Exelon Corp. (NYSE: EXC) said in its Aug. 9 quarterly Form 10-Q report that its possible purchase of the Fitzpatrick nuclear plant in New York includes coverage by Exelon of the costs for the next refueling outage at the plant.
On Aug. 8, Exelon Generation executed a series of agreements with Entergy Nuclear FitzPatrick LLC to acquire the 838-MW single-unit James A. FitzPatrick nuclear station located in Scriba, New York, for a cash purchase price of $110 million. As part of the transaction, Exelon Generation would receive the FitzPatrick Nuclear Decommissioning Trust fund assets and assume the obligation to decommission FitzPatrick. Entergy Nuclear Fitzpatrick is a unit of Entergy Corp. (NYSE: ETR).
Closing of the transaction is currently anticipated to occur in the second quarter of 2017 and is dependent upon approvals by the Federal Energy Regulatory Commission, Nuclear Regulatory Commission and the New York Public Service Commission (NYPSC). The transaction is also subject to the notification and reporting requirements of the HSR Act and other customary closing conditions.
The NRC license for FitzPatrick expires in 2034. Entergy had previously announced plans in November 2015 to early retire FitzPatrick at the end of the current fuel cycle in January 2017. Under the terms of the agreements, Exelon Generation will reimburse Entergy for approximately $200 million to $250 million of incremental costs to refuel the plant and operate and maintain the plant after the refueling outage, scheduled to end in February 2017, through the closing date of this purchase transaction.
These are costs which otherwise would have been avoided by FitzPatrick’s planned permanent shutdown in January 2017, a portion of which for financial reporting purposes will be evaluated as part of the purchase price consideration. Exelon Generation will be entitled to all revenues from FitzPatrick’s electricity and capacity sales for the period commencing upon completion of the refueling outage through the acquisition closing date. The agreements provide for certain termination rights, including the right of either party to terminate if the transaction has not been consummated within 12 months due to failure to obtain the required regulatory approvals.
Entergy said in its own Aug. 4 Form 10-Q report: “In October 2015, Entergy determined that it will close the Pilgrim and FitzPatrick plants. The decisions to shut down the plants were primarily due to the poor market conditions that have led to reduced revenues, the poor market design that fails to properly compensate nuclear generators for the benefits they provide, and increased operational costs. The Pilgrim plant is expected to cease operations on May 31, 2019. The FitzPatrick plant is preparing to shut down at the end of its current fuel cycle, which is planned for late January 2017, and those preparations are ongoing. Entergy announced in July 2016, however, that it is in discussions with another company for the possible sale of FitzPatrick.”