Entergy has a fairly small window to decide to extend the operation of
its 2,069-MW Indian Point nuclear plant in New York if the state has not found
suitable replacement power by the time the merchant facility is targeted for
retirement in 2021, company officials said Wednesday.
The New Orleans-based company is moving ahead with its strategy to
transition to a "pure play utility" in several years by shutting or selling
its merchant nuclear generation fleet, Leo Denault, Entergy chairman and CEO,
told analysts Wednesday during a conference call to discuss the company's
"The decision to close the merchant nuclear plants was a difficult one,"
he said, driven by "adverse economics," not operating or employee issues.
In January, the company reached a deal with New York officials to close
Indian Point's 1,028-MW Unit 1 by April 2020, and 1,041-MW Unit 2 a year
later. New York City gets 25% of its power from the Buchanan-based plant.
"The plant will run for several more years to allow New York to replace
this important generation resource," he said, but a replacement power source
has not yet been identified.
In the latter half of 2017, the New York Independent System Operator is
expected to perform an updated load and resource study that will explore
potential resources that could take Indian Point's place.
The study should provide some answers as to any reliability and security
issues that may be created by Indian Point's closing.
In any event, Entergy officials said they will need to know by the second
half of 2018 if the plant's operation should be extended to perhaps to 2024 or
2025. If so, Entergy most likely would want to negotiate a power purchase
agreement with the state, officials said.
Entergy, in the meantime, is preparing to close its 811-MW Palisades
nuclear plant in Michigan in 2018 and its 688-MW Pilgrim nuclear plant in
Massachusetts in 2019.
Later this year, probably in Q2, Entergy expects to close on the sale, to
Chicago-based Exelon, of its 838-MW James A. FitzPatrick nuclear plant in
upstate New York, the nation's largest nuclear generator. Exelon agreed to pay
$100 million, including assumption of certain liabilities, plus $10 million in
non-refundable fees for FitzPatrick.
"We are delivering on the promise of portfolio transformation," Denault
said. To replace some of the merchant generation, the company is adding more
natural gas and renewables to its generation mix.
In late January, Entergy broke ground for the 980-MW St. Charles Power
Station, a combined-cycle natural gas plant in Montz, Louisiana. The $869
million facility is scheduled for commercial operation in June 2019.
According to company spokeswoman Kay Jones, Entergy is wrapping up
permitting and other activities on several other combined-cycle gas plants
including 994-MW, $872 million Lake Charles in Louisiana and 993-MW, $937
million Montgomery County Power Station in Texas. They are set for commercial
operation in June 2020 and the summer of 2021, respectively.
Entergy also is pursuing the 226-MW, $216 million New Orleans Power
Station, a gas-fired combustion turbine project.
Last year, Entergy began laying the groundwork for an "integrated energy
network" featuring installation of automated metering infrastructure. "We've
made filings with regulators in four jurisdictions to implement advanced
metering and plan to file with Texas this year, Denault said, adding "we
expect meter deployment in 2019."
Overall, Entergy plans to spend about $10.4 billion from 2017-2019 on its
multi-state generation, transmission and distribution system.
The company posted a loss of $1.77 billion, or $9.88/share, in the fourth
quarter, reversing a $99.6 million, or 56 cents/share, profit a year ago,
largely because of an impairment related to its merchant nuclear plants.
Q4 utility revenue was $1.42 billion in the latest quarter, compared with
$1.81 billion in Q4 2015.
Entergy serves 2.9 million utility customers in Arkansas, Louisiana,
Mississippi and Texas.
--Bob Matyi, email@example.com
--Edited by Valarie Jackson, firstname.lastname@example.org