INTERVIEW-Entergy to keep other U.S. reactors running after Vermont closure

Sept 12 Thu Sep 12, 2013 7:08pm IST

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Sept 12 (Reuters) - Entergy Corp, which is shutting down its Vermont Yankee reactor, plans to keep its five remaining merchant nuclear power plants in service, a top executive told Reuters.

"At this point in time, we have not made any decision to shut down any of our other facilities," Bill Mohl, president of Entergy Wholesale Commodities, said on Wednesday.

In August, Entergy said it would shut 41-year-old Vermont Yankee when the Vernon, Vermont, plant's fuel cycle ends in the fourth quarter of 2014, due in part to weak natural gas and power prices. This was the fifth reactor closing announcement over the past 12 months.

Earlier this year, Dominion Resources Inc shut the Kewaunee reactor in Wisconsin, citing weak market conditions, while Duke Energy Corp and Edison International decided not to fix damaged nuclear reactors at Crystal River in Florida and San Onofre in California, partly because of the high cost and uncertain timing of repairs.

Mohl said other factors in shutting Vermont Yankee were the significant costs of maintaining the 620-megawatt reactor, and markets in New England that do not adequately compensate nuclear plants for the huge amounts of carbon-free power they generate around the clock.

As natural gas prices have dropped, New England has significantly increased its reliance on the fuel for electric generation. More than half of the power sold in the region now comes from gas-fired plants, up from less than 30 percent in 2001, according to the U.S. Energy Information Administration.

Increased use of gas for power generation has led to pipeline constraints and price spikes in New England.

TOUGH MARKET

Entergy, the second-largest operator of U.S. nuclear power plants behind Exelon Corp, also owns two reactors at Indian Point in New York and one each at Palisades in Michigan, Pilgrim in Massachusetts and FitzPatrick in New York. It also operates a reactor at Cooper in Nebraska for the Nebraska Public Power District.

"Our single-unit plants are challenged in New York and New England," in part because of low market prices, Mohl said.

He said the company was "working through the trough in the market" by implementing efficiency improvements at all plants. It refueled Pilgrim earlier this year and plans to do so at FitzPatrick in 2014.

Palisades is different than Entergy's other reactors because it has a long-term agreement to supply power to a unit of CMS Energy Corp through the early 2020s, Mohl said.

He said Entergy was always looking for partnerships, acquisitions like its 2011 purchase of a gas-fired plant in Rhode Island, and deals to manage assets for others like Nebraska Public Power.

Mohl did not rule out selling or retiring other assets, but added: "It's a challenging business right now, but we do believe nuclear generation is critical and will continue to be a key part of our portfolio."

INDIAN POINT

New York Governor Andrew Cuomo wants Indian Point, which is about 40 miles north of Manhattan, to shut down.

Entergy, however, wants to keep the plant running. In 2007, the company filed with the U.S. Nuclear Regulatory Commission to renew the reactors' operating licenses for an additional 20 years. The original 40-year operating licenses expire on Sept. 28, 2013 for Unit 2 and in December 2015 for Unit 3.

Mohl said those opposed to the plant's continued operation had filed a record 150 legal contentions. The NRC judges decided to hear 16 of them.

Mohl said the process to relicense the reactors, including any appeals, might last until 2017 or 2018.

Entergy, however, can continue to operate the plant after the reactor licenses expire as long as the renewal process is ongoing.

"We are working to engage the state to come up with a practical solution," Mohl said, " ... so we are certainly open to discussions as we work through the relicensing issues." (Additional reporting by Joe Silha in New York; Editing by Lisa Von Ahn)

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