Energy Center Navigation

Wednesday, October 31, 2012

Note to Exelon: you can't have it both ways.

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.
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.

1 comment:

  1. This was a very interesting post Courtney! I was looking for a Air Handler Rental when I came across your blog and I'm so happy I did because this was very informative. Thank you for sharing this with us!