Fitzpatrick plant.JPG

Entergy Corp. said New York's proposed "clean energy standard'' might be good for nuclear plants. but it's too late to save the FitzPatrick plant in Oswego County.

(NRC)

SCRIBA, N.Y. - Gov. Andrew Cuomo's plan for a "clean energy standard" that might include subsidies for nuclear plants is too late to save the doomed FitzPatrick plant in Oswego County, an Entergy Corp. executive said today.

Bill Mohl, president of Entergy Wholesale Commodities, said his company had to choose between planning to refuel the plant or planning to shut it down, both of which require long lead times. Given FitzPatrick's heavy financial losses, Entergy chose to shut it down, he said.

"It's frankly too late for FitzPatrick,'' Mohl said.

Cuomo this week directed the state Public Service Commission to work out a new clean energy standard by June 2016, including financial support for "Upstate nuclear plants." Until the details emerge, it's impossible to know how that would affect FitzPatrick, Mohl said. There's no guarantee the PSC will finish its proceeding on time -- or ever, he said.

"I think we've been pretty clear that the plant is really poorly situated and losing substantial amounts of money,'' Mohl said. "We simply are not willing to make a bet on something that may or may not happen in the future.''

Entergy estimates that closing FitzPatrick will save up to $275 million through 2020. The company expects to lay off half of the 615 employees when the plant shuts down, sometime late next year or early in 2017. The work force will be reduced further in ensuing years.

Given the uncertainty about the coming clean energy regulations, Cuomo's office recruited the state's other nuclear operator, Exelon Corp., in an effort to delay a decision on whether to shut down FitzPatrick or refuel it in September 2016.

Exelon agreed to acquire enough fuel to resupply FitzPatrick and to give Entergy until next June to decide whether to use it, presumably after seeing the new clean energy mandate.

PSC spokesman James Denn said today that the proposed "fuel bridge" gives Entergy the opportunity to delay its decision without taking the financial risk of ordering roughly $50 million worth of fuel now. Exelon made the offer because it can use the fuel at one of its 23 reactors if Entergy declines it, Exelon officials said.

"With the offer by Exelon to provide a fuel bridge, Entergy has nothing to lose by joining with other stakeholders and the state to develop a clean energy standard, the resolution of which will occur well before their decision needs to be made to refuel the plant,'' Denn said.

Related: Cuomo vs Entergy, the staredown over FitzPatrick

But Mohl said planning for a refueling outage is a time-consuming endeavor. In the months leading up to the outage, he said, the company would have to arrange "tens of millions of dollars in contractual commitments" in addition to buying fuel.

"We have to remain focused on preparing for the shutdown and decommissioning, which is really significant,'' Mohl said. "It's not practical to prepare for an outage and a decommissioning on a parallel path.''

The one thing that might have saved FitzPatrick this month was a purchase offer from Exelon, Mohl said. During the discussions about the proposed fuel bridge, Entergy officials thought Exelon might make an offer to buy the plant, which sits next to Exelon's two reactors at Nine Mile Point.

Exelon said this week they do not want to buy FitzPatrick, Mohl said.

"That would be the only thing, and they've validated that they're not interested,'' Mohl said. "We finally got verification from them this week that they are not interested in buying the plant.''

Entergy announced in September that it was considering a shutdown at FitzPatrick, but would first discuss options for keeping the plant open with state officials. The company has never divulged what it discussed with the Cuomo administration before declaring Nov. 2 that it would close FitzPatrick.

Many observers, including Wall Street analysts, speculated that Entergy sought a compromise to settle the future of its profitable Indian Point nuclear station in Westchester County. Cuomo has opposed Entergy's application to extend the operating license, arguing that Indian Point is too close to New York City to be safe.

Mohl declined to say what Entergy discussed with the Cuomo administration before deciding to shut FitzPatrick.

"I'm not going to comment on the nature of those negotiations. I just don't think that's appropriate,'' he said.

Entergy is preparing to decommission three of its so-called "merchant" nuclear reactors, each of which sells power in unregulated wholesale markets in the Northeast. After the closures of Vermont Yankee, Pilgrim and FitzPatrick, Entergy Wholesale Commodities will have just three merchant reactors left - two at Indian Point and one in Michigan.

For now, Entergy will continue its efforts to relicense Indian Point, Mohl said. But shrinking the company's nuclear fleet means that overhead costs are spread across fewer facilities, reducing profits.

"We don't have any immediate plans (to change direction) on Indian Point, but you start to have to think about what will you do down the road if you have a single asset in the Northeast,'' he said. "You just have less economies of scale. We're looking at that and what we need to do in that regard.''

Mohl said Cuomo's plan for a clean energy standard that gives nuclear plants extra money for providing carbon-free electricity is a positive development for the nuclear industry. He wishes the plan came along two years ago, when Upstate nuclear plants started struggling to compete with low-price power from natural gas plants.

"Despite meetings with the PSC and others on this matter over the last couple of years, nothing's really changed. Unfortunately, it's taken this situation to finally get some movement,'' he said.

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Entergy Letter to PSC