Entergy Corp. will permanently shut its Vermont Yankee nuclear power plant in 2014 after battling for years with state officials to keep the 41-year-old reactor in service.
The decision to shut Vermont's only operating reactor was based on natural gas prices, the high cost of running the single-unit plant and "artificially low" power prices in the region, New Orleans-based Entergy said in a statement Tuesday.
Entergy won renewal of the plant's license in 2011, allowing it to operate until 2032, and filed suit to prevent the state from closing the reactor earlier.
"The plant was no longer financially viable," Entergy Chairman and Chief Executive Officer Leo Denault said in a phone interview. "We did everything we could to try and keep this plant open from a financial standpoint. That's why we fought the battles we fought legally."
New Hampshire Gov. Maggie Hassan said the issues related to the plant have been closely monitored for years by officials in the Granite State.
"We will continue to work with Vermont and our regional and federal partners to prepare for and minimize any impacts to our electric grid, energy costs and reliability in the region," Hassan said in a prepared statement. "We also stand ready to work with our partners to assist displaced workers and to ensure that the closure of the plant protects the health and safety of New Hampshire's citizens.
New Hampshire's Seabrook Station nuclear power plant is owned by NextEra Energy; its current license expires in March 2030. NextEra applied for a license extension with the Nuclear Regulatory Commission in 2010. The renewal would extend the license to 2050, but is being held up by objections from several environmental groups. Though a number of issues have been settled or dismissed, concerns remain over alkali-silica reaction (ASR) identified in parts of the power plant. In ASR, water slowly degrades the aggregate within concrete.
Vermont Yankee is the fifth U.S. nuclear reactor this year to announce plans to permanently close, the highest-ever annual total, as power prices have slumped amid booming gas production. Reactors also face higher maintenance costs from stricter regulations following Japan's 2011 Fukushima nuclear disaster. Nuclear units in New Jersey, California, Wisconsin and Florida are being shut, reducing the U.S. total to 99 from 104.
Vermont Yankee's cost of producing power was probably about $50 a megawatt-hour, Julien Dumoulin-Smith and Andrew Gay, analysts for UBS, wrote in a research note Tuesday. Spot prices for on-peak power averaged $35.27 a megawatt-hour during the past month in New England.
Some Northeast power markets aren't paying enough for power from nuclear plants, Denault said. A failure to maintain nuclear generation may leave the United States vulnerable to higher prices and volatility if gas production fades, he said.
Based on a 2012 study, the region's power grid can be operated reliably without Vermont Yankee, ISO New England said in an emailed statement Tuesday. Closing the plant will increase the region's dependence on gas for power. Vermont Yankee generates the equivalent of three-fourths of the state's electricity capacity. Power from the reactor is sold into the New England wholesale market, where prices fell to their lowest levels since 2003 last year.
The reactor, which employs about 630 people, was expected to break even this year, with earnings declining in future years, the company said. Entergy said it will cost at least $566 million to shut the plant and decommission the site. There was $582 million in Vermont Yankee's decommissioning trust fund as of July 31.
Bradley Olson of Bloomberg News contributed to this report.