The decision to close Pilgrim was based on market conditions, reduced revenues and increased operational costs, Entergy reported in its announcement. The shutdown will happen no later than June 1, 2019, although Entergy will decide its exact timing by the first half of 2016.
Entergy has expected to incur annual after-tax net losses at Pilgrim of $10 million to $30 million for 2015 to 2017. The nuclear plant employs more than 600 people.
“The decision to close Pilgrim was incredibly difficult because of the effect on our employees and the communities in which they work and live,” said Leo Denault, Entergy’s chairman and chief executive officer, in a statement. “Our people at Pilgrim are dedicated and skilled, a wonderful blend of young professionals and seasoned, experienced veterans, who for decades have been generating clean power and contributing millions of dollars of economic activity to the region. But market conditions and increased costs led us to reluctantly conclude that we had no option other than to shut down the plant.”
Pilgrim generates about 680 MW of nearly carbon-free electricity, enough to power about 600,000 homes. Entergy’s release said the company had poured several hundred million dollars’ worth of capital into the plant, but faced higher operational costs and more intense Nuclear Regulatory Commission oversight.
Falling natural gas prices and government incentives for other sources also made Pilgrim’s nuclear power less cost-effective on a competitive basis. Current and forecast power prices have fallen about $10 per megawatt hour, which resulted in $40 million in annual revenue losses for Pilgrim, according to the release.
Entergy also cited regulatory moves that benefit other sources and hurt Pilgrim.
“Pilgrim’s economic performance is also undermined by unfavorable state energy proposals that subsidize renewable energy resources at the expense of Pilgrim and other plants,” the release said. “Also detrimental are a state proposal to provide above-market prices to utilities in Canada for hydro power representing about one-third of Massachusetts’ electricity demand and a recent state agency’s order that would further lower the price of natural gas and increase the region’s reliance on it.”
Recently the NRC placed Pilgrim in Column 4 of its Reactor Oversight Process Action Matrix, a deeper level of inspection which Entergy estimated was going to cost $45 million to $60 million pre-tax in extra operation and maintenance expense.
The NRC renewed Pilgrim’s operating license in 2012 and extended it until 2032.
The nuclear power plant began generating electricity in 1972. Overall, Entergy produces about 10,000 MW of nuclear power.