Exelon, the hugely profitable energy company, wants a bail-out. Taxpayers can pay all $500 million at once, or take advantage of a convenient monthly payment plan in the form of higher electric bills. Either way Exelon wants you to pay for their under-performing nuclear power plants.
After raking in billions in “stranded costs” as Pennsylvania transitioned into a competitive energy market, Exelon now finds several of its nuclear power plants unable to compete economically with cheaper and abundant natural gas in the generation of electricity. Having thus benefited from free markets, the energy giant wants a return to government subsidies after having failed to adjust to changing market conditions.
Exelon has deployed an army of lobbyists in Harrisburg to spin the yarn that closing two of their nuclear plants would somehow endanger the region’s electricity supply. Were that true, of course, the plants would be making money and a bail-out would not be necessary.
One of the plants is the damaged Three Mile Island facility south of the state capital. Forty years ago disaster was narrowly averted when there was an uncontrolled melt-down in one of its reactors. The plant has been operating at partial capacity ever since, contributing to its economic inefficiency.
Aside from being unprofitable and home to a damaged reactor, TMI as it is commonly known poses a security risk. Harrisburg International Airport lies literally in the shadow of the TMI cooling towers. In an age of heightened concern over terrorist attacks such proximity to an airport renders the facility vulnerable. Thus its closing might be a blessing in disguise.
Exelon has been pressuring state lawmakers for a $500 million infusion (bail-out) of taxpayer dollars to allow it to keep TMI and the Beaver Valley nuclear plant in western Pennsylvania open. The company is apparently unwilling to dip into its own profits to do this, and with a cash-strapped state budget legislators appear unwilling or unable to dish out the requested corporate welfare.
Sensing that, Exelon’s vast army of lobbyists have set about asking to have nuclear power included in something called the Alternative Energy Portfolio Standard (AEPS), a program designed to keep uncompetitive so-called “renewable” energy sources like windmills and solar power in the business of chopping up and frying birds.
Basically the program requires that a certain percentage of energy from such sources be purchased and distributed in the power grid regardless of cost. The effective end result is a ratepayer subsidy of expensive and uncompetitive energy sources.
Exelon argues it is the only non-fossil fuel source of energy not included in the portfolio and it wants to be added. Of course there is an easy way to level that playing field: abolish the AEPS entirely and let free markets purchase energy from the most cost-efficient sources.
Alas, Exelon is not alone in ditching free markets when it comes to their bottom line. The Mercatus Center at George Mason University recently conducted a poll entitled A Culture of Favoritism: Corporate Privilege and Beliefs about Markets and Government. The poll found that companies big enough to effectively lobby government believe markets should be more heavily regulated and – unsurprisingly – competition limited by government is good for business.
According to the Mercatus survey these companies believe business success is based more upon their knowledge of influential policy makers and government assistance that it is on consumer focus or having a unique and innovative business model. They also, of course, believe that government should favor specific businesses and industries – so long as they are the favored business.
A consequence of this, Mercatus’ scholars concluded is that the “culture of favoritism (is) expensive to taxpayers and consumers; it may also undermine the public’s faith in markets and economic freedom. If such attitudes persist or expand, then free, open, and competitive markets may be in peril. We risk stunted economic growth, wasted resources and higher levels of corruption as a result.”
All of those negative consequences – not to mention significantly higher consumer electric bills – will follow in the wake of any bail-out or move to add nuclear power to the AEPS. The taxpayers and electric rate-payers of Penn’s Woods should pay close attention to how this plays out over the coming weeks and months.
It is a pitched battle between free energy markets and corporate greed. If Exelon wins a competitive energy market in Pennsylvania will be a thing of the past – and you will pay for it with a higher monthly electric bill.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected].)
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