Jeremy L. Dillon
RW Monitor
10/16/2015
In an “agonizing decision,” Entergy said this week that it will shut down the Pilgrim Nuclear Power Station in Massachusetts no later than June 2019 and as early as spring 2017. The announcement follows the downgrading of the Pilgrim plant by the Nuclear Regulatory Commission last month to Repetitive Degraded Cornerstone Column Four, the second to lowest performance category for a nuclear plant, after a series of unplanned shutdowns and unplanned shutdowns with complications in 2014 and 2015. Entergy officials, though, attributed the plant closure to economic factors, including: low current and forecast wholesale energy prices brought about by record low natural gas prices, wholesale energy market design flaws that continue to suppress energy and capacity prices in the region, and increased operational costs and enhanced Nuclear Regulatory Commission oversight resulting from the new Column Four designation.
“We started a compressive evaluation of Pilgrim several months ago – similar to what we do every year, and after careful analysis, it became clear that Pilgrim is no longer financially viable,” Entergy President Bill Mohl said in a press conference this week. “Our decision to close Pilgrim was based on a combination of reduced revenues, poor market structure, challenging regional energy policies, and increased operational costs. We were forced to acknowledge the harsh reality that Pilgrim faces very unfavorable current and projected financial and operating conditions and make the shutdown decision as a choice of last resort after reviewing every viable option.”
The exact timing of the shutdown still needs to be determined, Mohl said. Entergy has an agreement with ISO New England Inc., the independent system operator of the electric grid in New England, to provide energy to the grid until May 31, 2019, but the utility plans to negotiate with ISO-NE to see if other alternative energy suppliers could facilitate an earlier end date. The Pilgrim station has a planned refueling in spring 2017 that could serve as another possible end date, Mohl said. Entergy anticipates having a firmer shutdown date by the first half of 2016.
Pilgrim’s decommissioning trust fund sat at approximately $870 million as of Sept. 30, an amount within the NRC’s required assurance levels, but more is likely needed to finance the plant cleanup. In comparison, Vermont Yankee, another shuttered Entergy reactor site, estimated its cleanup would cost roughly $1.24 billion. Pilgrim will likely need to enter SAFSTOR, which would enable the plant to sit for up to 60 years, to ensure the fund accrues enough interest to cover decommissioning. Entergy officials, though, indicated during the press conference that the company would not necessarily wait the full six decades to take down the plant, although a clearer timeline to active decommissioning depends on the cost estimate.
The economics behind operating a nuclear power plant, particularly one in a merchant market, have put such facilities at risk. Competition from natural gas, along with a harsh federal energy policy toward nuclear, has hurt nuclear plants’ profitability. In the past couple years, five stations have announced premature shutdowns, with several citing the economic environment as a major factor. Entergy’s Vermont Yankee Nuclear Power Plant in Vermont announced its premature shutdown in 2013 due to economic reasons, while Southern California Edison’s San Onofre Nuclear Generating Station announced its closure in 2012 after problems in its replacement steam generators proved too costly to fix.
With Entergy’s willingness to cut a loss by shutting down nuclear plants, other plants in the company’s nuclear fleet could be at risk of premature shutdown. The FitzPatrick Nuclear Power Plant in Central New York is undergoing review for a path forward, but if Pilgrim is any indication, it could be added to the growing list of closing plants. “We have made it clear that our FitzPatrick facility in Oswego is in a similar situation, facing similar economics,” Mohl said. “We have notified employees that we would make a decision on that facility by the end pf the month.”
Markey: Safety Concerns Led to Shutdown
Sen. Edward Markey (D-Mass.), a longtime opponent of the Pilgrim station, pointed to the plant’s poor safety and operational record as reason for its shutdown. “While nuclear energy was once advertised as being too cheap to meter, it is increasingly clear that it is actually too expensive to matter,” Markey said in a statement. “Pilgrim Nuclear Power Station is just the latest example of how nuclear power simply cannot compete in the current energy market. And alongside the economic conditions that Entergy blames this closure on, there also have been decades-long and repetitive operational safety and security concerns with the facility that have contributed to this announcement.”
Markey also called on the NRC to ensure Entergy has sufficient resources to adequately decommission the plant and remove spent fuel. “The NRC must also ensure Entergy dedicates adequate financial and technical resources to remove the spent nuclear fuel from the overcrowded spent fuel pool and decommission the reactor quickly,” Markey said. “We cannot allow the public to pay the price if Entergy comes up short on the bill to safely close this plant.” Markey, along with Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.), earlier this year introduced a series of bills aimed at preventing the reduction of safety and security regulations for reactor sites undergoing decommissioning and for the storage of spent nuclear fuel at operating nuclear plants.
NEI: Market Reforms Needed
The Nuclear Energy Institute used the announcement as a way to reiterate its call for market reform to fairly value nuclear’ s carbon-free power generation. “When Wisconsin’s Kewaunee nuclear plant was retired prematurely in 2013, we warned that market reforms are needed to ensure that the nation maintains a diversified portfolio of electricity options,” NEI President and CEO Marvin Fertel said in a statement. “We continued to sound those warnings when Entergy prematurely retired the Vermont Yankee nuclear plant a year ago. Today’s announcement is more proof that the reforms urgently needed in competitive electric markets are too slow in coming. Design flaws in wholesale markets such as New England continue to result in artificially low electricity and capacity prices. It is all the more unfortunate that, even though Pilgrim is among the largest if not the largest carbon-free power generator in Massachusetts, this important attribute is not valued by the state.”
