The 849 MW FitzPatrick nuclear power plant in Scriba, New York, will be shut permanently by late 2016 or early 2017, due to "the continued deteriorating economics of the facility," Entergy said Monday in a statement. The unit is licensed to operate until October 2034.
"The key drivers" in the company's decision to shut FitzPatrick "include significantly reduced plant revenues due to low natural gas prices, a poor market design that fails to properly compensate nuclear generators like FitzPatrick for their benefits [and] high operational costs."
New York Governor Andrew Cuomo, a Democrat, issued a statement Monday saying that the state "will pursue every legal and regulatory avenue in an attempt to stop Entergy's actions and its callous disregard for their skilled and loyal workforce." Stating that FitzPatrick's closing "will devastate the lives of the more than 600 employees and their families,' Cuomo added, "Good corporate citizenship must appreciate that there are many factors that count as the 'bottom line.'"
Patricia Kakridas, an Entergy spokeswoman, said in an email Monday, "We have no comment on the governor's statement."
Entergy said October 13 it would permanently shut its 728 MW Pilgrim plant in Massachusetts as early as the spring of 2017, citing identical issues. No decision has been made as to whether Pilgrim will be refueled in spring 2017, Entergy Chairman and CEO Leo Denault said Monday in a third-quarter earnings conference call with financial analysts. The company's 635 MW Vermont Yankee plant shut permanently at the end of December, with economic reasons also cited.
The 845 MW Palisades plant in Covert, Michigan, has a power purchase agreement with Consumers Energy Co. that runs "to April 2022," Denault said during the conference call, in response to an analyst's question about the future of this plant.
SEEKS NYISO RELIABILITY ASSESSMENT FOR FITZPATRICK
Entergy said Monday it notified the New York Independent System Operator and the New York State Public Service Commission that it will retire FitzPatrick at the end of the unit's current fuel cycle.
"Given the financial challenges our merchant power plants face from sustained wholesale power price declines and other unfavorable market conditions, we have been assessing each asset," Denault said in the statement.
Entergy said in the statement that the unit "carries a high-cost structure because it is a single unit," and that the upstate New York region where it is located "has excess power supply and low demand."
"Sustained low current and long-term wholesale energy prices, driven by record low gas prices due to the plant's proximity to the Marcellus shale formation, have reduced the plant's revenues," it said. "Current and forecast power prices have fallen by about $10 per megawatt-hour, which equates to a projected annual loss of more than $60 million in revenues for FitzPatrick."
PLANS SAFSTOR DECOMMISSIONING
William Mohl, president of Entergy Wholesale Commodities, whose generating portfolio includes nuclear power, said during the conference call that the company would decommission the unit using the Safstor method. Under the Safstor option, which is being used at Vermont Yankee and will be at Pilgrim, a plant is placed in a safe, stable condition for as long as 60 years until decommissioning work is completed.
Mohl estimated FitzPatrick's decommissioning fund totals about $728 million. The US Nuclear Regulatory Commission, in a December 31 decommissioning funding status report, reported the projected balance in FitzPatrick's decommissioning trust fund, just prior to the end of its license in 2034, would be just over $1 billion. The minimum amount of money required to complete decommissioning at the unit was estimated at just over $651.3 million.
Mohl also said during the earnings call that Entergy asked the NYISO to do an analysis of FitzPatrick to determine whether its generation is needed to assure electric system reliability in the upstate New York region.
Exelon Generation sought a similar reliability assessment in 2014 for its Ginna nuclear plant located elsewhere in upstate New York. The ISO study concluded Ginna's output was needed for reliability.
Exelon and Rochester Electric & Gas asked the state's public service commission to approve a reliability support services agreement under which the utility would pay a premium for Ginna's electricity. The initial proposal was set to run from April of this year through September 2018, but was amended last month to end in March 2017, as the utility said new transmission lines would be available sooner than anticipated to replace Ginna's generation.
Entergy on Monday reported a loss under GAAP of $4.04/share in Q3, including $5.93/share of non-cash asset impairments for Pilgrim.
The also recorded a "special item for Pilgrim/FitzPatrick asset impairments and related write-offs (pre-tax)" of $1.64 billion in Q3.
