Summary
Exelon Corporation (EXC) announced through its subsidiary, Exelon Generation Company, LLC, the intention to permanently cease generation operations at two nuclear power plants: Byron Generating Station in September 2021 and Dresden Generating Station in November 2021. This decision is driven by declining plant revenues due to persistently low wholesale power prices, unfavorable market rules that disadvantage clean energy in capacity auctions, and the lack of supportive federal or state policies that recognize the value of nuclear energy for its carbon-free generation and grid reliability. This early retirement will result in significant one-time charges for Exelon in 2020, estimated between $200 million and $300 million, primarily for inventory, employee costs, and asset impairments. Additional charges not exceeding $50 million may occur in 2021. These charges will be excluded from the company's Adjusted (non-GAAP) Operating Earnings. While decommissioning funding is generally adequate, Byron may require additional financial assurance from Exelon up to $325 million for radiological decommissioning, and potentially up to $175 million in supplemental cash for non-radiological costs like spent fuel management.
Key Highlights
- 1Exelon Generation is permanently retiring the Byron and Dresden nuclear power plants in September 2021 and November 2021, respectively.
- 2The primary drivers for retirement are low wholesale power prices and unfavorable market rules for clean energy resources.
- 3Exelon expects to incur one-time charges of $200-$300 million in 2020 and up to $50 million in 2021, excluded from Adjusted Operating Earnings.
- 4Significant non-cash expenses related to accelerated depreciation and amortization are anticipated in 2020 and 2021.
- 5Byron Generating Station may require additional financial assurance for decommissioning costs, potentially up to $325 million for radiological and $175 million for non-radiological expenses.
- 6Dresden Generating Station is expected to have adequate decommissioning funding assurance.
- 7The company cites the absence of federal or state policies valuing nuclear energy's environmental and reliability benefits.