Exelon completes purchase of 849-MW FitzPatrick reactor in New York

Washington (Platts)--31 Mar 2017 613 pm EDT/2213 GMT

Exelon Generation on Friday assumed the ownership of the 849-MW FitzPatrick nuclear reactor in Scriba, New York, completing a transaction with Entergy begun last summer, it said.

The sale averts the permanent shutdown of the upstate New Your reactor that had been scheduled for January, following a November 2015 announcement by Entergy that it was unprofitable and efforts to reach an agreement with New York state to provide unspecified "incentives" to keep the unit operating proved fruitless.

Entergy in August announced it had reached an agreement to sell FitzPatrick to Exelon for $110 million, contingent on the New York Public Service Commission enacting a Clean Energy Standard containing zero-emissions credits, or ZECs, that would be available to this unit, as well as Exelon's 597-MW Ginna, 640-MW Nine Mile Point-1 and 1,362-MW Nine Mile Point-2 reactors.

The PSC on March 24 issued an order that finalized the implementation of the ZEC program from Saturday. A ZEC is an off-take agreement for the purchase of power to ensure the continued operation of a generator. It sets a price to purchase power that may be above prevailing rates in order to provide financial support to a generator.

Under the agreement with Entergy, Exelon agreed to purchase fuel to refuel FitzPatrick, which was conducted January 14 to February 25, when the unit synchronized with the electricity grid. Exelon also agreed to "reinvest ... approximately $400-500 million in operations, integration and refueling expenditures for the [three] upstate plants," the company said Friday.

FitzPatrick, whose operating license expires in October 2034, is adjacent to Exelon's Nine Mile Point-1 and -2 reactors.

ZECs paid to designated nuclear generators under the New York plan are $19.59/MWh for the period from April 1, 2019 to March 31, 2021. The ZECs were set tentatively at $21.38/MWh for April 1, 2021-March 31, 2023; $23.83/MWh, April 1, 2023- March 31, 2025; $26.45/MWh, April 1, 2025-March 31, 2027; and $29.15/MWh, April 1, 2027-March 31, 2029.

The PSC program is still facing a legal challenge. Dynegy, Eastern Generation, NRG Energy, Roseton Generating and Selkirk Cogen Partners and the Electric Power Supply Association contended in a lawsuit the PSC's plan usurps the US Federal Energy Regulatory Commission's "exclusive authority" to regulate the sale of wholesale electricity across state lines, according to the suit filed October 19 in the US District Court for the Southern District of New York in New York City.

The court on Wednesday heard oral arguments on a motion by the state of New York to dismiss the suit and ordered the state and the plaintiffs to file briefs in the matter.

The Nuclear Regulatory Commission on March 1 approved the transfer of the operating license for FitzPatrick to Exelon, which was the final required regulatory approval needed for the sale. The transfer took place Friday.

The PSC on November 17 approved Entergy's application to transfer FitzPatrick's operating license to Exelon.

FERC, in a December 7 order, determined that Exelon's purchase of FitzPatrick, enlarging its upstate New York nuclear fleet, would not give the Chicago-based Exelon undue market power to set rates and would not materially affect wholesale electricity prices.

Exelon's acquisition of FitzPatrick, FERC said, "will not have an adverse effect on vertical competition," noting the purchase agreement "only involves those limited and discrete transmission facilities necessary to interconnect the FitzPatrick facility to the transmission grid."

--Jim Ostroff,

--Edited by Keiron Greenhalgh,

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