Entergy in talks to sell troubled nuclear facility in upstate New York

Entergy Corp., the parent company of Entergy Arkansas Inc., announced Wednesday (July 13) that it is in discussions with Exelon Corp. for the potential sale of the James A. FitzPatrick Nuclear Power Plant in upstate New York.

The New Orleans-based utility giant said the discussions with Exelon are consistent with Entergy’s commitment to consider any viable option that would allow FitzPatrick to remain in operation. Entergy first announced in November 2015 that it planned to shut down and decommission the FitzPatrick plant, later setting the timing to cease operations as late January 2017.

“In keeping with our corporate strategy to move away from merchant power and toward a pure-play utility, we are working with Exelon to come to commercial terms on a sale transaction that depends largely on the final terms and timeliness of the New York State Clean Energy Standard,” said Entergy Wholesale Commodities President Bill Mohl. “We thank New York Governor Andrew Cuomo for his leadership in promoting the Clean Energy Standard, which provides incentives for financially strapped nuclear power plants.”

The possible sale of the troubled New York nuclear facility comes as Entergy has made substantial changes in its nuclear operations. In February, Entergy named Chris Bakken III as its new chief nuclear officer, giving the industry veteran executive oversight for operations of the utility giant’s nuclear fleet with locations in Arkansas, New York, Massachusetts, Vermont, Michigan, Louisiana and Mississippi.

Bakken, who was also promoted to executive vice president, replaced Jeff Forbes, who announced his retirement last year. As a member of the Office of the Chief Executive, Bakken reports directly to Leo Denault, Entergy’s chairman and CEO, from his base at the company’s nuclear headquarters in Jackson, Miss.

Late last month, Bakken named New York native Larry Doyle as his chief operating officer to work alongside fellow COOs Donna Jacobs and John Ventosa. The three executives will be responsible for the strategic direction, support and oversight of the Entergy’s national fleet of 11 reactors in nine locations, including Arkansas Nuclear One and Two in Russellville.

Over the past year, Entergy has responded to the increased regulatory scrutiny and increasing low margins for its nuclear power business by also opting to board up two of its older nuclear plants on the East Coast. Besides plans to shutter the sprawling FitzPatrick plant in Scriba, N.Y., the utility giant said it will also close the aging Pilgrim Nuclear Power Station in Plymouth, Mass., by mid-2019, citing low power prices and shale development, regulatory challenges and government rules that don’t recognize the viability of nuclear power generation.

In March, the federal Nuclear Regulatory Commission said Entergy Arkansas’ Nuclear One and Two (ANO) units in Russellville were among three reactors that require increased oversight because of two safety findings of “substantial significance” in 2015.

Concerning the possible deal with Exelon, Entergy officials said transaction would be subject to New York’s Clean Energy Standard, the completion of definitive commercial agreements and any other conditions, including state and federal regulatory approvals.

If discussions between Entergy and Exelon do not result in an agreement for the sale and transfer of ownership of FitzPatrick, Entergy said it will move forward with its current plan to cease operations, followed by decommissioning.

“Our focus remains on providing employees and the community the best opportunity we can to prepare for either a transition to a new owner or a shutdown and decommissioning,” said Brian Sullivan, site vice president and Entergy’s top official at FitzPatrick.

Entergy’s discussions with Exelon provide the opportunity for a potentially different outcome for FitzPatrick, and therefore require the plant to proceed along two parallel paths: preparing for the plant’s permanent shutdown and decommissioning under the current plan, while also preparing for a possible refueling and continued operation in the event of a sale, officials said.

Negotiations with Exelon are ongoing, company officials added, with a target for completion in mid-August. Entergy said it cannot disclose “the material terms” of any deal it may enter into with Exelon. In after-hours trading following strong volume in Tuesday’s session, Entergy’s shares were trending upward before Wednesday’s opening bell on the New York Stock Exchange at $81.06, up five cents.