The Illinois nuclear bailout: What really happened? Who wins, who loses, and who pays the price – and why – for failing nuclear plants in Illinois?

Beware the nuclear bailouts – and hucksters

by David A. Kraft, Director, Nuclear Energy Information Service

David Kraft of Nuclear Energy Information Service explains the Illinois nuclear bailout.

Editor’s note: Here in Michigan, Consumers Energy can’t afford to keep buying overpriced electricity from Palisades Nuclear Generating Station. Entergy, the plant’s owner-operator, can’t afford to sell competitively priced electricity to Consumers and still make a profit. Both companies agree that Palisades should shut down in October of next year. In Ohio, the nuclear energy business faces the same problem. Some Ohio officials say bailouts of failing nuclear plants in New York and Illinois show how to keep nuclear power going in Ohio. David Kraft, director of Illinois-based Nuclear Energy Information Service, watched the Illinois nuclear bailout develop. In the message below, he explains how the Illinois nuclear bailout happened – the process, the winners and losers, and how much the losers will pay.

We must make sure this doesn’t happen to us here in Michigan!

TO:  Ohio journalists and members of the media

Greetings All —

As Ohio wrestles with the policy decision of whether or not to bail out private energy corporations using public money, we have found that recent events in Illinois and New York are being held up as some kind of “example” to follow. This is done often by totally misrepresenting what actually has happened and continues to happen in those states.

To clarify for you what has happened in Illinois, and how our unfortunate situation is being misused in Ohio, we submit the following op-ed piece. We understand it may be too long for publication. That is not the primary reason you are receiving this. We simply wanted you to be alerted to the degree of misrepresentation going on in an effort to mislead the people and public officials and institutions of Ohio to make a decision which could be quite detrimental to Ohio’s energy future.

Feel free to contact us if you have any questions about this piece. You have our permission to use it as written, or with pre-approved edits, with attribution.

Thank you for your consideration.

Stay well,

– Dave Kraft, Director –


By David A. Kraft, Director
Nuclear Energy Information Service
17 January 2017

An old Mark Twain adage states that a falsehood gets half-way around the world before Truth gets its boots on. Its wisdom and accuracy is thoroughly proven – by the fact that Mark Twain was probably not the one who said this.

The wisdom of the adage has again been amply demonstrated by recent articles written by pro-nuclear advocates calling for the bailout of money-losing nuclear plants based on the dubious contention that they are needed to combat climate change.

While this contention is flat out wrong, it does prove yet another adage: “Never send in an engineer when you need an economist.”

The recent guest letter in the Plain Dealer by Henry Spitz, a professor in nuclear and radiological engineering at the University of Cincinnati College of Engineering and Applied Science has made claims that are contestable at best, flat out wrong at worst concerning both the need to bail out failing nuclear plants to combat climate change, and that recent events in Illinois and New York demonstrate that environmentalists and legislatures are somehow endorsing this position. Upton Sinclair warnings aside, his interpretation of events is quite erroneous.

In the case of the Illinois example he cites, he claims, “Illinois recognized the value of nuclear power to meeting its clean energy goals by adopting a zero emission standard.” This glib pronouncement totally ignores the complex and often irrational political process that created that outcome.

No bailout for failure! We must make sure that nothing like the Illinois nuclear bailout happens in Michigan.

The Executive Committee of Sierra Club Southwest Michigan Group has adopted a resolution that lays out the reasons why closing Palisades is a win-win-win for Entergy, owner-operator of Palisades, for Consumers Energy, Palisades’ only customer, and for Consumers Energy’s electricity ratepayers. The resolution insists on no bailout for an unprofitable electricity generator. Instead we must make sure the Palisades workers, who protected us from nuclear disaster for more than four and a half decades, are properly rewarded.

Exelon Corporation originally created a “nuclear hostage” crisis in Illinois by using the threat of job loss to try to get the legislature to pass a multi-billion dollar nuclear bailout during election years; and the fig-leaf, after the fact “benefit” that nuclear plants were necessary to meet the state’s anticipated EPA carbon footprint reduction goals. Over several years the Company’s political strategy rationales for the nuclear bailout changed in substance and frequency as much as did the explanations for why we invaded Iraq back in 2003. In the end Exelon’s final motive was reported in Crain’s Chicago Business on Nov. 11, 2016:

Exelon now has dubbed the legislation, which still hasn’t been introduced officially, as the Future Energy Jobs Bill. That underscores the company’s emphasis on preserving and creating jobs rather than the environmental benefits of keeping nuclear plants open.

The bill “was not driven by the Clean Power Plan, although it had meeting those goals as an added benefit,” Exelon said in a statement. “This bill is about economics—both for Illinois consumers and for the state’s future prospects for economic development.

This telling statement was made after Exelon attempted to make alliances with downstate coal companies to get the votes needed for passage of the nuclear bailout bill, which would have resulted in some coal plants getting bailouts as well. This gambit failed when environmental groups withdrew their support for the Exelon legislation. So much for nuclear utility Exelon’s commitment to abating climate change through nuclear power.

Professor Spitz continues saying, “The Illinois measure also strengthened and expanded the state’s renewable portfolio standard, requiring greater use of solar power and wind turbines, and it expanded energy efficiency programs.”

What Prof. Spitz either ignores or is unaware of is that the “strengthen[ing] and expand[ing of] the state’s renewable portfolio standard” had been held hostage for several years, and its passage was not some energy alleluia moment; but rather a political trade-off predicated on the passage of some form of nuclear bailout first. This was the only way Exelon lobbyists would permit fixing Illinois’ broken renewable portfolio standard. Legislative leadership ordered the competing parties – Exelon, environmental groups, utility ComEd – to negotiate among themselves, and come back with legislative sausage where everybody got something, whether or not deserved or sound energy policy.

In plain English – environmental groups would get no such renewables expansion unless they first agreed to a nuclear bailout. There are legal terms that define such conditions. None are particularly flattering.

Prof. Spitz and others go further in their efforts to rationalize the continued existence of uneconomic nuclear reactors by claiming – quite falsely – that “environmentalists” are backing such plans.  Professor Spitz asserts,

What’s so striking about the Illinois action is that environmentalists joined labor and business leaders in backing it. Among the environmental groups that signed on were the Sierra Club, the Natural Resources Defense Council, and the Environmental Defense Fund. Something like that would have been unimaginable five years ago but it suggests that the environmental community now recognizes that nuclear power must play a role in the battle against climate change.

As a self-described scientist, Professor Spitz should understand that, just as correlation does not imply causality, coincidence does not necessarily equal agreement.

Many instances of this blatant distortion of reality have occurred over the past year, most notably involving an attempt by the Wall Street Journal  to push that angle back in late June, 2016. This assertion was quickly rebutted by clarifying statements from Sierra Club director Michael Brune and others, and in a spectacularly devastating article by Miranda Spencer of Fairness and Accuracy in Reporting at the time:

Sierra Club remains opposed to dangerous nuclear power, and our efforts to make sure these plants shut down continue. Our successful work to stop and retire coal, oil, and gas operations has not precluded this important work, nor will it in the future. It’s imperative that we move toward an economy powered by 100% clean, renewable energy like wind and solar right away.

Michael Brune, Sierra Club Executive Director, June 17, 2016.

But, let’s see what “the environmentalists” in Illinois said about the nuclear bailout legislation Professor Spitz gushes over. Was it really a recognition that nuclear has a role to play in battling climate change? Illinois Sierra Club director Jack Darin apparently did not think so – as did many other environmental groups – at the bill-signing on December 7, 2016:

These are huge leaps forward for clean energy, but the Future Energy Jobs Bill was also a compromise that includes ratepayer support for two nuclear power plants. To be clear, the Sierra Club remains opposed to nuclear power, and we do not consider nuclear to be clean energy. While we fought for our clean energy priorities, we strongly opposed Exelon’s proposed “Low Carbon Portfolio Standard,” which would have subsidized all of Exelon’s six nuclear reactors, to the exclusion of renewable power. We defeated that proposal, and championed the Illinois Clean Jobs bill as a much better alternative. However, after nearly two years, legislative leaders and the Governor convened all stakeholders with the directive to agree on a single, comprehensive energy proposal. We fought and won to make renewable energy and energy efficiency the cornerstones of the compromise legislation, and of Illinois’ energy future.

This is hardly the ringing endorsement of nuclear’s roles in combating climate change that Prof. Spitz and others assert.

Sincere thanks from Sierra Club Southwest Michigan Group to David Kraft for giving us permission to republish his message to Ohio officials and news media. This message is just as appropriate for Michigan officials. Thank you, Mr. Kraft.

When you buy into nuclear power, it really is a lot like buying a burrito – you have to take everything they stuff inside it, and can’t cherry pick the contents after the fact. You have to take the radioactive wastes, the Fukushimas and Chornobyls, the perpetual cost overruns, the counterfeit and substandard parts, and above all – the multi-billion dollar bailouts of economically failing reactors, along with the, um, oh yeah, less-carbon intensive electricity. But that’s not how nuclear is sold by its supporters, which tend to glibly gloss over, distort, or ignore these downsides, and more often than not seem to possess the Alfred E. Newman attitude of, “What – me worry?”

These nuclear wealth-transfer schemes (from public ratepayer wallets to private company shareholder portfolios) mortgage our energy future by bailing out the past. Ask any blacksmith or clipper ship sail manufacturer you meet how far that will get you.

If nuclear proponents can so egregiously misinterpret an outcome, whether by ignorance of readily available and necessary facts or by deliberately cherry-picking the data to arrive at a self-aggrandizing outcome, then perhaps the public’s mistrust of nuclear power has not been so misplaced after all.  If that’s how they do their science and engineering, we’re all in big trouble. ■

NEIS was founded in 1981 to provide the public with credible information on nuclear power, waste, and radiation hazards; and information about the viable energy alternatives to nuclear power.  NEIS conducts a global warming abatement program aimed at individual action and responsibility titled, “You Can’t ‘Nuke’ Global Warming!” For more information, visit the NEIS website.

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