note to Exelon: You Can’t Have It Both Ways

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By Courtney Lane of PennFuture Energy Center (reposted by request)

Exelon has changed its tune on the federal Production Tax Credit (PTC) for wind energy and has begun to lobby against its extension. Most recently, the company issued a report attacking the subsidy.

The truth behind this about-face is not something Exelon wants the public to know. Exelon owns the country’s largest commercial nuclear fleet, and the profitability of these plants depends primarily on the price of power. While lower electricity prices are good for electric customers, they cut into Exelon’s bottom line.

Exelon nuclear power plant by iluvcocacola (some rights reserved)

While Exelon would like you to believe that the PTC is causing wholesale electricity prices to fall, that is simply not the case. It is well documented that the recent reduction in wholesale electricity prices has primarily been caused by the economic downturn and the abundance of cheap natural gas. Natural gas production is at a record high in the U.S., and prices are the lowest they’ve been in over a decade. It is, therefore, not surprising that the use of low-cost natural gas by electric power generators has increased every year since 2009.

While wind does have beneficial impacts on lowering wholesale electricity prices, it is not from subsidies. Rather, it is due to the fact that wind has no fuel costs and therefore can bid into competitive electricity markets such as PJM at a price of zero.

Another flaw in Exelon’s argument is that it fails to recognize that all forms of power generation are subsidized. The company’s nuclear plants, it should be noted, are no exception. A 2011 report by the Union of Concerned Scientists (UCS) found that more than 30 subsidies have supported every stage of the nuclear fuel cycle, from uranium mining to long-term waste storage. The report concluded that legacy subsidies exceeded 7 cents per kilowatt-hour (kWh), which is above the average wholesale electricity price from 1960 to 2008. All told, the nuclear industry has received over $160 billion in subsidies since 1947, and new plants have been eligible for a production tax credit of $18 per megawatt-hour since 2005.

Exelon may be feeling the pinch from lower wholesale electricity costs but it cannot use wind energy or the PTC as a scapegoat. It is critical for electric customers, and the reliability of our grid, that we continue to invest in a diverse supply of power generation. Wind is an important part of our generation portfolio and provides many benefits to electric customers, the economy and the environment.

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11 thoughts on “Note to Exelon: You Can’t Have It Both Ways

  • Tell you what. Let’s get rid of ALL subsidies, put every power source on one level playing field, and see what holds up. No power source should become part of the US portfolio if it survives only at the public trough. Not wind, nuclear, coal, hydro or any other electricity source. I think wind would do fine on its own, and should certainly be able to after 20 years of living on the dole (I am not including loan guarantees, which are not true subsidies, and I do think government has a primary role in energy R&D). The problem with the 2.2 cents/kwh PTC for wind is it is so lucrative that wind operators can actually pay others to take their power and STILL MAKE A PROFIT. Think about that for a minute — and us beleaguered taxpayers are paying the tab. The only honest argument for retaining the wind production tax credit is that wind can’t survive without it, and I don’t believe that to be true.

    • I can get behind that. Let’s use a ‘first in, first out’ system for eliminating subsidies.

      Oil and coal have been getting subsidies for, what, 100 years? Cut them off.

      Nuclear has been getting subsidies for 60 years? Cut them off.

      When wind and solar have gotten 50% of what fossil fuels and nuclear received then cut them off. That seems overly fair to oil, coal and nuclear to me.

      • And Jack I’m not sure you really mean what you are saying. What about the $0.5 Billion in health cost each for coal and oil that they don’t pay, external “supported” by our government not requiring they pay. And that is just the tip of the ice. Read the last post, nuclear gets $0.07 a kwh and that doesn’t count the implied “insurance” from the government if there is a big break down.

        But yes I agree lets first in first out them.
        1) End all coal, oil, nuclear, this is hard there are a lot hidden in the tax code.
        2) Charge the coal and oil each $0.75 billion/year for health cost.
        3) Charge oil for 1/2 military budget (including VA and retirement benefits) since that is what we used them for the last 30 years.
        4) Raise insurance cost to nuclear to cover risk of a big failure.

        Funds raise by 1-4, fed tax refund. Split even to each full dependent.

        So the youngest, nuclear start in 1947, that is 65 years ago. Winds has been on/off agin let us call it 10 years. But lets only give them 1/2 as long. So PTC on shore get 23 more years, off shore 33 more years, PV 20 years.

        geothermal, enhance geothermal, OTEC, KinFlow, wave are all somewhere in the 15-33 year range.

        Now that would be a level field. But it is unlikely we will get even past (1).

      • Fossil fuel industries also can diversify into alternative energy to take benefit from subsidies. These companies complaining is political BS.

    • Gasoline would be $14 per gallon if the oil companies had to pay their share of the military costs for the protection etc….


      • I saw some data that indicates about 20/gal but, regardless,your point is well taken.

  • wind will rise without the subsidy….it will just take longer…

    • The EIA is projecting the cost of wind to drop about 2 cents per kWh over the next few years. Take away the PTC and the cost of wind would stay about stable.

      There’s nothing projected to be cheaper than wind.

  • What I find to be most disturbing is the fact that the cost of the substitutes that allow Nuclear plants to be built are at the expense of the public. The profits that are derived from the sale of that electricity go into private pockets and the liabilities (think Fukashima) are, of course, another public expense. Sweet deal for Exelon.

    To resist the PTC for wind is simply another example of corporate greed and irresponsibility.

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