Entergy discloses non-cash impairment of more than $1bn on nuclear plants

Days after announcing plans to close its Pilgrim nuclear power plant in Massachusetts, Entergy (NYSE:ETR) disclosed that it is taking a “non-cash impairment” or charge of more than $1bn collectively for Pilgrim and the James A. FitzPatrick nuclear plant in New York.

While Entergy has decided to close Pilgrim in less than four years, it’s possible that FitzPatrick could close soon also, Entergy said in a financial filing.

The non-cash impairments for the two plants total roughly $1.6bn on a pre-tax basis and approximately $1.1bn after-tax, according to an 8-K report that Entergy filed with the Securities and Exchange Commission (SEC) on Oct. 16.

Entergy announced Oct. 13 that it plans to close the 680-MW Pilgrim plant in Massachusetts by June 2019. That closure, which the company blamed on factors including market policy and reduced revenue, could come as early as spring 2017.

The exact timing of the Pilgrim closure will hinge on whether the company decides to carry out its next scheduled refueling and maintenance outage for Pilgrim.

Entergy has also informed employees at the roughly 850-MW FitzPatrick plant in Oswego County, N.Y., that they will learn within weeks whether FitzPatrick will also be prematurely retired.

FitzPatrick’s next refueling outage, currently scheduled for fall 2016. Entergy is in discussions with the State of New York regarding the future of FitzPatrick and plans to make a decision around the end of October, according to the 8-K report.

Entergy is preparing financial statements for third quarter 2015 financial reporting. In connection with preparation of such financial statements, the company has concluded that it will report non-cash asset impairments.

Under generally accepted accounting principles, long-lived assets are typically accounted for on a historical cost basis unless a triggering event occurs which requires an impairment evaluation. Both plants experienced a triggering event in the third quarter. Applying the accounting rules after these events led to the impairments and related charges, Entergy said in the SEC report.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.