Entergy to Close Pilgrim Nuclear Power Station, Citing "Poor Market Conditions"
October 13,2015
Entergy Corporation announced today that it will close its Pilgrim Nuclear Power Station in Plymouth, Mass., no later than June 1, 2019, because of poor market conditions, reduced revenues and increased operational costs.
The company notified the independent system operator of the electric grid, the ISO New England Inc. (ISO-NE), that as of that date, Pilgrim would not participate as a capacity resource in the market. The exact timing of the shutdown depends on several factors, including further discussion with ISO-NE, and will be decided in the first half of 2016.
According to the company, the decision to close Pilgrim was based on a number of financial factors:
• "Low current and forecast wholesale energy prices – brought about by record low natural gas prices, driven by shale gas production – significantly impacted Pilgrim's revenues. The current and projected market price for delivered natural gas in New England has dropped substantially because of the influx of shale gas and policy-related issues, which in turn has driven down power prices. As a result, current and forecast power prices have fallen about $10 per megawatt hour, an annual loss of more than $40 million in revenues for Pilgrim.
• "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. These benefits include reliable carbon-free, large-scale 24/7 energy generation and onsite fuel storage. Efforts over the past few years to correct these market design flaws have not been sufficiently successful. 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. 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."