Entergy taking $1.6 billion hit on Pilgrim, FitzPatrick nuclear plants

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Entergy Corp.’s upcoming third-quarter earnings will take a $1.6 billion pre-tax impairment due to financial losses at its Pilgrim and James A. FitzPatrick nuclear power plants, the company reported Friday.

The non-cash accounting writedowns were announced three days after Entergy revealed it will close the Pilgrim Nuclear Station in Plymouth, Massachusetts no later than June 1, 2019. Entergy’s release cited competitive challenges, including subsidized renewable energy and lower power prices due to cheaper natural gas, as the headwinds against Pilgrim’s revenues.

“The decision to close Pilgrim was incredibly difficult because of the effect on our employees and the communities in which they work and live,” said Leo Denault, Entergy’s chairman and CEO, in a statement earlier this week. “Our people at Pilgrim are dedicated and skilled, a wonderful blend of young professionals and seasoned, experienced veterans, who for decades have been generating clean power and contributing millions of dollars of economic activity to the region. But market conditions and increased costs led us to reluctantly conclude that we had no option other than to shut down the plant.”

The accounting impairment from both Pilgrim and FitzPatrick will be a $1.06 billion after-tax drag on Entergy’s earnings, according to Friday’s release. FitzPatrick accounts for $624 million and Pilgrim $438 million of that after-tax impact.

Entergy will detail its third-quarter earnings on November 2.

The FitzPatrick plant has produced energy in Oswego County, New York, since 1975. It may face the same fate as Pilgrim, with recent local news stories highlighting discussions between state officials and Entergy about keeping the plant alive.

In September, Denault told investors that that Entergy will decide FitzPatrick’s future by December. The facility is due for its next refueling stage by early 2016.

The 680 MW Pilgrim plant employs more than 600 people and is the last nuclear plant operating in Massachusetts. FitzPatrick employs close to 650 people and produces up to 838 MW in power capacity.

Entergy closed its 41-year-old Yankee nuclear plant in Vermont last year.

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