Exelon to shut two nuclear plants in Illinois

[June 03, 2016]  June 2 (Reuters) - Exelon Corp, the biggest U.S. nuclear power plant operator, said on Thursday it will shut reactors at the Clinton and Quad Cities nuclear stations in Illinois, given a lack of progress on state energy legislation that would have allowed the plants to operate economically.

The planned nuclear shutdowns are the latest example of natural gas' growing dominance of the U.S. power sector since the shale revolution made the United States the world's biggest producer of the fuel for the past five years.

Gas is expected to top coal as the nation's biggest source of power generation in 2016, according to federal energy estimates.

Coal has been the primary fuel source for U.S. power plants for the last century, but its use has declined since peaking in 2007 due to low gas and power prices that make it uneconomic to upgrade older units to meet stricter environmental rules.

Coal is not the only victim of low gas prices.

Nuclear operators have shut five reactors since 2013 and have threatened to close several more primarily because U.S. power prices have collapsed to decade lows due to low gas prices, making it uneconomic to keep running or make needed repairs to the nuclear units.

Exelon said Clinton will close on June 1, 2017, and Quad Cities will close on June 1, 2018. Quad Cities and Clinton have lost a combined $800 million in the past seven years, despite being two of Exelon's best-performing plants, the company added.

Exelon was hoping the Illinois Legislature would adopt legislation, known as the Next Generation Energy Plan, that would compensate nuclear reactors for the reliability, environmental and economic benefits they provide like round-the-clock power with no carbon emissions, and jobs and taxes for the local communities.

"While the Illinois legislative session has not ended, the path forward for consideration of the Next Generation Energy Plan legislation is not clear," Exelon said.

The company said it would immediately take one-time charges of $150 million to $200 million for 2016 and accelerate about $2 billion in depreciation and amortization through the announced shutdown dates.

Exelon said it will continue to work with stakeholders on passing the legislation but it may come too late to save some plants.

The Clinton and Quad Cities plants support about 4,200 direct and indirect jobs and produce more than $1.2 billion in economic activity annually, Exelon said. There are nearly 700 workers at Clinton and 800 workers at Quad Cities.

The Clinton plant began service in 1987, while Quad Cities began service in 1972.

(Reporting by Scott DiSavino; Editing by W Simon and Chris Reese)

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