By William Opalka

Entergy is expected to announce this week whether it will keep operating the James A. FitzPatrick nuclear plant near Syracuse, N.Y.

The company said earlier this month that it would announce a decision by the end of October on whether it would continue to run the 838-MW plant in the face of stiff economic pressure. The 40-year-old facility on the shores of Lake Ontario is due to be refueled in late 2016.

“A decision whether to conduct FitzPatrick’s next refueling outage is expected around the end of the month. The company continues to be focused on constructive discussions with the state,” Entergy spokesman Tammy Holden said on Friday.

Another troubled nuclear plant in western New York has just completed negotiations with Rochester Gas & Electric and other stakeholders to keep operating into 2017 to maintain system reliability. An agreement was filed with the New York Public Service Commission and FERC last week to keep Exelon’s R.E. Ginna plant operating with ratepayer subsidies. (See Ginna Lifeline to End in 2017; Profitable Operation Afterwards ‘Unlikely’.)

Entergy, Cuomo Spar over Negotiations

Negotiations between Entergy and the administration of Gov. Andrew Cuomo, which apparently have been ongoing for months, took an ugly and public turn last week. Cuomo chastised the company for threatening the potential loss of 600 jobs to wring concessions from the state.

“This tactic has been attempted by others in the past and has been unsuccessful. In this state, an entity called the Public Service Commission has oversight over services deemed to be in the statewide public’s best interests. Entergy should keep that in mind. Any decisions will be made on the merits,” he said in a statement provided to Capital Tonight, a cable television program that covers state politics.

The company immediately responded by sending an email to employees that was obtained by the Syracuse Post-Standard. “Most recently, we have heard inaccurate claims that we are ‘holding employees hostage’ or ‘only seeking to improve our bottom line.’ That is simply not the truth. We are facing substantial financial challenges at FitzPatrick and have been negotiating in good faith with New York state over the last several months to obtain certainty for this facility,” wrote Bill Mohl, president of Entergy Wholesale Commodities. “We have a very short window of time remaining to come to a successful resolution with New York state and will be doing everything we can to achieve this. Waiting until the last minute does not serve anybody’s interests.”

Retirement Predicted

An Oct. 13 UBS research note on the prospects for Northeastern nuclear facilities predicts the plant will not survive. “We see single-unit nuclear assets are particularly challenged. We see this plant as next to formally retire,” UBS said.

In an 8-K filing with the Securities and Exchange Commission on Oct. 16, Entergy reported a $965 million impairment charge against the plant, referring to an undisclosed “triggering event” in the third quarter. The plant was previously listed as having a book value of $1.14 billion.

On Oct. 13, Entergy announced the closure of the Pilgrim nuclear plant in Massachusetts, which faces economic challenges similar to FitzPatrick, as cheap natural gas has lowered clearing prices in energy markets. (See Entergy Closing Pilgrim Nuclear Power Station.)

Entergy also wrote down the value of Pilgrim by $677 million. Combined, the two writedowns will total $1.6 billion pre-tax basis and about $1.1 billion after-tax (-$5.93/share).