Exelon: Competitive Markets Can Achieve Clean Energy Goals at One-Fourth the Cost of Other Approaches

A new analysis by Exelon under its Exelon 2020 strategy finds that by letting competitive electricity markets work, the electric utility industry can slash harmful air pollutants for as little as one-quarter the cost of other politically popular approaches, such as subsidizing favored energy technologies.

"The evidence is clear: Markets are delivering more than cost savings and reliability – they are also delivering clean energy,” said John W. Rowe, chairman and CEO of Exelon. "We believe that they will continue to be the best mechanism for delivering clean, reliable and affordable electricity.”

Under its Exelon 2020 strategy, the company has conducted annual studies of the most cost-effective ways to reduce carbon emissions. This year, Exelon expanded its analysis beyond carbon emissions to examine nitrogen oxide (NO_x), sulfur dioxide (SO₂) and toxic air pollutants targeted by EPA clean air rules.

The analysis shows how the 13-state PJM power market in which Exelon operates can most cost-effectively reduce harmful air pollutants that affect the lives of millions of Americans and result in tens of billions of dollars in annual healthcare costs. This lowest-cost approach requires that:

• Federal and state policymakers avoid picking winners and losers through government mandates or subsidies for favored energy technologies
• EPA provides regulatory certainty by finalizing its clean air rules – namely, the Cross-State Air Pollution and Air Toxics Rules – in a timely manner
• Competitive electricity markets are permitted to work.

The analysis compared this lowest-cost approach with three other approaches that are more politically popular today, including subsidizing large amounts of wind power; mandating investment in a mix of wind, solar, new nuclear and clean coal; and subsidizing pollution controls for old, inefficient coal-fired power plants. These options were shown to cost consumers up to an additional $15 billion per year – or four times the lowest-cost approach – while sometimes falling well short of the nation’s clean air standards.

"Exelon 2020 tells us that properly designed competitive markets will ensure that the energy supply is cleaned in the most effective manner. No new mandates or subsidies are needed so long as EPA Clean Air Act regulations go into effect,” Rowe said. "The market, properly reflecting all the costs of energy, makes better choices for electricity supply than other options. And the cost of other approaches can be huge, which ultimately costs consumers more.”

Exelon 2020, the company’s business and environmental strategy introduced in 2008, has a goal of eliminating the equivalent of Exelon’s 2001 carbon footprint by reducing, offsetting or displacing more than 15.7 million metric tons of greenhouse gas emissions per year by 2020. As of the end of 2010, Exelon had achieved more than 56 percent of the goal by eliminating more than 8.9 million metric tons of emissions. Based on Exelon’s performance through the third quarter of 2011, the company expects to achieve more than 75 percent of its goal by the end of this year.

Current, key initiatives under Exelon 2020 include:

• ComEd and PECO energy-efficiency programs, which helped customers save 1.5 million megawatt-hours of energy through last year
• Energy use reduction in Exelon’s commercial facilities of 25 percent as of 2010
• Increases in capacity at Exelon’s existing low-emission nuclear plants by nearly 190 megawatts (MW) since 2008, with more power uprates planned through 2017
• Investment in clean, natural-gas fired generation, including the acquisition of the 720-megawatt Wolf Hollow natural gas-fired power plant in August 2011
• Investment in renewables, including the acquisition of Antelope Valley Solar Ranch One, a 230-MW solar photovoltaic project under construction in California
• Permanent retirement of two inefficient, coal-fired units in Pennsylvania in May 2011, with two additional fossil units in the state slated for retirement in December 2011 and June 2012.

The Exelon 2020 update for 2011, including comparisons of various clean energy policy approaches, is available at exeloncorp.com.

Exelon Corporation is one of the nation’s largest electric utilities with more than $18 billion in annual revenues. The company has one of the industry’s largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.4 million customers in northern Illinois and southeastern Pennsylvania and natural gas to approximately 490,000 customers in the Philadelphia area. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.