Entergy agrees to Indian Point closure

09 January 2017

Entergy has agreed with the state of New York to close the Indian Point nuclear power plant in 2020-2021. The company said economic considerations were key in its decision to shut the plant, completing the company's exit from the merchant power business.

Indian_Point_(NRC/Entergy)_460
Indian Point (Image: NRC/Entergy)

The settlement will see Indian Point unit 2 close in April 2020 and unit 3 in April 2021 - although in the event of an emergency situation affecting electricity generation, the state may agree to allow the plant to continue operating for up to five more years. In return, New York State will grant the necessary coastal, water quality and water discharge permits for the continued operation of the plant, and along with primary intervenor Riverkeeper withdraw legal challenges to Entergy's application to renew the plant's licence for the remainder of its operation.

Entergy will request that the US Nuclear Regulatory Commission (NRC) shorten the term of renewed operating licences for units 2 and 3 to 2024 and 2025 respectively. The company will also provide $15 million as part of its continued commitment to community stakeholders and environmental stewardship.

The agreement also provides for various inspections of the plant to be conducted by Entergy and New York State, in addition to NRC inspections. Entergy will be required to transfer at least 24 casks of used fuel at the plant to dry cask storage by 2021.

Economic drivers


Indian Point is home to two operating pressurized water reactors - Indian Point 2, in commercial operation since 1974, and Indian Point 3, since 1976. Indian Point 1, was permanently closed in 1974 after 12 years of commercial operations. Entergy purchased unit 3 in 2000 from the New York Power Authority, and unit 2, as well as the shut-down unit 1, in 2001 from Consolidated Edison. The plant, located on the Hudson River, lies about 24 miles (39 kilometres) from New York City.

Entergy pointed to the plant's operating record, with reliability increasing from a capacity factor of under 60% when it purchased the units to over 90% today. CEO Leo Danault said the company had invested more than $1.3 billion in safety and reliability improvements over its 15-year ownership.

"Key considerations in our decision to shut down Indian Point ahead of schedule include sustained low current and projected wholesale energy prices that have reduced revenues, as well as increased operating costs. In addition, we foresee continuing costs for licence renewal beyond the more than $200 million and ten years we have already invested," Bill Mohl, president of Entergy Wholesale Commodities, said. He said record low gas prices had driven down power prices by about 45% over the last ten years, to a record low of $28 per megawatt-hour. "A $10 per megawatt-hour drop in power prices reduces annual revenues by approximately $160 million for nuclear power plants such as Indian Point," he said.

Entergy said it will recognize a pre-tax non-cash impairment charge of about $2.4 billion in its fourth quarter results for 2016 from the agreement to shut Indian Point. It expects to record additional charges totalling about $180 million related to severance and employee retention costs in the period to the end of 2021.

With the previously announced sale of the James A Fitzpatrick plant, the planned sale of the shut-down Vermont Yankee, planned shutdowns of Palisades in Michigan and Pilgrim in Massachusetts, and the sale of a gas-fired plant in Rhode Island, the closure of Indian Point will mark Entergy's exit from the merchant power business. The company says it will focus on growing its regulated utility, including nuclear power plants in southern US states.

State view


New York State last year adopted legislation explicitly recognising the zero-carbon contribution of nuclear power plants and protecting the continued operation of Nine Mile Point, RE Ginna and James A Fitzpatrick which are located in the "upstate" region. However, the state has remained opposed to the continued operation of Indian Point and has challenged Entergy's efforts to secure a 20-year licence extension for the plant, submitted to the NRC in 2007.

The 40-year operating licences for Indian Point 2 and 3 were due to expire in 2013 and 2015 respectively. Entergy has been allowed to continue operating them under their existing licences while the NRC's review of the request is ongoing. The review process has taken substantially longer than the 18-30 months that would typically be expected, due to the challenges and issues brought up during the adjudicatory proceedings. New York State agencies had already concluded the application to be inconsistent with its coastal management requirements, which would prohibit the NRC from granting a licence.

New York State attorney general Eric Schneiderman said the closure of Indian Point was a "major victory". "For the past six years, my office has led the state’s challenge to Entergy’s request for a 20-year extension of its licence to operate Indian Point, and this agreement marks the successful culmination of our work," he said.

Ahead of Entergy's announcement, a new analysis from research and policy organization Environmental Progress suggested the closure of Indian Point would see the carbon emissions from the state's power sector increase by 29%. However, New York State governor Andrew Cuomo said the closure of Indian Point's 2000 MWe of generation would not have an adverse impact on regional carbon emissions, with transmission upgrades, efficiency measures and other generation resources including 1000 MWe of hydropower able to generate "more than enough electrical power" to replace the nuclear plant's capacity by 2021.

Vital component


Maria Korsnick, CEO of the Nuclear Energy Institute, said she was personally saddened by the impact that Indian Point's closure would have on the plant's employees, their families and the surrounding communities but pointed to the legislation passed by New York and Illinois recognizing nuclear's clean air benefits.

"As unpleasant as it is to see the business decision that Entergy has been forced to make in an era of sustained, record-low natural gas prices, we are seeing increased recognition of nuclear energy's value," she said. "More must be done - with urgency - to preserve financially challenged nuclear plants in other states, but momentum is building," she added

"I'm confident that federal and state lawmakers increasingly will view nuclear energy facilities as a vital component of our nation's industrial and electrical infrastructure, even as companies continue to innovate and design the next-generation nuclear energy technologies that will strengthen our energy diversity and energy security for generations to come," she said.

Researched and written
by World Nuclear News