If New York regulators fail to approve the recently announced sale of the FitzPatrick nuclear plant by Nov. 18, the state will owe the plant owner Entergy Corp. a termination fee of $35 million.
That guarantee is one of the incentives state officials offered several weeks ago to help persuade Entergy to sell the money-losing Oswego County plant rather than shut it down.
The subsidies that were approved Aug. 1, target all three Upstate nuclear plants and should reap about $120 million a year for FitzPatrick alone. That was enough to persuade Exelon Corp. to buy the plant for $110 million and save it from being shut down as Entergy had planned.
Officials from Gov. Andrew Cuomo’s office said earlier this month that they convinced Entergy to negotiate the last-minute sale by threatening to seize the plant through eminent domain. But administration officials also provided Entergy with financial assurance that the sale to Exelon, which will take six months or more to finalize, will receive active and ongoing support from state agencies.
To that end, the New York Power Authority established a $35 million letter of credit that pays Entergy if the state fails to take certain actions before FitzPatrick is due to be refueled in January.
Among other possible scenarios, Entergy would get the money if the PSC does not approve the sale to Exelon by Nov. 18, said Steven Gosset, speaking for the power authority.
Entergy also would get the money if the New York State Energy Research and Development Authority fails to sign a contract by Nov. 18 that guarantees nuclear subsidies for FitzPatrick.
Both of those scenarios, and others that would trigger payment of the $35 million termination fee, are “highly unlikely,” Gosset said.