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

Washington — Exelon Generation on Friday assumed the ownership of the 849-MWFitzPatrick nuclear reactor in Scriba, New York, completing a transaction withEntergy begun last summer, it said.

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

Entergy in August announced it had reached an agreement to sellFitzPatrick to Exelon for $110 million, contingent on the New York PublicService Commission enacting a Clean Energy Standard containing zero-emissionscredits, or ZECs, that would be available to this unit, as well as Exelon's597-MW Ginna, 640-MW Nine Mile Point-1 and 1,362-MW Nine Mile Point-2reactors.

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

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

FitzPatrick, whose operating license expires in October 2034, is adjacentto 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 wereset 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, EasternGeneration, NRG Energy, Roseton Generating and Selkirk Cogen Partners and theElectric Power Supply Association contended in a lawsuit the PSC's plan usurpsthe US Federal Energy Regulatory Commission's "exclusive authority" toregulate the sale of wholesale electricity across state lines, according tothe suit filed October 19 in the US District Court for the Southern Districtof New York in New York City.

The court on Wednesday heard oral arguments on a motion by the state ofNew York to dismiss the suit and ordered the state and the plaintiffs to filebriefs in the matter.

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

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

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

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

--Jim Ostroff,

--Edited by Keiron Greenhalgh,