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Entergy, Exelon discussing sale, preservation of upstate NY nukes

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Entergy, Exelon discussing sale, preservation of upstate NY nukes

is in talks withExelon Corp. to sellits James A. FitzPatricknuclear plant in Scriba, N.Y., if state regulators pass and implement a subsidythat would help three upstate plants.

Entergyannounced on July 13the potential deal, which could prevent the scheduled January 2017 retirement ofthe upstate nuclear plant. Entergy announced in November 2015 it would shutterthe almost 852-MW FitzPatrick plant due to low electricity prices and hasmaintained that stance regardless of whether the New York Public ServiceCommission passes a proposed clean energy standard with a initiative tosubsidize upstate nuclear generation at an initial two-year rate of $17.48/MWh.

"Inkeeping with our corporate strategy to move away from merchant power marketsand toward a pure-play utility, we are working with Exelon to come tocommercial terms on a sale transaction that depends largely on the final termsand timeliness of the New York state clean energy standard," EntergyWholesale Commodities President Bill Mohl said in a news release. Mohl alsothanked New York Gov. Andrew Cuomo for promoting a clean energy standard that "providesincentives for financially strapped nuclear power plants."

Entergysaid it is aiming to conclude negotiations by mid-August as it simultaneouslyprepares for both the plant's permanent shutdown and decommissioning as well asits possible refueling and continued operations in case of a sale. Along withbeing subject to final commercial agreements and regulatory approvals, Entergysaid that the sale depends on the fate of the proposed clean energy standard,which seeks to subsidize renewables as a means of helping New York meets itsgoals of cutting carbon dioxide by 40% from 1990 levels and generating 50% ofits electricity from renewable energy resources by 2030.

Cuomowelcomed the announcement of the negotiations in a news release and said he hasdirected various state agencies to continue working with Exelon and Entergy toreach an agreement for sale. "Over the past several months, myadministration has been working closely with both companies to find a way tokeep this vital energy resource operating," Cuomo said. "While thereremains much work to be done, I am pleased that significant progress is beingmade."

Alongwith FitzPatrick, the other nuclear plants that could receive subsidies underthe proposed clean energy standard are the R.E. Ginna and Nine Mile Point plants, both controlled byExelon. Exelon has threatenedto close both Ginna and Nine Mile Point if the PSC fails to pass the cleanenergy standard and have signed contracts by the end of September. According toa July 11 research note by Guggenheim Securities LLC, the PSC is expected todecide on the proposed zero emissions credits at its Aug. 1 meeting.

"Gov. Cuomo's administration has made it clear thatFitzPatrick is critical to the success of the governor's zero-emission energystrategy," Exelon spokeswoman Lacey Dean said in a statement. "Thesediscussions potentially could lead to continued long-term operation of allthree upstate nuclear plants, preserve the economic and environmental benefitsthose units bring to all New Yorkers and help New York achieve its clean energyand economic development goals."

In a statement, Exelon pledged to immediately reinvest about$200 million in Ginna and Nine Mile Point if the clean energy standard isapproved.

In addition to the "timely implementation" of theclean energy standard, Dean said the "possibility of taking over" ofFitzPatrick is subject to a guaranteed long-term revenue stream for the plantand an immediate positive impact on Exelon earnings.

Theonly New York nuclear plant to be excluded from the proposal is Entergy'sIndian Point plant, which is located about 50 miles north of New York City.Cuomo opposes the relicensing of the 1,031-MW Indian Point 2 and 1,047-MW Indian Point 3 reactors over safety concerns.

IndianPoint continues to come under scrutiny from the Cuomo administration followinga number of safety investigations, outages and , including a leak of low-levelradioactive water and a weld leak, in recent months. Entergy in filed a lawsuit againstthe state for opposing its relicensing and overstepping its authority byregulating Indian Point under the pretext of protecting aquatic life in theHudson River from the plant's cooling intake.