(Bloomberg) - Exelon Corp.’s money-losing nuclear power plants in Illinois have won a $235 million-a-year lifeline from state lawmakers.
Legislation designed to rescue Exelon’s Quad Cities and Clinton reactors from shutdown was passed by the Illinois House and Senate late Thursday. The bill, which next goes to Republican Governor Bruce Rauner for approval, secures about $235 million annually for 10 years for the nuclear plants that generate zero-emissions electricity, based on Exelon’s estimates.
“The bill now awaits the Governor’s signature, which we expect soon,” Shahriar Pourreza, an analyst at Guggenheim Securities LLC, wrote in a note to clients on Friday. “With that, zero emission subsidies for nuclear would go into effect mid-2017, securing economic viability for Exelon’s nuclear plants at risk of retiring.”
The move comes as nuclear reactor owners across the U.S. are struggling to turn a profit amid competition from cheap natural gas and a sharp rise in wind and solar generation. Five nuclear power plants have retired in the past five years and more are projected to close. Illinois is among the states deciding whether to help keep nuclear plants alive. New York has approved subsidies worth about $500 million a year for unprofitable reactors.
Shares jumped as much as 3 percent on Friday, and traded at $32.98 at 9:40 a.m. in New York. The stock is up 19 percent this year.
An Illinois approval “could aid similar efforts in other states,” Bloomberg Intelligence analysts Kit Konolige and Rob Barnett said in a research note Thursday before the vote. Exelon may also seek nuclear subsidies in Pennsylvania, where it co-owns a plant, they said.
Exelon said in June that it would shut its Clinton reactor on June 1, 2017, and its Quad Cities reactors a year later after its push for a measure that would promote zero-carbon energy failed in a regular legislative session. Critics of the latest bill had warned that it’ll increase customer bills and amount to a bailout for Exelon.
Exelon said in a statement after the vote that the legislation “levels the playing field with solar and wind energy by valuing the zero-carbon energy produced by the nuclear facilities.” The Chicago-based company said the costs of the bill are capped at 25 cents a month for the average residential customer.
House bill co-sponsor Robert Rita said during a debate of the bill on Thursday that Rauner had indicated he planned to sign the measure into law.