Entergy 2015 Annual Report Download - page 29

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Clear vision, clear progress.
2015 Integrated Report
29
Entergy Wholesale Commodities
Entergy Wholesale Commodities
Our Entergy Wholesale Commodities generation fleet provides safe, reliable power for our
wholesale customers. In recent years, wholesale power generators have been challenged
by persistent low prices due to abundant shale gas. Our strategic imperative is to transition
to a smaller merchant fleet while properly managing all risks and safely and reliably operating
our facilities. We made clear progress in 2015, managing the EWC transition while continuing
to engage with our stakeholders.
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.