Low natural gas prices and high costs of operations finally caught up with Massachusetts’s sole nuclear power plant.
Entergy Corp., which owns the plant, announced a 2019 expiration date for the Pilgrim Power Plant in Plymouth, but the closure could come as early as 2017.
Entergy President of Wholesale Commodities Bill Mohl cited a combination of poor market conditions, reduced revenues and state energy policy for the company’s “agonizing” decision “of last resort,” the Worcester Telegram reports.
Federal inspectors downgraded the plant’s safety to the lowest level last month. The multi-million dollar upgrades required to meet current safety standards prompted the company to make what President of Wholesale Commodities Bill Mohl called an “agonizing” decision “of last resort.”
The company’s struggle with the Pilgrim Plant, however, did not begin with the safety issues. According to the Wall Street Journal, Entergy lost $40 million operating the plant this year and could no longer compete in the energy market.
So what does the Pilgrim Plant’s closure mean for New England? Read on to find out.
Plymouth’s economy will suffer a mighty blow
Since its launch of operations in 1972, the Pilgrim Power Plant has been good to its hometown. Town Manager Melissa Arrighi told the Cape Cod Times that Entergy currently feeds an annual amount of $9.25 million directly into the city’s budget rather than paying taxes.
“Obviously the community as a whole will be hurt by losing $10 million in tax dollars, and that will be challenging,” Viriato DeMarco, a state senator from Plymouth told the Times.
On top of providing about 7 percent of the town’s tax valuation, the plant also accounts for $24.9 million worth of wages and benefits to Plymouth residents.
The Pilgrim Power Plant’s closure caught Plymouth officials off-guard
The inevitability of the plant’s termination loomed amidst an economic climate guided by high operation costs and cheap natural gas. City officials even set up stabilization fund several years ago to offset the financial of the plant’s eventual closure.
But with an expiration date as soon as 18 months from now, the account’s current balance of $2.7 million fell short of the financial padding city officials would have liked this soon before the plant’s closure.
“I would have liked to have more notice than that,” Arrighi said. “It would have been nice to have more (in the stabilization fund), but we’ll add to it. The plant is not going anywhere soon.”
Hundreds of employees’ jobs hang in the air
The plant plays a vital role in Plymouth’s workforce. A report from the University of Massachusetts found that about 190 Plymouth residents work at the plant, but Entergy said the plant employs more than 600 full-time employees and 900 temporary employees.
Workers, with the support of Utility Workers Union of America, urged Entergy to reconsider. WCVB reports Craig A. Pinkham, acting president for the group’s local 369, released a statement condemning the decision.
“It’s not acceptable to walk away from a resource this valuable, and this important to our energy supply and to our economy, simply because it is going to require an investment to maintain its viability,” Pinkham said. “Gov. Baker, officials at the New England power grid, ISO NE, and our state and federal legislative delegations need to tell Entergy to work harder to find a way to keep this resource up and running, safely and economically.”
Pinkham’s suggestions, however, are unlikely to reach fruition. Safety improvements required would come with a $60 million price tag—one factor that prompted Entergy President Bill Mohl to deem the plant no longer “financially viable.”
Electricity will also cost a pretty penny—for a while
Despite the ever-shrinking prices of natural gas, New Englanders can expect temporary bumps in electricity costs, according to WCVB.
“Certainly there will be the need for additional new resources to replace the capacity represented by Pilgrim,” said Dan Dolan, president of the New England Power Generators Association. “And the question is always, ‘Where is that going to come from and how much is that going to cost?’”
The plant supplies an estimated 17 percent of the state’s energy— the power required to heat and light Boston.
Despite the cause for concern about alternate energy sources for New England, Boston Globe Correspondent Jack Newsham sees hope in the area’s pipelines to supplement its energy needs, including Access Northeast, Northeast Energy Direct, and Algonquin Incremental Market and Atlantic Bridge.
“Pipeline developers, including Massachusetts’s biggest utilities, have proposed new infrastructure to bring in fuel for gas-burning power plants,” Newsham writes. “And several companies have proposed high-capacity transmission projects that could bring hydropower and wind power from Canada and Maine to central New England.”
Decommissioning the plant won’t be cheap, but it won’t be too much of a headache
The power plant will be closed by 2019, but the process of decommissioning the plant—that is, removing services and reducing any residual radioactivity—will likely span a decade and cost $1 billion to complete.
Despite the duration and pirce tag, MIT nuclear science and engineering professor Jacopo Buongiorno said it’s a fairly simple process.
“It’s not dissimilar from taking care of asbestos, you need to make sure when you’re bringing down the structure you don’t disburse the potentially hazardous material,” he told the Boston Herald. “It takes time and money, but it’s not a technically super challenging, untried process.”
Entergy currently has about $870 million saved in its decommissioning trust fund, but the dismantling process can’t commence until the company is able to cover the full cost.
When the plant is finally closed, its spent nuclear fuel will be sealed into dry cask storage—heavy, steel receptacles that are welded shut after the fuel is deposited. This process will likely take about five years.
Plymouth City Officials are worried, but not too worried
How do you make up for nearly $10 million in lost tax revenue? That’s the challenge city leaders in Plymouth face in the months leading up to the plant’s closure.
Naturally, the huge costs combined with an approaching deadline have put pressure on the city. But Arrighi was confident that the city will recover gracefully— even without raising taxes.
“It hasn’t become as much of the overall influx of income to the town of Plymouth as it has in the past,” she told the Cape Cod Times. “We’ve set aside about $3 million in a special mitigation fund for the eventuality of the plant closing, so that has been funding we can use. We will be actually adding to that funding at the Spring Special Town Meeting.”
Hoping to offset the jobs losses, city leaders are working with the state and federal government to invest in tourism and draw in new business.
“We are optimistic,” Plymouth Board of Selectman Kenneth Tavares told the Times. “We know we have challenges but we feel very confident that we’re up to them, as long as the health and safety of our residents is protected by the NRC and the people that have oversight of the plant.”