By William Opalka
ALBANY, N.Y. — The New York Public Service Commission on Thursday approved Entergy’s sale of the James A. FitzPatrick nuclear plant to Exelon, a transaction needed to prevent the plant’s imminent closure (16-E-0472).
A year ago, Entergy announced it would close the money-losing plant in early 2017. Exelon began negotiations in the summer to purchase the plant for $110 million, contingent on the state’s approval of a subsidy to keep the plant operating and regulators’ approval of the transaction by Nov. 18. (See FitzPatrick Sale Filed with New York Regulators.)
“It’s the next step forward on the Clean Energy Standard,” PSC Chair Audrey Zibelman said at a news conference after the meeting. “We understood this transaction would have to happen” to keep the plant running.
Having pledged to acquire 50% of the state’s electricity from renewable sources by 2030, New York officials see nuclear power as an interim carbon-free source until renewables are deployed at scale. (See New York Adopts Clean Energy Standard, Nuclear Subsidy.)
The commission found the sale in the public interest, saying there were no adverse environmental consequences, Exelon has the financial wherewithal to maintain safe operations and the acquisition would not give it undue market power.
PSC economist Warren Meyers said the transaction means Entergy and Exelon swap places as the fourth- and fifth-largest owners of generation in the state. Before the transaction, Entergy controlled 7% of New York’s fleet and Exelon had 6%. After the sale, those numbers change to 5% and 8%, respectively. Entergy owns the Indian Point nuclear plant north of New York City.
Critics of the zero-emission credit (ZEC) say the 12-year subsidy could cost ratepayers up to $7.6 billion to keep FitzPatrick and two other upstate nuclear plants open. “This is part of a larger picture and that picture is that the Public Service Commission has moved in favor of a mandatory bailout from ratepayers in the entire state,” Manna Jo Greene, Hudson River Sloop Clearwater’s environmental director, said after the meeting. “Had they not agreed on the bailout, this transaction would not have occurred.”
Zibelman acknowledged the likelihood of the plant’s closure without PSC approval, but she emphasized the environmental benefits. The state can’t afford to step back from its low-emission commitments, she said. When nuclear plants have closed in Germany and New England, carbon emissions have risen as the lost energy was replaced by fossil fuel plants, Zibelman said. (See CO2 Emissions Increase in ISO-NE.)
The ZECs have been opposed by other environmentalists and they also say the companies’ petition for FERC approval of the FitzPatrick sale needed to include information about the subsidy. (See Public Citizen Challenges NY Nuclear Subsidy, FitzPatrick Sale.) Fossil-fuel generators have also challenged it in court, saying it interferes with wholesale power markets under FERC jurisdiction. (See Federal Suit Challenges NY Nuclear Subsidies.)
Exelon spokesman Marshall Murphy declined to comment on whether the company would seek to cancel the sale if the ZECs are voided by the courts. “The company is not going to speculate on any legal outcome with respect to the Clean Energy Standard,” he said.
Besides FitzPatrick, the ZECs would be paid to Exelon’s neighboring Nine Mile Point 1 and 2 plants, and its R.E. Ginna facility to the west.
“With a number of nuclear energy plants across the country at-risk for premature closure — or having closed already — New York is a bright spot on the map when it comes to recognizing and preserving the many benefits that these plants provide,” the advocacy group Nuclear Matters said in a statement. “While we will need to review the final order in order to fully evaluate the PSC’s decision, the approval of the FitzPatrick transfer preserves a host of benefits for all New Yorkers, allowing the continued operation of a reliable producer of carbon-free energy that is also a key driver of jobs and economic growth in the state.”
The Nuclear Energy Institute also praised the vote. “By its own cost-benefit analysis, the Public Service Commission recognized that the gross benefits of keeping FitzPatrick and the other upstate plants operating in the first two years of the Clean Energy Standard program are approximately $5 billion. This is weighted against a cost of less than $1 billion and thus hugely beneficial,” NEI said in a statement.
The 882-MW plant began operating in 1975 and is licensed through 2034.
The transaction must also be approved by the U.S. Department of Justice, the Nuclear Regulatory Commission and FERC. It is expected to close in the second quarter of 2017.