Kay Jones (Media Relations)
Paula Waters (Investor Relations)
NEW ORLEANS -- Entergy Corporation (NYSE: ETR) announced today that it will close the James A. FitzPatrick Nuclear Power Plant in Scriba, NY, in late 2016 or early 2017. The company said its decision to close the plant is based on the continued deteriorating economics of the facility. The key drivers cited by the company 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.
Entergy is reporting today to the operator of the electric grid, the New York Independent System Operator, and to the New York State Public Service Commission that it will retire the plant at the end of the current fuel cycle.
Entergy and New York State officials worked tirelessly over the past two months to reach a constructive and mutually beneficial agreement to avoid a shutdown, but were unsuccessful.
"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. "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 continued.
FitzPatrick employs more than 600 workers, and has been a part of the Oswego County community since it began generating electricity in 1975.
"We recognize the consequences of the shutdown for our employees and the surrounding community and pledge to do our best to support both during this transition. As a company, we are committed to ensuring the well-being of our employees, and appreciate their continued dedication to making safe, clean, secure and reliable operations a top priority," Denault said. "Additionally, to the community of Oswego, we would like to express our gratitude for its overwhelming support and willingness to stand with us for more than 40 years."
Financial Factors Behind Decision
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.
Entergy's Commitment to Nuclear Power
When FitzPatrick closes, Entergy will have one power generating facility in operation in New York State, the Indian Point Energy Center in Buchanan, NY.
Entergy remains committed overall to nuclear power, whose benefits include carbon-free, reliable power that is cost-effective over the long term, contributes to supply diversity and energy security as part of a balanced energy portfolio. It provides almost two-thirds of America's clean-air electricity.
The FitzPatrick Nuclear Power Plant generates 838 megawatts of nearly carbon-free electricity, enough to power more than 800,000 homes.
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 and Texas. Entergy has annual revenues of more than $12 billion and approximately 13,000 employees.