Clear vision, clear progress.

2015 Integrated Report

Manage Risk and Operate Our Facilities Safely and Reliably

Power prices declined significantly in 2015 and our long-term outlook is for continued low wholesale power prices, particularly in the Northeast. Based on that outlook, we took aggressive steps to reduce price risk in 2015. At the same time, we maintained our hedging activities to ensure we are well-positioned to capture upside from any future price volatility.

In late December, we sold the 583-megawatt Rhode Island State Energy Center – a dispatchable CCGT plant with a favorable competitive position in the region in which it operates. The base sales price was approximately $490 million, well above the purchase price Entergy paid in December 2011. The transaction is consistent with our strategy to reduce wholesale market price risk and free up financial resources for other opportunities.

We announced the closure of two single-unit nuclear plants – Pilgrim Nuclear Power Station in Massachusetts and James A. FitzPatrick Nuclear Power Plant in New York. We made the difficult decisions to close these plants based on the continued deteriorating economics of each facility. Among the primary factors driving the plant closures were low natural gas prices, market designs that fail to properly compensate nuclear generators for fuel diversity, reliability, environmental and other benefits, as well as high operating costs. Pilgrim is expected to shut down no later than June 1, 2019, while FitzPatrick is planned to shut down on January 27, 2017. While closing Pilgrim and FitzPatrick makes financial sense for our company and our owners, we recognize the consequences of shutdowns on plant employees and the surrounding communities. We are committed to supporting both groups during the transition.

Indian Point is a low-cost plant located in a favorable market. It supplies on average 25 percent of the power for New York City and the Westchester County area.

EWC Nuclear Fleet
Capacity Factor

Capacity factor: normalized percentage of the period that the nuclear plants generate power

We formed a nuclear decommissioning organization in late 2015 to focus on the safe transition to full dormancy of Pilgrim, FitzPatrick and Vermont Yankee Nuclear Power Station, which transitioned to a SAFSTOR organization at the end of 2014. The model for success at Vermont Yankee and best practices from other decommissioning efforts outside the company will be followed to ensure strong linkage among site-specific decommissioning plans, application of best practices and risk management.

The remaining EWC fleet includes three financially viable units – Palisades Power Plant in Michigan and Indian Point Energy Center Units 2 and 3 in New York – as well as interests in several fossil and wind power plants. We also provide management services to the Cooper Nuclear Power Station in Nebraska. Palisades operates under a favorable power purchase agreement that expires in 2022. Indian Point is a low-cost plant located in a favorable market. It supplies on average 25 percent of the power for New York City and the Westchester County area. We continue to pursue license renewal from the NRC for Indian Point Energy Center through a multi-year process during which the plant continues to operate.

In addition to addressing market risks, we manage risks by operating safely and reliably. We were disappointed in our operating performance in 2015. While Palisades successfully moved to Column 1 of the reactor oversight process, the NRC moved Pilgrim to Column 4, resulting in a substantial increase in regulatory oversight. We also experienced several unplanned outages at Indian Point 3 during the year, and in early 2016 the unit was moved down to Column 2 of the Reactor Oversight Process Action Matrix. We are committed to resolving performance deficiencies and ensuring recovery in plant performance.