Pilgrim might close as early as 2017; decision on FitzPatrick expected soon, Entergy says

Entergy (NYSE:ETR) might close its Pilgrim nuclear plant in Massachusetts as early as the spring of 2017, depending on if the company elects to carry out the next scheduled refueling outage, Entergy Wholesale Commodities (EWC) President Bill Mohl said in a news conference on Oct. 13.

“We have not decided whether to proceed with the plant’s next refueling outage,” which is scheduled in the spring of 2017, Mohl said. EWC is the Entergy affiliate that operates the company’s merchant nuclear plants. The decision on the refueling will be made in the first half of 2016.

Staffing at the 680-MW nuclear plant will remain at current levels, about 630 employees, through plant closure, Mohl said.

The Massachusetts news conference, which was webcast, allowed Mohl and other Entergy officials to elaborate on the company’s announcement earlier in the day that it would close Pilgrim, located in Plymouth, Mass, no later than June 1, 2019.

In the event that Entergy closes Pilgrim in 2017, the company could arrange to obtain energy from other resources that would then be used to help Entergy meet its power commitment to the ISO New England (ISO NE) through May 2019.

In keeping with an ISO NE deadline, Entergy informed the ISO Oct. 12 that it did not plan for Pilgrim to participate in an auction for 2019.

Mohl said he wanted to “provide context for a very difficult decision,” which he also described as “agonizing.” In response to questions, Mohl also acknowledged that another difficult decision looms at the FitzPatrick nuclear plant in Oswego County, N.Y.

Entergy reviews the viability of each of its generating assets on an annual basis, Mohl noted.

“I think we have made it clear that our FitzPatrick facility is in a similar position,” meaning it is a single-unit nuclear plant operating in a challenging market, Mohl said. Mohl added that the future of FizPatrick would be decided this month.

“We continue to be in discussions with New York State” and it’s premature to say what will happen at Fitzpatrick.

On the other hand, the market situation facing the two Indian Point units located in Buchanan, N.Y., is much better, Mohl said.

“We recognize that closing the plant on this schedule was not what any of us had hoped for,” Mohl said of the Pilgrim closure.

Over time, however, it has become clear that Pilgrim “is simply no longer financially viable,” Mohl said. “We were forced to acknowledge the very harsh reality that Pilgrim faces,” he added.

While the recent downgrade, and resulting increased oversight, from the Nuclear Regulatory Commission (NRC) was a contributing factor it was not a key driver, Mohl said.

State, FERC policy didn’t do nuclear any favors, Mohl said

The chief drivers were economic, Mohl said. It was the cumulative effect of low wholesale energy prices, which have turned out to be lower than Entergy envisioned a year ago, combined with various policy developments that “pick winners and losers,” he added.

While “some progress” has been made in capacity markets, changes are needed in energy prices – and that’s where plants like Pilgrim get 85% of their revenue, Mohl said.

The Entergy official suggested that policy moves by various entities have favored other types of generation over nuclear power in New England. “The proposed Massachusetts clean energy standard excluded nuclear generation,” Mohl said.

Senate Bill 1965 in Massachusetts favors having that state import large amounts of hydroelectric power from Canada; the Federal Energy Regulatory Commission (FERC) granted incentives for natural gas plants to stock-up on back-up onsite fuel during the winter – but not credit nuclear plants for on-site fuel availability, Mohl said.  

Also Mohl cited “ratepayer-subsidized access to gas pipeline capacity,” as an example of an uneven playing field for nuclear power.

“Entergy remains committed overall to nuclear power,” as a source of carbon-free, baseload power, Mohl said.   

The Entergy official praised Pilgrim employees. “We are not closing the plant immediately and we have important work to do together.”

When asked about the Palisades nuclear plant in Michigan, Mohl said it is facing a better financial situation.

Palisades has a power purchase agreement in effect through about 2022 and a number of coal plants are scheduled to retire in that region and that will affect the Midwest marketplace, Mohl said.

 

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.