Entergy Corp. said Tuesday it will close its Pilgrim nuclear power plant in Massachusetts no later than June 1, 2019, because of poor market conditions, reduced revenues and increased operational costs.
“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’s chairman and chief executive officer, said in a press release.
The 680-megawatt Pilgrim reactor entered service in 1972 and can power more than 600,000 homes.
Entergy’s nuclear woes are not unique to Pilgrim. Many other U.S. nuclear plants also face potential shutdown over the next several years for economic reasons primarily related to low natural gas and power prices.
For a table on other reactors in danger of closing, see:
The exact timing of the Pilgrim shutdown depends on several factors and will be decided in the first half of 2016, Entergy said.
Entergy said the decision to close Pilgrim was based on a number of financial factors, including low current and forecast wholesale energy prices brought about by record low gas prices, driven by shale gas production, which significantly impacted Pilgrim’s revenues.
The company said Pilgrim was expected to incur annual after-tax net losses on an operational basis ranging from about $10 million to $30 million for 2015, 2016 and 2017.
Power prices in New England have averaged $54 per megawatt since the start of 2015. That was down from $76 in 2014 and a five-year (2010-2014) average of $58.
Entergy also blamed Pilgrim’s problems on wholesale power market design flaws that continue to suppress energy and capacity prices in the region that do not provide adequate compensation to merchant nuclear plants for the benefits they provide.
Those benefits include reliable carbon-free, large-scale energy generation 24 hours a day and seven days a week and onsite fuel storage, Entergy said.
“Efforts over the past few years to correct these market design flaws have not been sufficiently successful,” the company said.
In addition, Entergy, like other nuclear operators, said Pilgrim’s economic performance was undermined by unfavorable state energy proposals that subsidize renewable energy resources and a state proposal to provide above-market prices to utilities in Canada for hydro power.
Entergy said it has about $870 million in the plant’s decommissioning fund as of Sept. 30. No additional funding is anticipated at this time.