Deal Contingent on Subsidies
By Ted Caddell
Entergy said Wednesday it may sell its troubled James A. FitzPatrick nuclear plant to Exelon if New York approves the proposed Clean Energy Standard, which would provide large subsidies to nuclear stations.
If New York cannot agree on those subsidies, Entergy said, it will go forward with its plans to cease operations by January.
“In keeping with our corporate strategy to move away from merchant power markets and toward a company operating exclusively as a utility in regulated markets, we are working with Exelon to come to commercial terms on a sale transaction that depends largely on the final terms and timeliness of the New York State Clean Energy Standard,” Entergy Wholesale Commodities President Bill Mohl said. “We thank New York Gov. Andrew Cuomo for his leadership in promoting the Clean Energy Standard.”
Cuomo called the possible sale “welcome news.”
“My administration has been working closely with both companies to find a way to keep this vital energy resource operating,” Cuomo said in a statement. “While there remains much work to be done, I am pleased that significant progress is being made.
“I have directed various state entities to continue working with the parties involved to finish the job. I am hopeful that a definitive agreement will be reached to ensure these benefits to New Yorkers are realized.”
The proposed nuclear subsidies are a recent addition to the state’s Clean Energy Standard. The clean energy blueprint would mandate use of renewable energy for half of the state’s electricity by 2030.
According to a July 8 report by the staff of the New York Public Service Commission, the nuclear subsidies would total $965 million over the first two years while providing economic and environmental benefits through carbon reductions, supply cost savings and property tax benefits of about $5 billion (Case 15-E-0302).
Initial cost estimates for the nuclear subsidies were $59 million to $658 million through 2023, with net benefits of about $1 billion. (See NYPSC: Minimal Cost to Meet 50% Renewable Goal.)
Three plants in the state — FitzPatrick and Exelon’s Nine Mile Point and R.E. Ginna — would be eligible for the subsidies. Cuomo wants to exclude Entergy’s Indian Point, which he wants shut down because of its proximity to New York City.
When the nuclear subsidies in the Clean Energy Standard were first announced, Entergy said they would have no effect on its plans to close FitzPatrick. But the company said Wednesday that its decision to seek a sale to Exelon is “consistent with Entergy’s commitment to consider any viable option that would allow FitzPatrick to remain in operation.”
Exelon spokeswoman Lacey Dean confirmed the talks on Wednesday, saying a deal would be “subject to several firm conditions.”
In addition to approval of the Clean Energy Standard, Dean said, the conditions were a guaranteed long-term revenue stream for the plant and an immediate positive impact on Exelon’s earnings.
She declined to say how long the talks had been in progress or if a purchase price had been discussed.