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Researched by Industrial Info Resources (Sugar Land, Texas)--Citing poor economic and market conditions, Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) said it plans to close the James A. FitzPatrick Nuclear Power Plant in New York in late 2016 or early 2017. In October, the power utility and wholesale energy company said it planned to close a nuclear plant in Massachusetts. Entergy reported a $723 million loss for third-quarter 2015, including asset impairment charges from the two planned closures. Industrial Info is tracking 97 active Entergy projects worth $4.34 billion.
Tough Decisions
Entergy Chief Executive Officer Leo Denault said during the company's earnings conference call the decision to close both the New York and Massachusetts plants were difficult, but added they "are the right business decision."
Entergy said falling plant revenues due to low natural gas prices, high operational costs and a "flawed market design" were to blame for the decision to shutter the 838-megawatt (MW) FitzPatrick plant, located in Scriba, New York. The facility began operations in 1975.
Low energy prices, driven by natural gas from the nearby Marcellus shale, equates to a projected annual loss of more than $60 million in revenue for the FitzPatrick plant, Entergy said in a press statement. Entergy also said the current market design fails to recognize or compensate nuclear generators for their benefits, including providing energy diversity with climate-related advantages and "carbon-free electricity." Finally, the plant carries a high cost because it is a single unit, and the region has excess power supply and low demand.
According to a company statement, Entergy worked with New York State officials in an effort to avoid a closure, but were unsuccessful. The plant employs more than 600 workers.
Low natural gas prices and other factors also were cited in the company's announcement on October 13 that it will close the 680-MW Pilgrim Nuclear Power Plant in Plymouth, Massachusetts, no later than June 1, 2019. For related information, see October 14, 2015, article - Entergy Announces Closure of Pilgrim Nuclear Plant in Massachusetts.
Both facilities are part of the company's merchant power plant fleet. With the closures, Entergy will have only two merchant fleet nuclear plants, one in New York and the other in Michigan. Its utility fleet also has four nuclear facilities.
In December 2014, Entergy permanently closed the 640-MW Vermont Yankee Nuclear Plant, located in Vernon, Vermont. The decommissioning and dismantlement of the facility is expected to cost more than $1.2 billion. Entergy has put the power station in SAFSTOR mode, which means that it can be mothballed for up to 60 years before a complete dismantling and decontamination of the site. For more information on the decommissioning and dismantling project, see Industrial Info's project report and January 8, 2015, article - Entergy Permanently Shutters Yankee Nuclear Station in Vermont.
Denault said Monday the FitzPatrick Plant also is likely to be put in SAFSTOR mode.
. Third-Quarter Results
Entergy reported its earnings swung to a $723 million loss in third-quarter 2015, from a $230 million profit in the same period a year earlier. The latest results included more than $1 billion in asset impairments and other write-offs related to the planned FitzPatrick and Pilgrim closures. Not including those items, operational earnings totaled $340.7 million, up from $304.4 million a year earlier.
During the quarter, residential sales declined 0.1%, but commercial sales increased 1.2% on a weather-adjusted basis. Company executives noted Monday that industrial sales rose 4% from a year earlier, reflecting a ramp-up of grassroot and expansion projects. Petroleum refineries ran at high utilization levels, contributing to the demand for electricity, it said.
Looking forward, company executives said industrial sales are likely to slow in the fourth quarter, as one major customer is planning an extended outage and other projects are coming on line more slowly than expected.
Chief Financial Officer Andrew Marsh noted the company plans to sell its 583-MW Rhode Island State Energy Center (RISEC), located in Johnston, Rhode Island, to Carlyle Power Partners for $490 million by the end of this year. The gas-fired, combined-cycle generating plant entered commercial service in 2002.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Tough Decisions
Entergy Chief Executive Officer Leo Denault said during the company's earnings conference call the decision to close both the New York and Massachusetts plants were difficult, but added they "are the right business decision."
Entergy said falling plant revenues due to low natural gas prices, high operational costs and a "flawed market design" were to blame for the decision to shutter the 838-megawatt (MW) FitzPatrick plant, located in Scriba, New York. The facility began operations in 1975.
Low energy prices, driven by natural gas from the nearby Marcellus shale, equates to a projected annual loss of more than $60 million in revenue for the FitzPatrick plant, Entergy said in a press statement. Entergy also said the current market design fails to recognize or compensate nuclear generators for their benefits, including providing energy diversity with climate-related advantages and "carbon-free electricity." Finally, the plant carries a high cost because it is a single unit, and the region has excess power supply and low demand.
According to a company statement, Entergy worked with New York State officials in an effort to avoid a closure, but were unsuccessful. The plant employs more than 600 workers.
Low natural gas prices and other factors also were cited in the company's announcement on October 13 that it will close the 680-MW Pilgrim Nuclear Power Plant in Plymouth, Massachusetts, no later than June 1, 2019. For related information, see October 14, 2015, article - Entergy Announces Closure of Pilgrim Nuclear Plant in Massachusetts.
Both facilities are part of the company's merchant power plant fleet. With the closures, Entergy will have only two merchant fleet nuclear plants, one in New York and the other in Michigan. Its utility fleet also has four nuclear facilities.
In December 2014, Entergy permanently closed the 640-MW Vermont Yankee Nuclear Plant, located in Vernon, Vermont. The decommissioning and dismantlement of the facility is expected to cost more than $1.2 billion. Entergy has put the power station in SAFSTOR mode, which means that it can be mothballed for up to 60 years before a complete dismantling and decontamination of the site. For more information on the decommissioning and dismantling project, see Industrial Info's project report and January 8, 2015, article - Entergy Permanently Shutters Yankee Nuclear Station in Vermont.
Denault said Monday the FitzPatrick Plant also is likely to be put in SAFSTOR mode.
. Third-Quarter Results
Entergy reported its earnings swung to a $723 million loss in third-quarter 2015, from a $230 million profit in the same period a year earlier. The latest results included more than $1 billion in asset impairments and other write-offs related to the planned FitzPatrick and Pilgrim closures. Not including those items, operational earnings totaled $340.7 million, up from $304.4 million a year earlier.
During the quarter, residential sales declined 0.1%, but commercial sales increased 1.2% on a weather-adjusted basis. Company executives noted Monday that industrial sales rose 4% from a year earlier, reflecting a ramp-up of grassroot and expansion projects. Petroleum refineries ran at high utilization levels, contributing to the demand for electricity, it said.
Looking forward, company executives said industrial sales are likely to slow in the fourth quarter, as one major customer is planning an extended outage and other projects are coming on line more slowly than expected.
Chief Financial Officer Andrew Marsh noted the company plans to sell its 583-MW Rhode Island State Energy Center (RISEC), located in Johnston, Rhode Island, to Carlyle Power Partners for $490 million by the end of this year. The gas-fired, combined-cycle generating plant entered commercial service in 2002.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
