Update: Gov. Cuomo Announces Agreement with Entergy to Shut Down Indian Point by 2021
John Jordan | January 2017
ALBANY—New York Gov. Andrew Cuomo confirmed published reports days earlier of a deal to shut down the Indian Point nuclear power plant complex in Buchanan by 2021.
On Monday morning (Jan. 9), Gov. Cuomo announced the deal with Indian Point owner and operator Entergy Corp. to shut down the complex 14 years earlier than when Entergy had been attempting to secure federal relicensing approvals. Entergy has agreed to cease all operations at Indian Point and will shut down the Unit 2 reactor in April 2020. Unit 3 will be shut down in April of 2021. The Unit 1 reactor was permanently shut down in October 1974. The governor in his announcement noted that in the event of an emergency situation, such as a terrorist attack affecting electricity generation, the state may agree to allow Indian Point to continue operating in two-year increments, but no later than April 2024 and April 2025 for Units 2 and 3 respectively, state officials stated.
“For 15 years, I have been deeply concerned by the continuing safety violations at Indian Point, especially given its location in the largest and most densely populated metropolitan region in the country,” Gov. Cuomo said. “I am proud to have secured this agreement with Entergy to responsibly close the facility 14 years ahead of schedule to protect the safety of all New Yorkers. This administration has been aggressively pursuing and incentivizing the development of clean, reliable energy, and the state is fully prepared to replace the power generated by the plant at a negligible cost to ratepayers.”
In his announcement, Gov. Cuomo addressed some of the criticism and concerns that have been raised following reports of the closure deal, particularly relating to workforce, economic and business (energy supply) impacts of the deal with Entergy.
Gov. Cuomo said, “The Public Service Commission’s Indian Point Contingency Plan and other planning efforts have ensured that more than adequate power resources are able to come online by 2021 to ensure reliability of the power grid. Given these planning efforts and likely replacement resources, the plant’s closure in 2021 will have little to no effect on New Yorkers’ electricity bills.” The governor noted that while Indian Point produces 2,000 megawatts of electrical power, currently, transmission upgrades and efficiency measures totaling more than 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,” the governor’s office stated in the announcement.
The agreement calls for Entergy to submit a six-year license application to the Nuclear Regulatory Commission. Entergy, New York State, and other organizations will terminate litigation against one another.
In terms of the approximately 1,000 workers employed by Entergy at Indian Point, the governor said that under the terms of its agreement, Entergy has committed to offer plant employees new jobs at other facilities. In addition, through NYSERDA, the state will offer re-trainings and new skills in renewable technologies like solar and wind to any Entergy Indian Point worker.
Other highlights of the agreement include Entergy establishing a $15-million fund to support environmental restoration and community benefit projects. The fund will support efforts involving the protection and restoration of vital wetlands and estuaries, the creation and enhancement of wildlife habitat, invasive species migration, and the conducting of scientific studies to ensure the long-term viability of the area’s natural resources.
In terms of local tax impact, Gov. Cuomo said the agreement allows for “ample time to plan for and mitigate impacts to local tax revenues.” Entergy’s previously agreed upon payments in lieu of taxes (PILOTs) to local government entities and school districts will continue through 2021, before being gradually stepped down at a negotiated level following shutdown. The state will also work with local communities to address potential revenue shortfalls, similar to how it has worked with communities affected by other plant closures through the existing fossil fuel plant retirement fund.
Entergy Chairman and CEO Leo Denault said of the agreement, “We thank our nearly 1,000 dedicated employees for operating a world-class nuclear power generating facility at top levels of safety, security and reliability, as well as the community for supporting us. We are committed to treating our employees fairly and will help those interested in other opportunities to relocate within the Entergy system.”
Key drivers to making the deal with New York State, according to Bill Mohl, president of Entergy Wholesale Commodities, were 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,” Mohl added. “Record low gas prices, due primarily to supply from the Marcellus Shale formation, have driven down power prices by about 45%, or by about $36 per megawatt-hour, over the last 10 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.”
Entergy officials maintained that since purchasing Indian Point 15 years ago, the firm has invested $1.3 billion in safety and reliability improvements and has delivered millions of megawatt hours of virtually emissions-free power safely to the Hudson Valley and New York City.
The decision to shut down Indian Point follows announcements of other plant shutdowns or sales of Entergy’s merchant assets that will enable the company to exit the merchant power business and focus on growing its regulated utility, including ensuring that its southern nuclear power plants continue their safe and reliable operations. Entergy’s prior announcements include the planned sale of the James A. FitzPatrick nuclear power plant in upstate New York, the closure and planned sale of the Vermont Yankee nuclear plant, the sale of the Rhode Island State Energy Center natural gas-fired power plant, and the planned shutdowns of the Pilgrim nuclear plant in Massachusetts and the Palisades nuclear plant in Michigan.
Opponents of Entergy’s relicensing application to the NRC released statements praising the Indian Point closure deal. For example, New York State Attorney General Eric Schneiderman said, “Shutting down the Indian Point power plant is a major victory for the health and safety of millions of New Yorkers, and will help kick-start the state’s clean energy future. For the past six years, my office has led the state’s challenge to Entergy’s request for a 20-year extension of its license to operate Indian Point, and this agreement marks the successful culmination of our work to address the serious health and safety risks that the plant poses to neighboring communities.”
“This agreement is a win for the safety of our communities and the health of the Hudson River, and it will pay big dividends in new sustainable energy sources and the well-paying jobs that come with them,” said Riverkeeper President Paul Gallay. “Riverkeeper is thrilled that the governor stepped up to get this deal done—just like he promised he would.”
Scenic Hudson President Ned Sullivan termed the deal “a landmark victory for the Hudson River and the people of New York.” He added, “Scenic Hudson has worked for decades to stop the massive environmental damage to the Hudson River caused by the plants’ withdrawal of billions of gallons a day of cooling water. The accelerated closure and other provisions of the settlement will protect the health and safety of New Yorkers and restore the integrity of the Hudson River. Tireless advocacy over several decades by Scenic Hudson, Riverkeeper and our partners has paved the way for a healthier Hudson River and a safer Valley.”
Westchester County Executive Robert Astorino held a press conference last Friday (Jan. 6) where he expressed concern over the fiscal impacts of the reported Indian Point closure deal. He charged that the closure of Indian Point would “wreak unwarranted economic chaos on the county of Westchester.”
Marsha Gordon, president and CEO of The Business Council of Westchester, said, “The business community is very concerned about the implications of closing Indian Point—the economic, the loss of jobs, the lack of an immediate plan to replace that power, the lack of community support in terms of (lost) taxes and support to community organizations—as well as the fact that Westchester County and local municipalities were not included in any of these negotiations.”
County Executive Astorino staged a press conference in Tarrytown earlier this week along with local municipal officials, including Cortlandt Town Supervisor Linda Pugliese, who has sent a letter to Gov. Cuomo urging him to immediately establish a Blue Ribbon Commission to address the economic, environmental and security issues relating to the plant closure.
In her Jan. 9th letter to the governor, Supervisor Pugliese, who noted that the Town of Cortlandt and the Village of Buchanan are host communities to the Indian Point reactors, said she first learned of the agreement with Entergy to shut the nuclear reactors at Indian Point by 2021 in a Jan. 6th article in the New York Times.
She said that a similar Blue Ribbon Commission was established by the state and specifically by the administration of then Gov. Mario Cuomo to formulate a plan to deal with the closure of the General Motors plant in Sleepy Hollow back in the 1990s.