Entergy has announced that it will close its Pilgrim Nuclear Power Station in Plymouth, Mass., no later than June 1, 2019, because of poor market conditions, reduced revenues and increased operational costs. The company notified the independent system operator of the electric grid, the ISO New England Inc. (ISO-NE), that as of that date, Pilgrim would not participate as a capacity resource in the market.

The exact timing of the shutdown depends on several factors, including further discussion with ISO-NE, and will be decided in the first half of 2016. "The decision to close Pilgrim was incredibly difficult because of the effect on our employees and the communities in which they work and live," said Leo Denault, Entergy's chairman and chief executive officer.

"Our people at Pilgrim are dedicated and skilled, a wonderful blend of young professionals and seasoned, experienced veterans, who for decades have been generating clean power and contributing millions of dollars of economic activity to the region. But market conditions and increased costs led us to reluctantly conclude that we had no option other than to shut down the plant."

The decision to close Pilgrim was based on a number of financial factors:

Low current and forecast wholesale energy prices - brought about by record low natural gas prices, driven by shale gas production - significantly impacted Pilgrim's revenues. The current and projected market price for delivered natural gas in New England has dropped substantially because of the influx of shale gas and policy-related issues, which in turn has driven down power prices. As a result, current and forecast power prices have fallen about $10 per megawatt hour, an annual loss of more than $40 million in revenues for Pilgrim.

Wholesale energy market design flaws continue to suppress energy and capacity prices in the region, and do not provide adequate compensation to merchant nuclear plants for the benefits they provide. These benefits include reliable carbon-free, large-scale 24/7 energy generation and onsite fuel storage. Efforts over the past few years to correct these market design flaws have not been sufficiently successful.

Pilgrim's economic performance is also undermined by unfavorable state energy proposals that subsidize renewable energy resources at the expense of Pilgrim and other plants. Also detrimental are a state proposal to provide above-market prices to utilities in Canada for hydro power representing about one-third of Massachusetts' electricity demand and a recent state agency's order that would further lower the price of natural gas and increase the region's reliance on it.

We have invested hundreds of millions of dollars to improve - first and foremost - Pilgrim's safety, as well as its reliability and security but face increased operational costs and enhanced Nuclear Regulatory Commission oversight, consistent with Column 4 of the agency's Reactor Oversight Process Action Matrix. While we will always make needed investments at any plant, we also take into account the effect on our stakeholders of operating over the long-term if it is not economically viable to do so.

While making decisions based on conditions at each plant, Entergy remains committed overall to nuclear power, whose benefits include carbon-free, reliable power that is cost effective over the long term, contributes to supply diversity and energy security as part of a balanced energy portfolio and provides almost two-thirds of America's clean-air electricity.