By William Opalka
Entergy said Monday it will close the 838-MW James A. FitzPatrick Nuclear Power Plant near Syracuse, N.Y., in late 2016 or early 2017. The company blamed reduced plant revenues due to low natural gas prices, a market design that doesn’t compensate nuclear power for carbon-free emissions and high operational costs.
The decision, which was expected, was announced in conjunction with the company’s third-quarter earnings. Entergy had already announced it was taking a $1.6 billion impairment charge as it wrote down FitzPatrick and the Pilgrim nuclear plant in Massachusetts, which it is also closing. (See Entergy may Announce FitzPatrick’s Fate this Week.)
“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,” Entergy CEO Leo Denault said in a statement.
“Entergy and New York state officials worked tirelessly over the past two months to reach a constructive and mutually beneficial agreement to avoid a shutdown but were unsuccessful,” he added. FitzPatrick, which has been operating since 1975, employs more than 600 workers.
Current and forecast power prices have fallen by about $10/MWh, costing FitzPatrick $60 million in annual revenue, the company said.
It also blamed a “flawed market design” that “fails to recognize or adequately compensate nuclear generators” for their fuel diversity and environmental benefits.
Like Pilgrim and Vermont Yankee, which Entergy closed in 2014, FitzPatrick has a high cost structure because it is a single unit. (See Entergy Closing Pilgrim Nuclear Power Station.)
Entergy said it has informed NYISO and the New York Public Service Commission that it will retire the plant at the end of the current fuel cycle. Under PSC rules, closure of units 80 MW or larger will prompt a reliability study for the affected region.
Unlike other areas in New York with either inadequate generation or constrained transmission, however, FitzPatrick is located where there is excess power supply. The plant is in Central New York Zone C, which has generating capacity of 6,650 MW to meet peak summer demand of about 2,574 MW, according to NYISO.
“We’ve had NYISO do analyses on whether FitzPatrick qualifies for a reliability-must-run agreement, and that most recent analysis says that it does not,” Bill Mohl, president of Entergy Wholesale Commodities, said on a call with financial analysts.
Entergy said the plant’s nuclear decommissioning trust had a balance of $729 million as of Sept. 30, $77 million more than the minimum for license termination, according to a Nuclear Regulatory Commission report earlier this year.
The trust is held by the New York Power Authority, which sold the plant to Entergy in 2000. The parties are discussing whether NYPA would transfer the decommissioning trust and the liability to Entergy or enter into a fixed-price decommissioning contract with Entergy for the amount in the trust.
With FitzPatrick’s closure, Entergy will have one generator in operation in New York state, the Indian Point Energy Center in Buchanan. Gov. Andrew Cuomo has said his preference is to close that facility due to its proximity to New York City.