Entergy (NYSE:ETR) has spent more than $200m on its decade-long effort to get 20-year license renewals for Indian Point Units 2 and 3, Entergy Wholesale Commodities (EWC) President Bill Mohl said during a news conference Jan. 9.
“That’s an average of over $20 million per year,” a somber Mohl said during the news conference. Entergy had hoped to have the two nuclear reactors relicensed within three-to-four years, Mohil said.
“The other plants in New York got their licenses in a little over two years,” Mohl said. But Entergy has now decided to retire the two nuclear units, located about 35 miles outside of Manhattan, in 2020 and 2021.
The move was announced earlier in the day by Entergy and New York Gov. Andrew Cuomo (D), a long-time critic of the nuclear project. The State of New York and other foes of the license renewal have evidently agreed to a shorter license renewal to 2024 and 2025.
The agreement envisions the two units retiring in 2020 and 2021. In the event of a disaster, the New York Independent System Operator (NY ISO) could decide that the nuclear station’s generation is needed for four additional years.
Mohl stressed that, while there is litigation, the State of New York is not putting Indian Point out of business. The decision was driven was market factors – chiefly declining power prices driven by cheap natural gas.
“The decision to shut down the plant was ours and ours alone – and due to economics,” Mohl said.
Power prices in the region served by the nuclear complex bottomed out to $25/MWH in 2016. That’s a far cry from prices in the $70 to $90/MWH range only 10 years earlier.
Entergy currently doesn’t foresee the price of natural gas getting much above the current level of $3-to-$4/mmBtu in the next few years.
Negotiations between the state and Entergy about plant closure “got serious” in the last several weeks, Mohl said.
Legal negotiations were confidential and therefore Entergy was not free to inform Westchester County in advanced, Mohl said. The Entergy official also said that the company didn’t have any role in the Jan. 6 story in The New York Times prior to the formal announcement of the retirement deal.
In response to one question, Mohl declined to say that Indian Point might have remained open if it had been made eligible for state-backed “zero emission credits” or ZECs that are being earmarked for Upstate New York nuclear plants.
Cuomo and other critics of Indian Point have argued for closure in part because the nuclear complex’s close proximity to New York City. Because of other Entergy wholesale nuclear unit retirements in the Northeast and Midwest, the Indian Point complex was effectively the company’s “last remaining asset” in the merchant nuclear fleet.
While Mohl said cheap natural gas generally helps the environment, “Are you comfortable in an environment where you have only renewable and gas-fired plants?”
Operating costs were also driven up somewhat by problems with baffle bolts at the nuclear plant, Mohl said.
Entergy purchased the two nuclear units years ago. Unit 2 was purchased from Consolidated Edison (Con Ed) and Unit 3 was bought from the New York Power Authority (NYPA).