BUCHANAN, N.Y., Jan. 9, 2017 /PRNewswire/ -- The two
operating units at the Indian Point Energy Center will close
in 2020-2021 after powering New
York for more than four decades with clean,
safe, and reliable electricity. The early and orderly shutdown
is part of a settlement under which New
York State has agreed to drop legal challenges and support
renewal of the operating licenses for Indian Point, located
in the Village of Buchanan in northern Westchester County. The shutdown will complete
Entergy's exit from its merchant power business because of
sustained low wholesale energy prices.
"We thank our nearly 1,000 dedicated employees for operating a
world-class nuclear power generating facility at top levels of
safety, security and reliability, as well as the community for
supporting us," said Leo Denault,
Entergy's chairman and chief executive officer. "We are committed
to treating our employees fairly and will help those interested in
other opportunities to relocate within the Entergy system."
"Since purchasing the plants 15 years ago, we have invested more
than $1.3 billion in safety and
reliability improvements. The plants have delivered hundreds of
millions of megawatt hours of virtually emissions-free power to the
Hudson Valley and New York City
safely."
Decision Driven By Economics
"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 license renewal beyond the more than $200 million and 10 years we have already
invested," said Bill Mohl, president
of Entergy Wholesale Commodities. "Record low gas prices, due
primarily to supply from the Marcellus Shale formation, have driven
down power prices by about 45 percent, or by about $36 per megawatt-hour, 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."
"We appreciate the efforts of our employees who have made Indian
Point one of the most reliable generating stations in New York State," Mohl added.
Independent Experts Continuously Evaluate Plant
Safety
Inspectors at the US Nuclear Regulatory Commission, with special
expertise and training in nuclear power and strict licensing and
operational guidelines, ranked the plant in the agency's top
regulatory column for safety following more than 6,000 hours of
inspections in 2016.
Unit 2 has been online for 187 days continuously and Unit 3 for
390 days continuously. Under Entergy's ownership, Indian Point's
reliability has increased significantly – to a capacity
factor1 of greater than 90 percent from approximately 60
percent under prior owners. Entergy has demonstrated its commitment
to the reliable operation of the facility, investing approximately
$500 million in capital improvements
over the last five years and a total of more than $1.3 billion since it bought the plants.
Indian Point has been safely generating power for New York since 1962 – first by Unit 1 until
1974, then Units 2 and 3, providing economic, environmental and
electric grid reliability benefits for millions of New Yorkers.
Details of Settlement with New York
State
Under the agreement, Indian Point Unit 2 will shut down by
April 30, 2020 and Unit 3 by
April 30, 2021. Other key terms
include:
- Coastal Zone Management Act Consistency Certification from
New York State;
- Water Quality Certificate and water discharge permits from
New York State;
- Agreement by New York State
and primary intervenor Riverkeeper to withdraw legal challenges to
license renewal;
- Entergy will request that the NRC shorten the term of a renewed
license for Indian Point from 2033 and 2035 for Units 2 and 3,
respectively, to 2024 and 2025.
- Agreement by Entergy to provide $15
million as part of its continued commitment to community
stakeholders and environmental stewardship; and
- Various inspections of Indian Point conducted by Entergy and
New York State, supplemental to
NRC inspections.
Company Continues to Pursue Licenses for Remaining Operating
Years
Entergy filed a license renewal application for both Indian
Point operating units in April 2007,
and NRC Staff in its Safety Evaluation Report concluded that no
issues would preclude safe operation during the period of a renewed
license. Under the settlement, Entergy will continue to pursue
license renewal, unopposed by the state, for the remaining
operating years, and will work on plans to mitigate the economic
impact of the shutdown on its employees and the surrounding
community. Both units remain under the NRC's normal oversight, to
which Entergy remains committed.
Corporate Strategy to Exit Merchant Power Business
With today's announcement, Entergy is providing certainty and
time for stakeholders to prepare for an early and orderly shutdown.
The decision follows announcements of other plant shutdowns or
sales of Entergy's merchant assets that will enable the company to
exit the merchant power business and focus on growing its regulated
utility, including ensuring that its southern nuclear power plants
continue their safe and reliable operations. Entergy's prior
announcements include the planned sale of the James A. FitzPatrick
nuclear power plant in upstate New
York, the closure and planned sale of the Vermont Yankee
nuclear plant, the sale of the Rhode Island State Energy Center
natural gas-fired power plant, and the planned shutdowns of the
Pilgrim nuclear plant in Massachusetts and the Palisades nuclear plant
in Michigan.
Financial Implications
As a result of its agreement to shut down Indian Point Units 2
and 3, Entergy will recognize a non-cash impairment charge of
approximately $2.4 billion pre-tax
and $1.5 billion after-tax in the
fourth quarter of 2016. In addition to the impairment charge,
through the end of 2021 Entergy expects to record additional
charges totaling approximately $180
million related to severance and employee retention
costs.
The impact on free cash flow from the settlement is expected to
be approximately neutral through the end of operations. Impact to
free cash flow includes expected contributions to the
decommissioning trust funds, severance and retention payments and
changes in capital expenditures and operating cash flows. The
actual amount of the anticipated contribution to the
decommissioning trusts will be determined later.
About Indian Point and Entergy
Indian Point Energy Center, in Buchanan, N.Y., is home to two operating
nuclear power plants, Unit 2 and Unit 3, which generate
approximately 2,000 megawatts of electricity for homes, business
and public facilities in New York
City and Westchester
County. Indian Point Unit 2 began commercial operation in
1974 and Unit 3 in 1976. Entergy purchased Unit 3 in 2000 from the
New York Power Authority and Unit 2 -- along with the permanently
closed Unit 1 -- in 2001 from Consolidated Edison.
Entergy Corporation (NYSE: ETR) 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.
Entergy delivers electricity to 2.8 million utility customers in
Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of
approximately $11.5 billion and more
than 13,000 employees.
Cautionary Note Regarding Forward-Looking Statements
In this news release, and from time to time, Entergy Corporation
makes certain "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements include, among other things, Entergy's
plans and expectations with respect to the settlement relating to
the Indian Point Energy Center, including without limitation the
anticipated financial implications of the settlement, and other
statements of Entergy's plans, beliefs or expectations included in
this news release. Except to the extent required by the federal
securities laws, Entergy undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Forward-looking statements are subject to a number of risks,
uncertainties and other factors that could cause actual results to
differ materially from those expressed or implied in such
forward-looking statements, including (a) those factors discussed
elsewhere in this news release and in Entergy's most recent Annual
Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q
and Entergy's other reports and filings made under the Securities
Exchange Act of 1934; (b) uncertainties associated with rate
proceedings, formula rate plans and other cost recovery mechanisms;
(c) uncertainties associated with efforts to remediate the effects
of major storms and recover related restoration costs; (d) nuclear
plant relicensing, operating and regulatory costs and risks,
including any changes resulting from the nuclear crisis in Japan
following its catastrophic earthquake and tsunami; (e) changes in
decommissioning trust fund values or earnings or in the timing or
cost of decommissioning Entergy's nuclear plant sites; (f)
legislative and regulatory actions and risks and uncertainties
associated with claims or litigation by or against Entergy and its
subsidiaries; (g) risks and uncertainties associated with strategic
transactions that Entergy or its subsidiaries may undertake,
including the risk that any such transaction may not be completed
as and when expected and the risk that the anticipated benefits of
the transaction may not be realized; and (h) the effects of
technological changes and changes in economic conditions and
conditions in commodity and capital markets during the periods
covered by the forward-looking statements.
Indian Point Energy Center's online address is
safesecurevital.com and Entergy's online
address is entergy.com
1 Capacity Factor is the ratio of a plant's actual
output compared to its potential at continuous full power during a
given period
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SOURCE Entergy Corporation