Exelon Corp. has long supported the move to combat greenhouse gas emissions (GHG), and it remains committed to building more nuclear power projects in the United States. The buildup of nuclear power, however, won’t dampen the use of natural gas as a generation fuel, CEO John Rowe said last week. “Natural gas has become something of a bitch goddess. She’s still queen.”

Rowe, a keynote speaker at Cambridge Energy Research Associates’ (CERA) CERAWeek 2007 in Houston, said the costs of building new generation plants have become more difficult to predict, but he expects a build-out to begin in the near term for both rate-based and regulated units. Exelon has the largest U.S. nuclear fleet and the third-largest commercial fleet in the world. The diversified energy company’s 10 nuclear stations have 17 reactors, which represent 20% of the U.S. nuclear industry’s power capacity.

New nuclear projects in the United States should begin to materialize in the next two to three years, Rowe said. However, key members of Congress still have to be persuaded.

“A number of the nuclear projects…will depend on the new Democratic majority’s willingness to embrace the technology as an arrow in its quiver to address climate change.”

House Speaker Nancy Pelosi (D-CA) believes nuclear power “needs to be considered,” but other legislators are more resistant. Rep. Ed Markey (D-MA) heads a key committee to address nuclear power issues, and Rowe said, “I will be a very old man by the time I convince Mr. Markey on [supporting] nuclear energy.”

In Texas, however, where generation is needed, Exelon wants to build a nuclear plant. Subsidiary Exelon Generation last year notified the Nuclear Regulatory Commission (NRC) that it had begun the process to obtain a combined construction and operating license (COL) to build a plant in Texas at an as-yet unnamed location (see Daily GPI, Oct. 2, 2006).

The Chicago-based utility has not disclosed the capacity for the proposed plant. However, Exelon expects to submit an application to the NRC in 2008. Texas was picked for a new site partly because Exelon already has gas generating plants in the state and Texas is expected to have an increase in electricity demand over the next 20 years. Plus, Texas has to reduce its GHG emissions, he noted.

Congress is likely to enact a cap-and-trade system for carbon dioxide (CO2) within the next two years, Rowe said. However, he told attendees that a carbon tax would be “vastly superior” to a cap-and-trade program. Carbon taxes might not be politically viable, but Rowe noted that such a tax could provide companies with more of a guarantee about the cost of carbon, and it could provide regulators with much-needed revenue.

In any case, regulating CO2 and other GHG emissions will benefit Exelon and other large nuclear plant owners. Because Exelon has long supported a curb on GHG, it sold off some of its fossil fuel plants to prepare for more nuclear generation. However, the CEO admitted that gas still holds the lion’s share of the market with both customers and utilities. Exelon also distributes gas to more than 470,000 customers in southeastern Pennsylvania.

In a Securities and Exchange Commission filing on Wednesday, Exelon revealed that Rowe received total compensation, including salary, pension value and stock-based compensation, of $16.427 million last year. Rowe could have received an additional 143,000 stock options worth an estimated $1.859 million, but the Exelon board and Rowe agreed to donate that amount to the Illinois Institute of Technology, a fund run by the Archdiocese of Chicago to support inner-city schools, and the Chicago Field Museum of Natural History.

Executive compensation at Exelon is based on a “pay for performance” model and is benchmarked against other energy companies, according to company executives. Exelon has performed at nearly twice the rate of the Standard & Poor’s Utility Index in the past five years.

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