Exelon is a member of the US Climate Action Partnership and because of its huge fleet of nuclear power plants is on everyone's list of companies that will benefit from any Presidential executive branch actions on carbon dioxide.*
From al-Jazeera:
How electricity auctions are rigged to favor industry
Consumers pay higher prices thanks to Enron tactics
The latest major electricity auction demonstrates yet again how the industry, with help from Wall Street financial engineers, is gaming power markets, forcing customers to pay higher prices. You would not know that, however, from most news reports mentioning the auction.
Absent disclosures by the secretive markets, investigation and reform, you should expect your monthly electricity bill to rise sharply in the next few years as electricity industry investors reap outsize profits.
Losing is winningThe auction last week was not for electricity itself, but for promises to maintain the capacity to generate power in future years. The so-called capacity auction was conducted by PJM, the electricity market in 11 states serving 61 million people from New Jersey to Illinois.
Exelon informed investors that two Illinois nuclear plants and one New Jersey plant filed losing bids. The bids for these plants were higher than bids filed by other power plants owned by Exelon and other companies to provide the amount of generating capacity that PJM says will be needed for the 12 months beginning June 1, 2017.
PJM is a secretive market that does not disclose bid details even after an auction. But a list of all Exelon plants in the PJM area indicates that the losing bids affected just 17 percent of its generating capacity.
The capacity market is a so-called single-price or clearing-price auction. The highest bid needed to ensure capacity wins, with all those who bid less also getting the highest price. Those who bid above that price, like the two Exelon nuclear plants, get nothing.
Exelon alerted stock traders to these losing bids. When the markets opened on Tuesday, its share price jumped up, closing at 3.6 percent higher than on the previous trading day.
Why would losing bids make the stock price go up?
Strange as it may seem, Exelon stands to make a lot more money because it made losing bids for about one-sixth of its generating capacity. The reason is that it will collect much bigger revenues on the 83 percent of its plants that filed winning bids. Therein lies one of the many problems with the electricity market rules.
Exelon will get almost exactly double the capacity market payments than if it had placed winning bids for its entire fleet of generating plants, utility rate consultant Paul Chernick estimates....MUCH MORE*From the company's 2nd quarter 2009 slide-show (p.3):
Lowest carbon intensity in the sector - $1.1 billion(2) and growing annual upside to Exelon revenues from implementation of Waxman-Markey legislationFrom a letter to NRG shareholders during the takeover attempt:
(2) Assumes $15/tonne carbon pricing.
We are offering you securities in a company… whose value rises rather than declines as carbon is priced into the marketplace…We've looked at the electricity giant quite a few times. In 2011 it was "Obama Job's Czar Calls on President's Hometown Utility for Help With Japanese Nukes (GE; EXC)":
It's called networking.
As I said a couple weeks ago: "Before the President made an honest man of him, David Axelrod was a consultant to EXC". Some of the connections I didn't mention [he thinks everyone knows/cares about this stuff -ed] that Frank Clark, the CEO of EXC subsidiary Commonwealth Edison, a company with a storied securities and crony politics history dating back to the Sam Insull days and before, was an Obama advisor and fundraiser. Then there's some guy named Rahm Emanuel who, as his mayoral opponent in the recent election said:
...“I defy you to tell me anybody you know who jumped out of government into a business for which he had no credentials or background, made $18.5 million in two years and then jumped back into government,”...How did Rahm do it?* Among other things, during his 2 1/2 year stint he brokered the $15.2 Bil. (equity, there was another $16 Bil. of debt) merger of Com Ed's parent, Unicom, with Philedelphia's PECO Energy which the NYT noted with the headline "Peco and Unicom to Merge In Big Bet on Nuclear Power".
Exelon runs 5 of the 23 GE Mark I boiling water reactors in the U.S, sisters of two of the plants in trouble at Fukushima.
With that long [and meandering -ed] intro, here's the story via the Wall Street Journal...
