Exelon Generation announced on Tuesday that it had agreed to assume ownership and management of Entergy Corporation's James A. FitzPatrick Nuclear Power Plant in Scriba, N.Y., in a deal made possible by the state's recently approved Clean Energy Standard policy that includes subsidies for upstate nuclear power facilities.
Entergy had announced that it would close the FitzPatrick plant as of January 2017,prior to the next expensive refueling outage, based on the plant's inability to turn a profit. Exelon's R.E. Ginna and the Nine Mile Point, in Ontario and Oswego, N.Y., were also under threat of closure due to market headwinds.
The state of New York responded with a policy meant to set a high target for sourcing renewable energy and support nuclear power with a 12-year subsidy plan for nuclear plants that would be based on the wholesale price of electricity in the upstate regions of the state – leaving out Entergy's two-unit downstate plant, Indian Point, which operates in a more profitable environment close to New York City.
Exelon Generation, owner of 16 separate nuclear power facilities, said the Clean Energy Standard policy adopted by Gov. Andrew Cuomo's office last week “helped facilitate the transaction.” Prior last week, Exelon had said taking over the FitzPatrick plant was contingent on the state moving forward with the Clean Energy Standard (CES) plan.
On Monday, financial advisory Moody's Investment Services issued a report that outlined the “broader implications” of the CES plan, saying it could be adopted by other states that wanted to establish sound energy policies without disrupting the rural economies that count on jobs provided by the nuclear power industry.
The CES, approved last week, will save thousands of high-paying jobs and spur hundreds of millions of dollars in short-term investments in energy infrastructure in upstate New York, Exelon said. Without the plan, upstate nuclear plants would have been at “risk of closure” the company said.
“We are pleased to have reached an agreement for the continued operation of FitzPatrick,” said Exelon President and Chief Executive Officer Chris Crane in a statement. “We look forward … to continue to delivering to New York the environmental, economic and grid reliability benefits of this important energy asset,” he said.
Under the agreement, totaling $110 million, Entergy would transfer FitzPatrick's operating license to Exelon. The New York Power Authority has agreed to transfer the decommissioning trust fund and liability to Exelon.
The transaction, however, is dependent on regulatory review and approval on both state and federal levels. The U.S. Department of Justice, the Nuclear Regulator Commission, the Federal Energy Regulatory Commission and the New York State Public Services Commission are expected to scrutinize the deal that is expected to close – should no regulatory hurdles stand in the way – by the end of the second quarter of 2017.
As previously announced, Exelon intends to reinvest millions “right back into the upstate economy,” the company said, with plans to invest $400 million to $500 million in operations, integration and refueling expenditures in the spring of 2017 – “all of which will have a positive impact across the state."