Exelon to buy FitzPatrick nuclear plant from Entergy

OREANDA-NEWS. August 10, 2016. Exelon will purchase the 838MW Fitzpatrick nuclear plant in New York from Entergy, the companies said today.

The sale means the Fitzpatrick plant will not shutdown next year, as Entergy had previously planned. It avoids the need to replace the lost generation with sources that could potentially raise the state's CO2 emissions.

The decision comes just one week after New York regulators approved a 50pc by 2030 Clean Energy Standard (CES), which includes a 12-year subsidy for much of the state's ailing nuclear sector. Governor Andrew Cuomo (D) pushed for the standard as part of his overall energy and climate policies, which call for a 40pc reduction in the state's greenhouse gas emissions by 2030.

"We thank governor Cuomo and his administration for their part in facilitating an agreement to save FitzPatrick," said Exelon president and CEO Chris Crane. Crane said Cuomo's support for "preserving zero-emissions assets" as having "truly positioned New York as the nation's leader in clean energy."

Entergy chairman and CEO Leo Denault said the sale is "in the best interests of all of our stakeholders."

Cuomo said keeping the plant open is "essential" for the state's efforts to reduce fossil-fuel use and will avoid 3mn t/yr of CO2 emissions.

"Saving FitzPatrick is an enormous win for central New York and the entire state," Cuomo said.

Exelon will pay \\$110mn to become the owner and operator of FitzPatrick, which generates enough electricity for about 800,000 homes and employs over 600 people. Exelon owns two other nuclear stations in New York, the 1,760MW Ginna plant and 580MW Nine Mile plant, which is located next to FitzPatrick. Combined, the three power about 3.3mn homes.

Entergy had previously said FitzPatrick would cease operations in January 2017, regardless of whether the CES ultimately passed. But the companies disclosed talks on the sale of the plant last month, after the New York Public Service Commission first proposed a CES subsidy of nearly \\$17.50/MWh for the three upstate nuclear plants.

Exelon said the CES will allow it to invest \\$400-\\$500mn in operations, integration and refueling at three upstate plants next year. The PSC estimates the payments will cost the state about \\$965mn over the first two years of the program.

News of the potential sale last month helped to drive the price of Regional Greenhouse Gas Initiative (RGGI) CO2 allowances down by about 80? over three days. The lifeline for Fitzpatrick means the state will not have to look to new natural gas generation to fill the gap, helping to keep CO2 emissions in check. New York accounts for 39pc of the RGGI CO2 budget.

The transaction and CES should help boost investor confidence and provide a sense of stability on the long-term health of the New York nuclear sector. New York's policy leadership could "serve as a template for other states" including New Jersey and Pennsylvania, Moody's Investor Service said yesterday.

The transaction now faces regulatory approval from federal and state authorities and is expected to close in the second quarter of 2017.