Entergy decides to close Pilgrim plant

The single-unit Pilgrim plant - the only nuclear power plant in the US state of Massachusetts - will be permanently shut down by mid-2019, owner Entergy announced today. The utility said the continued operation of the plant is not economically viable.

The single-unit Pilgrim plant - the only nuclear power plant in the US state of Massachusetts - will be permanently shut down by mid-2019, owner Entergy announced today. The utility said the continued operation of the plant is not economically viable.

The Pilgrim plant (Image: Entergy)

Entergy said it has notified the independent grid operator, ISO New England Inc (ISO-NE), that Pilgrim will not participate as a capacity resource in the market after 31 May 2019, meaning that the plant will shut by 1 June 2019. It said the exact timing of the plant's closure will depend on several factors, including further discussion with ISO-NE, and will be decided during the first half of 2016.

"Factors that could lead us to shut down earlier than 2019, such as at the end of our current operating cycle in 2017, include: increased cost of regulatory recovery; any additional regulatory challenges stemming from operational issues; and potential opportunities to find economically viable sources of capacity to replace that which Pilgrim is obligated to supply," Entergy said.

"Market conditions and increased costs led us to reluctantly conclude that we had no option other than to shut down the plant."

Leo Denault
Entergy chairman and CEO

The company said its decision to shut down the plant - which comprises a single 680 MWe boiling water reactor that began operating in 1972 - was driven by poor market conditions, reduced revenues and increased operational costs.

Entergy said low wholesale energy prices - brought about by record low natural gas prices - have significantly impacted Pilgrim's revenues. Current and forecast power prices have fallen by some $10 per megawatt hour, leading to an annual loss of more than $40 million in revenues for Pilgrim, it said. Meanwhile, wholesale energy market design flaws continue to suppress energy and capacity prices in the region, and "do not provide adequate compensation to merchant nuclear plants for the benefits they provide". Entergy said efforts over the past few years "to correct these market design flaws have not been sufficiently successful".

The utility added that "unfavourable state energy proposals that subsidize renewable energy resources at the expense of Pilgrim and other plants" have also impacted on the plant's economic performance.

Entergy said, "Before considering any impairment or the decision to close the plant, Pilgrim was expected to incur annual after-tax losses on an operational basis ranging from $10 million to $30 million for 2015, 2016 and 2017."

Once shut down, decommissioning of the Pilgrim plant will start, Entergy said. It noted that, as of the end of September 2015, the plant's decommissioning fund stood at some $870 million, "representing excess financial assurance of approximately $240 million for licence termination activities above Nuclear Regulatory Commission required levels".

Entergy chairman and CEO Leo Denault said, "The decision to close Pilgrim was incredibly difficult because of the effect on our employees and the communities in which they work and live. 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 the market conditions and increased costs led us to reluctantly conclude that we had no option other than to shut down the plant."

Commenting on Entergy's announcement, Marvin Fertel, CEO of the Nuclear Energy Institute, said: "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. We continued to sound those warnings when Entergy prematurely retired the Vermont Yankee nuclear plant a year ago." He added, "Today's announcement is more proof that the reforms urgently needed in competitive electric markets are too slow in coming."

Researched and written
by World Nuclear News