T&D World Magazine
FitzPatrick Nuclear Plant Closing 'Prematurely'

FitzPatrick Nuclear Plant Closing 'Prematurely'

The company said its decision to close the plant is based on the continued deteriorating economics of the facility.

Entergy Corp. will close the James A. FitzPatrick Nuclear Power Plant in Scriba, New York, 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 reported 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.

When FitzPatrick closes, Entergy will have one power generating facility in operation in New York State, the Indian Point Energy Center in Buchanan, NY.

The Nuclear Energy Institute’s president and chief executive officer, Marvin Fertel, made the following comments about the announcement:

“The fact that the FitzPatrick nuclear energy facility in New York is the industry’s fourth nuclear power plant to prematurely close due to uncorrected flaws in competitive electricity markets is alarming. It is clear that, despite providing reliable electricity and enormous environmental and economic benefits in upstate New York for more than 40 years, FitzPatrick’s benefits are grossly undervalued and are not fully compensated.

“FitzPatrick powers more than 800,000 homes, employs 600 professional workers and drives more than $500 million in annual economic activity. It also prevents the emission of three million metric tons of carbon dioxide every year and constitutes 10 percent of the carbon-free electricity in New York. The facility could have provided these benefits for at least another two decades. The unnecessary loss of such a powerful, long-term economic and environmental asset in New York is a tragedy. We need state and federal policies that will help preserve these vital resources.

“The nuclear energy industry has been engaging with regulators and other leaders to communicate the wholesale market reforms that are needed. The biggest price for the loss of FitzPatrick will be paid by the hundreds of hard-working, highly skilled men and women who work at FitzPatrick, by local communities, and by the environment. The time is now for actions that will prevent more nuclear plants from closing.”

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