Entergy Corporation said Monday morning that it would close the 838 megawatt James A. FitzPatrick Nuclear Power Plant in Scriba, NY, in late 2016 or early 2017, due to what the company called the "deteriorating economics of the facility"
The key drivers for the decision are familiar to the industry. They include significantly reduced plant revenues due to low natural gas prices, a poor market design that fails to properly compensate nuclear generators like FitzPatrick for their benefits, as well as high operational costs, the company said.
Entergy said it "worked tirelessly" with New York State officials to reach a constructive and mutually beneficial agreement to avoid a shutdown. The effort fell short, however.
"Given the financial challenges our merchant power plants face from sustained wholesale power price declines and other unfavorable market conditions, we have been assessing each asset," said Leo Denault, Entergy's chairman and chief executive officer in a statement.
"As part of this review, we previously announced the closure of the Pilgrim Nuclear Generating Station in Massachusetts and have now decided that despite good operational performance, market conditions require us to also close the FitzPatrick nuclear plant," Denault said.
FitzPatrick employs more than 600 workers, and has been a part of the Oswego Countycommunity since it began generating electricity in 1975.
Denault said the company would work to help its workforce transition to other options, expressing gratitude to the community "for its overwhelming support and willingness to stand with us for more than 40 years."
The decision to close the FitzPatrick plant was based on the following factors that make it no longer economically viable:
- Sustained low current and long-term wholesale energy prices, driven by record low gas prices due to the plant's proximity to the Marcellus shale formation, have reduced the plant's revenues. Current and forecast power prices have fallen by about $10 per megawatt-hour, which equates to a projected annual loss of more than $60 million in revenues for FitzPatrick.
- Flawed market design fails to recognize or adequately compensate nuclear generators for their benefits. FitzPatrick and other nuclear power generators provide a key fuel diversity benefit with significant climate-related advantages. In addition to generating virtually carbon-free electricity, nuclear plants offer onsite fuel storage, maintain grid reliability and serve as a significant source of large-scale 24/7 energy generation.
- The plant carries a high cost structure because it is a single unit. Entergy has already invested hundreds of millions of dollars to improve FitzPatrick's reliability, safety and security. While the company will always make investments needed to assure safe operations, it considers the long-term financial viability of operating plants in markets that ignore the benefits of nuclear power.
- The locational constraints reduce the plant's revenues. The region has excess power supply and low demand.
The closure leaves, Entergy with one power generating facility in operation in New York State, the Indian Point Energy Center in Buchanan, NY. Entergy also pledged that it "remains committed to nuclear power," which provides the United States with almost two-thirds of its clean air electricity.
Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 10,000 megawatts of nuclear power, making it one of the nation's leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi andTexas. Entergy has annual revenues of more than $12 billion and approximately 13,000 employees.