Corporate executives often tout the benefits of competition in a free-market economic system, but it's striking just how much large corporations don't like it. In fact, some companies will do all they can to squash it, lobbying for favors and subsidies while working to deny them to their competitors.
Exelon's Christopher Crane wants Congress to kill a wind tax break, despite the fact the nuclear industry wouldn't be viable today without decades of federal subsidies.
The squabble over a key federal tax break for the wind industry is a case in point. Called the production tax credit (PTC), it has helped quadruple the wind industry's generation capacity over the last five years, and six states now have enough wind turbines to meet more than 15 percent of their annual demand.
Unlike most coal, nuclear, and oil and gas subsidies, the PTC — which has been around only since the mid-1990s — is not permanent. Congress has to renew it periodically. Last December, Congress let it expire yet again, and lawmakers likely will not restore it until after the November mid-term elections, if at all. The PTC represents roughly $1.2 billion in annual tax savings to the wind industry.
Wind's more-established competitors want the PTC dead.
ExxonMobil, the Koch brothers and their front groups, for example, want Congress to let it die. Never mind that the oil and gas industry has been receiving an average of $4.86 billion annually in today's dollars in subsidies and tax breaks since 1918. Or the fact that Congress exempted natural gas developers from key provisions of seven major environmental laws, including the Clean Air Act and Clean Water Act.
The nuclear power industry doesn't like the wind tax break, either. Its most outspoken critic is Exelon, the nation's largest nuclear plant owner with 23 reactors at 14 plant sites. The Chicago-based utility contends Midwest wind installations are cutting into its profit margins by driving down electricity prices, and it blames the PTC. The company has been lobbying Congress to terminate it, and as I reported earlier this week, it recently launched a front group, Nuclear Matters, to generate public support for keeping all U.S. reactors running.
"If the government believes that they're improving the environment by subsidizing wind, they are wrong," Exelon CEO Christopher Crane told the Chicago Tribune in late April. "It is going to shut nuclear plants down." Around the same time, Exelon Senior Executive Vice President William Von Hoene Jr. clarified the company's position. Exelon is not "anti-wind," he told trade reporters, "but anti-subsidy."
Anti-subsidy?! The nuclear industry is awash in subsidies. In fact, the industry wouldn't be economically viable without subsidies underwriting every stage of the nuclear fuel cycle, according to a 2011 report by the Union of Concerned Scientists (UCS). Altogether, those subsidies have often exceeded the average market price of the power produced.
What makes Exelon's opposition to the PTC complicated is it is much more than a nuclear power company. The largest supplier of wholesale power in the country, it gets 55 percent of its electric generation capacity from nuclear, 28 percent from natural gas, 6 percent from hydro, 4 percent from coal, and 3 percent from oil. The remaining 4 percent comes from landfill gas, solar and ... wind.
Although wind represents a tiny percentage of Exelon's capacity, it's the 12th largest wind farm owner in the country. It was even on the board of the American Wind Energy Association — until it got kicked off two years ago for slamming the PTC. No matter. Given that nuclear power and natural gas represent more than 80 percent of its generating capacity, Exelon is against subsidies — but only for wind and other renewables. Exelon officials don't mention the fact that natural gas is heavily subsidized, and they actually claim with a straight face that nuclear power is not subsidized at all.
There's no question that nuclear power's future isn't looking as rosy as it did 10 years ago. Back then, U.S. utilities were banking on a nuclear renaissance. Some proponents were calling for as many as 100 new reactors. Now the industry likely will get at most five built in the next 10 years, and the economic viability of some operating reactors is now in question. "Merchant" plants in deregulated markets, which are not guaranteed an annual profit, are particularly at risk. In any case, four reactors closed last year, and Vermont Yankee's lone reactor will shut down this fall. Investment research firm Morningstar has identified six reactors that may be next in line. And Exelon, which plans to shut down New Jersey's Oyster Creek plant in 2019, is threatening to close some of its Illinois reactors if market conditions don't improve.