Future of New York NPPs in the balance

20 July 2016

US Entergy Corporation is in discussions with Exelon Corporation for the potential sale of the single-unit Fitzpatrick NPP in New York state. An Entergy statement said the discussions with Exelon were consistent with its commitment to consider any viable option that would allow Fitzpatrick to remain in operation. Entergy announced in November 2015 that it planned to shut down and decommission the single unit 813MWe Fitzpatrick plant and later said it would cease operations in late January 2017, although it is licensed to operate until 2034.

Entergy, which operates 11 nuclear units, said the decision to close the boiling water reactor, which began commercial operation in July 1975, was based on the deteriorating economics of the facility, including significantly reduced plant revenues. This was attributed to low natural gas prices, a poor electricity market design that fails to properly compensate nuclear generators like Fitzpatrick for their benefits, and high operational costs.

Exelon Generation has formally notified grid operator PJM Interconnection of its plans to retire its Quad Cities NPP on 1 June 2018. The company said it plans later this year to inform MISO, grid operator for its Clinton NPP, of that plant's closure which is set for 1 June 2017. However, Exelon   confirmed on 14 July that it will invest millions of dollars to keep Fitzpatrick and its other NPPs in upstate New York (Nine Mile Point and RE Ginna) in operation if a support mechanism recently proposed by the New York State Department of Public Service is approved.

The NPPs are the basis of the state's proposed Clean Energy Standard (CES) to help provide a so-called bridge to a clean energy future for the state. Earlier this year the State of New York Public Service Commission ruled that the CES portfolio must include a support mechanism to ensure that the upstate nuclear power plants - at risk because of the economic challenges from the short-term nature of the deregulated market they operate in and competition from low-cost gas and federally subsidised wind power - continue in operation. The state's Department of Public Service subsequently published its proposed mechanism to achieve that by valuing their zero-emissions attributes based on the social cost of carbon.

Exelon said the proposals in the Department of Public Service's paper, if approved, would help keep its upstate plants running as the state of New York transitions to a 50% zero-carbon energy standard by 2030. "If the programme is approved, we will immediately reinvest approximately $200m [in Nine Mile Point and Ginna] in the spring and continue to operate. If the programme is not approved, we need to go in a different direction," Joseph Dominguez, Exelon executive vice president for governmental and regulatory affairs and public policy, said. Exelon CEO Chris Crane said: "The proposed CES program, if approved, will give us the confidence to invest hundreds of millions of dollars in Fitzpatrick in January to refuel the plant and upgrade systems needed to reverse the shutdown decision."



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