Entergy has reached an agreement with New York State official which will see the two operating nuclear units at the Indian Point Energy Center close in 2020-2021

The shutdown will complete Entergy's exit from its merchant power business because of sustained low wholesale energy prices, Entergy said

Under the agreement, Indian Point Unit 2 will shut down by April 30, 2020 and Unit 3 by April 30, 2021.

Indian Point produces 2,000 megawatts of electrical power.

The NY governor's office said, "Currently, transmission upgrades and efficiency measures totaling over 700 megawatts are already in-service. Several generation resources are also fully permitted and readily available to come online by 2021, after the plant’s closure, including clean, renewable hydropower able to replace up to 1,000 megawatts of power. Together, these sources will be able to generate more than enough electrical power to replace Indian Point’s capacity by 2021."

"Key considerations in our decision to shut down Indian Point ahead of schedule include sustained low current and projected wholesale energy prices that have reduced revenues, as well as increased operating costs. In addition, we foresee continuing costs for license renewal beyond the more than $200 million and 10 years we have already invested," said Bill Mohl, president of Entergy Wholesale Commodities. "Record low gas prices, due primarily to supply from the Marcellus Shale formation, have driven down power prices by about 45 percent, or by about $36 per megawatt-hour, over the last ten years, to a record low of $28 per megawatt-hour. A $10 per megawatt-hour drop in power prices reduces annual revenues by approximately $160 million for nuclear power plants such as Indian Point."

As a result of its agreement to shut down Indian Point Units 2 and 3, Entergy will recognize a non-cash impairment charge of approximately $2.4 billion pre-tax and $1.5 billion after-tax in the fourth quarter of 2016. In addition to the impairment charge, through the end of 2021 Entergy expects to record additional charges totaling approximately $180 million related to severance and employee retention costs.

The impact on free cash flow from the settlement is expected to be approximately neutral through the end of operations. Impact to free cash flow includes expected contributions to the decommissioning trust funds, severance and retention payments and changes in capital expenditures and operating cash flows. The actual amount of the anticipated contribution to the decommissioning trusts will be determined later.

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