The Pilgrim nuclear power plant in Massachusetts is set to retire early due to poor electricity market conditions, reduced revenues and increased operating costs.
US utility Entergy has revealed it will close the 711MW boiling water reactor no later than 1 June 2019, and possibly as early as 2017. A decision will be made in the first half of 2016, follow discussions with grid operator ISO New England Inc.
Three key financial factors contributed to the decision to close Pilgrim.
Entergy said that record low natural gas prices have caused current and forecast power prices to fall by around $10/MWh,¬ leading to Pilgrim losing more than $40 million a year.
In addition, it cited "energy market design flaws," which do not provide adequate compensation to merchant nuclear plants for its reliable, low-carbon energy production; state subsidies for renewables and state proposals pay above market prices for Canadian hydropower.
Finally, Entergy said that Pilgrim was facing increased operating costs due to enhanced regulatory oversight. It estimated direct operation and maintenance expenses related to a planned NRC enhanced inspection ranges from $45 to $60 million, not including potential capital expenses.
"While we will always make needed investments at any plant, we also take into account the effect on our stakeholders of operating over the long-term if it is not economically viable to do so," the utility noted.
Entergy stated that before considering any impairment or the decision to close the plant, Pilgrim was expected to incur annual after-tax net losses on an operational basis from $10 million to $30 million for 2015, 2016 and 2017.
Pilgrim will be the second Entergy nuclear plant in New England to retire early due to electricity market conditions. In December 2014, the single unit Vermont Yankee nuclear station was closed. Entergy is currently reviewing the Fitzpatrick nuclear plant in New York, which is facing a similar situation.
Nuclear Matters co-chair, former Senator Judd Gregg warned "To continue down a path where plants like Pilgrim - and the rest of the existing nuclear fleet - are not properly valued is simply untenable and deprives communities of important economic benefits such as price stability for consumers." He said the news highlights an even greater sense of urgency around the need to implement public policies that ensure existing nuclear plants continue to provide long-term sustainability for the grid and sufficient power supply for the future.
Pilgrim, which began operating in 1972, provides some 72% of Massachusetts' emission-free electricity, Nuclear Matters said.