Legal & Regulatory

Entergy to Permanently Close Troubled Pilgrim Nuclear Plant

Entergy Corp. will permanently close its 680-MW Pilgrim nuclear power plant in Plymouth, Mass., by June 2019, owing to poor market conditions, reduced revenues, and increased operational costs, the company said today. 

The New Orleans–based company said it has notified grid operator ISO-New England (ISO-NE) that the reactor that began operations in 1972 would not participate as a capacity resource in the market. “The exact timing of the shutdown depends on several factors, including further discussion with ISO-NE, and will be decided in the first half of 2016,” it said.

The General Electric Type 3 boiling water reactor that was licensed to operate until June 2032 has experienced repeated failures that have resulted in unplanned shutdowns—including three in 2015 alone. The most recent one occurred on Aug. 22, when a broken air-nitrogen line caused a main steam isolation valve to close, triggering a reactor scram.

But Entergy’s chairman and CEO Leo Denault said in a statement on Oct. 13 that it was market conditions and increased costs that led the company to “reluctantly conclude that we had no option other than to shut down the plant.”

The company cited low current and forecast wholesale energy prices, tamped down by cheap gas, as a primary reason for the decision.

“The current and projected market price for delivered natural gas in New England has dropped substantially because of the influx of shale gas and policy-related issues, which in turn has driven down power prices. As a result, current and forecast power prices have fallen about $10 per megawatt hour, an annual loss of more than $40 million in revenues for Pilgrim,” it said.

However, wholesale energy market design flaws, including state subsidies of renewable energy were also to blame, it said. These flaws “continue to suppress energy and capacity prices in the region, and do not provide adequate compensation to merchant nuclear plants for the benefits they provide.”

Entergy also pointed to a state proposal to provide “above-market” prices to utilities in Canada for hydropower, and a recent state agency’s order that would further lower natural gas prices and “increase the region’s reliance on it.”

The Pilgrim nuclear decommissioning trust had a balance of approximately $870 million as of Sept. 30, 2015, representing excess financial assurance of approximately $240 million for license termination activities above NRC-required assurance levels, Entergy said.

The reactor’s announced closure follows a spate of similar announcements in the U.S. and around the world.

It will leave 98 reactors operating in the U.S. Reactors at five plants were shuttered or slated for shutdown in 2013 owing to low demand, depressed wholesale prices, cheap gas, high costs of operation, or ill-fated repair projects: Dominion Resource’s Kewaunee nuclear plant in Wisconsin, Duke Energy’s Crystal River plant in Florida, Southern California Edison’s San Onofre Nuclear Generating Station, and Entergy’s Vermont Yankee plant.

“Even though five new reactors are being built in the Southeastern United States, it is disconcerting that the Pilgrim plant will be retired prematurely due to electricity market flaws that remain uncorrected in the Northeast,” the Nuclear Energy Institute’s president and CEO, Marvin Fertel, said in a statement. “As Entergy’s announcement makes clear, the deck is stacked against Pilgrim financially despite its enormous value to New England. Beyond literally being an electricity powerhouse for four decades, it has significantly helped improve the region’s air quality and, to this day, has an important role to play in regional and national efforts to reduce greenhouse gas emissions in the electric sector.”

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)


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