Illinois approves $700 million in subsidies to Exelon, prevents nuclear plant closures

© Reuters. FILE PHOTO: The Three Mile Island Nuclear power plant is pictured from Royalton, Pennsylvania, U.S. May 30, 2017. REUTERS/Carlo Allegri

By Timothy Gardner

(Reuters) -The Illinois Senate on Monday saved two Exelon Corp (NASDAQ:EXC) nuclear power plants from closure by passing a bill that will provide $700 million in subsidies to the company over five years for generating virtually carbon-free power.

Exelon had threatened to close its Byron nuclear plant on Monday and Dresden nuclear plant in November

because of rising costs and competition from power plants that burn low-cost natural gas.

The Senate passed the bill 37-17. The house approved the measure last week after a compromise deal on coal plant closures favored by both environmentalists and labor groups.

Exelon said it was preparing to refuel its 40-year-old Byron and Dresden plants after the Senate vote.

"The threat to our planet is real," said Senate President Don Harmon, a Democrat. "Our goal all along was to enact reliable, renewable and affordable energy policies that position Illinois to lead the nation in combating climate change and growing a green energy economy."

While nuclear power plants create toxic waste for which there is no permanent U.S. repository, some environmentalists and politicians praise nuclear energy as climate friendly because it generates virtually carbon-free power. Nuclear plants also tend to pay some of the energy industry's highest wages.

The coal plant deal requires private coal-fired plants to shut by 2030. Municipal coal plants must cut carbon emissions 45% by 2035 and achieve zero emissions or close by 2045.

Some lawmakers including Senator Chapin Rose, a Republican, said the closure of coal plants would simply lead to more imports of coal-fired electricity from Indiana and Kentucky.

Gina McCarthy, President Joe Biden's climate adviser, has said existing nuclear plants are "absolutely essential" to hit U.S. goals to decarbonize the electric grid by 2035. The administration has supported federal incentives for the industry. The United States has 93 nuclear reactors, down from 104 in 2012.