Power Plant Purchases, Mergers and Management Rationalisation

Nuclear Power in the USA Appendix 2

(Updated October 2016)

Nuclear power plant purchases

In mid-1999, the 670 MWe Pilgrim plant was sold to Entergy by Boston Edison for $14 million plus $67 million for fuel.

AmerGen, the joint venture of British Energy and PECO Energy (now Exelon), completed its purchase of the 930 MWe Clinton nuclear plant and the 790 MWe Three Mile Island plant at the end of 1999. However, its plan to acquire control of the two-unit Nine Mile Point nuclear power station (614 & 1140 MWe) was derailed by a minor shareholder exercising its veto. Constellation later bid successfully for the units.

In 1999, AmerGen won the Boldest Successful Investment Decision award from the Financial Times. AmerGen was cited as "a huge success ... with expected strong financial returns" and "a bold investment which has created new confidence in the US nuclear industry."

In March 2000, Entergy Corporation reached agreement to buy the New York Power Authority's (NYPA) Indian Point 3 (965 MWe) and Fitzpatrick (778 MWe) nuclear power plants for $967 million, topping a bid by Dominion Resources. The complexity of the transaction is indicated by the terms that included $636 million for the two mid-1970s units, nearly $171 million for the fuel, $92 million to reduce NYPA's decommissioning obligation, and other amounts related to power purchase. There are also provisions for further payments if licences for the 25 year old plants are extended. NYPA retains the $630 million decommissioning funds and pay them when required, while Entergy accepts the $250 million risk of any adverse tax ruling on these. Up to 500 MWe of the combined output is available to NYPA at 2.9 cents/kWh, the remainder at 3.2 or 3.6 cents/kWh. The sale closed in November 2000.

In November 2000, Entergy became the successful bidder for Con Edison's (ConEd) 939 MWe Indian Point 2 unit (including the shut down unit 1 and 76 MWe of gas turbine capacity). The price was $502 million plus about $100 million for fuel. The companies also entered into a power purchase agreement for Entergy to sell the output of Indian Point 2 to Con Edison at an average of 3.9 cents/kWh through the end of 2004, as well as a capacity purchase transaction agreement for Entergy to sell the installed capacity of Indian Point 2 to Con Edison through April 2005, with options for capacity purchases for another six years.

In June 2000, AmerGen received approval to purchase the elderly 650 MWe Oyster Creek plant for $10 million, and the 522 MWe Vermont Yankee plant for $61 million. However, the latter deal was vetoed by state regulators and the plant was auctioned.

In August 2000, Dominion Resources agreed to pay $1.3 billion in cash for the Millstone nuclear plant, about $600 for each kilowatt of generating capacity. The Northeast Utilities plant comprises the 1150 MWe unit 3 and the 858 MWe unit 2,  which were 14 and 25 years old at the time of the deal.  Unit 1, which is being decommissioned, was also included. The price included $105 million for fuel, but only 93.5% of unit 3, since minority shareholders wished to remain.

In December 2000, Constellation Energy, owner of Calvert Cliffs nuclear power plant, agreed to buy Nine Mile Point for $815 million from Niagara Mohawk Power Corporation and other utilities. The deal included unit 1 (609 MWe, started in 1969) and 82% of unit 2 (1,148 MWe, started 1988) for $737 million, plus $78 million for fuel. This is about 3.5 times the price AmerGen agreed to pay for the plant in 1999. Constellation agreed to sell 90% of its output to the vendors for 10 years at about 3.5 cents/kWh. Some $450 million in decommissioning funds were to be transferred to Constellation.

In 2001, PECO (now Exelon) and PSEG concluded the purchase of minor shares in five large reactors from Connectiv Energy.

In August 2001, Entergy Corporation became the successful bidder for the 29-year-old Vermont Yankee power station. Entergy paid $180 million for the 522 MWe plant, $35 million of this for fuel. It took over both the decommissioning liability and the existing fund for this. Power is sold to local utilities (former owners) for 3.9 to 4.5 cents/kWh to 2012. Entergy paid almost three times the price which had been agreed in 2000 with AmerGen.

In April 2002, FPL Energy became the successful bidder for 88.2% of the 12-year-old Seabrook plant. The utility agreed to pay six utility vendors $836.6 million for the share in the 1161 MWe PWR reactor, being $749.1 million for the plant (including decommissioning trust fund), $61.9 million for fuel and the balance for components of an uncompleted second unit. FPL Energy is the US leader in wind energy generation and a sister company to Florida Power & Light, which operates four PWR units.

In September 2003, British Energy (BE) agreed to sell its most profitable asset - the half share of US utility AmerGen - to FPL Energy for $276.5 million. The proposed deal was the result of its plan to realise the value of its AmerGen equity independently of Exelon, its joint venture partner. Exelon then exercised its right of first refusal and bought the share. The sale was required by the UK government's restructuring provisions for BE.  In 2008, Amergen was absorbed into Exelon.

In November 2003, Dominion agreed to pay $220 million cash for Kewaunee, a 540 MWe Wisconsin reactor, the figure including $36.5 million for fuel. The sale was finalised in July 2005. Some $392 million in decommissioning funds were transferred.

Also in November 2003, Constellation Energy agreed to buy the R E Ginna nuclear power plant from New York utility Rochester Gas and Electric Corporation (RG&E) for $401 million plus $21.6 million for fuel. The 495 MWe PWR started up in 1969 and is among the best-performing in the US. The sale was contingent upon the licence extension taking its life to 2029. (The Nuclear Regulatory Commission approved the licence renewal in May 2004.) A planned uprate enabled by a steam generator replacement in 1996 increased capacity to 610 MWe. A sales contract commits 90% of ten years output to RG&E at 4.4 cents/kWh average.

In March 2004, Cameco Corporation agreed to buy American Electric Power's 25.2% stake in the South Texas Project plant - two 1,250 MWe PWRs which started up 1988-89 - for $279 million plus fuel, but two of the owners - Texas Genco Holdings and City Public Service Board of San Antonio - then exercised right of first refusal, leaving Cameco with a $7 million consolation fee. (Texas Genco was acquired by NRG Energy in 2005.)

In July 2005, FPL Energy agreed to pay $380 million for 70% of the Duane Arnold BWR (600 MWe capacity, following an uprate approved in November 2001) from an Alliant Energy subsidiary, which continued to buy the power. The plant is run by Nuclear Management Company and a licence extension application was submitted in September 2008.

In July 2006, Entergy agreed to buy the 798 MWe Palisades nuclear power plant from CMS subsidiary Consumers Energy for $242 million ($301/kWe) plus $83 million for the fuel and $55 million for other assets. It started up in 1971 and a 20-year licence extension to 2031 was granted early in 2007. Entergy is selling all the power back to Consumers Energy for 15 years. Responsibility for eventual decommissioning of the plant was transferred to Entergy, though the vendor retained $200 million of the $566 million decommissioning funds, with the later return of $116 million more pending a favorable federal tax ruling.

In December 2006, FPL Energy agreed to buy the Point Beach nuclear plant. The two units total 1012 MWe and had just had licences extended to 2030 and 2033. The vendor is Wisconsin's We Energies, which continues to buy the power. The final price was $719 million for the plant, plus $205 million for fuel and inventory. FPL assumed responsibility for decommissioning and $390 million in trust funds were transferred to FPL for this. The deal was approved in September 2007.

Also in December 2006, Duke Energy and North Carolina Electric Membership Corporation (NCEMC) announced agreements to purchase Saluda River Electric Cooperative's 19% ownership interest in unit 1 of the Catawba nuclear plant in South Carolina. Duke paid $158 million for about 72% (approximately 154 MWe) of Saluda River's stake, and NCEMC paid $42 million for the remaining 28% (approximately 60 MWe) share. Following the deal, NCEMC and Duke Energy own approximately 62% and 38% of Catawba 1, respectively.

The private equity buyout of TXU Corporation, with its two 1,150 MWe Comanche Peak reactors, announced in February 2007 was completed in October of that year. TXU has become Energy Future Holdings Corp which comprises three operations: TXU Energy for retail, Luminant for power generation and Oncor for transmission and distribution. Luminant has taken over plans to build two new 1700 MWe Mitsubishi US-APWR reactors at Comanche Peak in Texas and possibly others as well. Plans for eight coal-fired plants were scrapped earlier in the year. Environment groups have supported the buyout with its changed policies, and a new director who is chairman of one such group "will lead the effort to make climate stewardship central to corporate policies."

Representing significant international rather than simply US consolidation, Constellation Energy in January 2009 accepted the Electricit√© de France (EDF) $4.5 billion bid for half of its nuclear power business – more than 60% of its production. The deal gave EDF a major foothold in the USA, with a share of 3,994 MWe at Calvert Cliffs in Maryland, and Nine Mile Point and Ginna in New York.* All the five reactors had been granted 20-year licence extensions, and the deal valued them at about $2,250/kWe net, but including fuel. (The NY plants had been bought by Constellation for $533/kWe without fuel earlier in the decade.)

* EDF already owned 9.5% of Constellation itself, and had committed $975 million to the UniStar Nuclear Energy joint venture which it set up with Constellation to build, own and operate a fleet of US-EPR units in North America with the "objective of leading the nuclear renaissance in the USA". In October 2010 Constellation pulled out of Unistar and sold its share to EDF for $140 million. This meant that Unistar became wholly foreign-owned, which precluded any US nuclear development at all until that changed to majority US ownership.

In March 2012 Exelon merged with Constellation Energy (CENG) which operated five reactors at three plants (taking a 50.01% share, EDF retained 49.99%), and two years later the fleets were integrated operationally so that Exelon operated 23 reactors with over 22 GWe capacity and holds the licences. These are all merchant plants. EDF agreed to have the five CENG units (3.9 GWe) consolidated in Exelon’s fleet for a $400 million exceptional dividend from CENG (funded by a loan from Exelon) and option to sell the CENG stake to Exelon at fair market value between 2016 and 2022.

US nuclear power plant purchases since mid-1998

Buyer Reactors Net MWe
sold
Plant price
$ million
Sale completed
(expected)
Price*
$/kW
Value**
$/kW.y
Entergy
Pilgrim
670
14
July 1999
21
1.6
AmerGen
Three Mile Island
786
23
Dec 1999
29
1.9
AmerGen
Clinton
924
20
Dec 1999
22
0.8
AmerGen
Oyster Creek
619
10
Aug 2000
16
1.8
PECO (Exelon) et al
Peach Bottom, Hope Creek, Salem
714
20
Jan & Oct 2001
28
1.5
Entergy
Fitzpatrick & Indian Point 3
1743
636
Nov 2000
280
18.4
Entergy
Indian Point 2
939
502
Sept 2001
49
3.8
Dominion
Millstone
1947
1193
March 2001
613
30
Constellation
Nine Mile Point
1536
675
Nov 2001
439
23
Entergy
Vermont Yankee
510
145
July 2002
288
28
FPL Energy
Seabrook
1024
749
Nov 2002
731
26
Exelon
Clinton, TMI, Oyster Creek
1210
276
Oct 2003
228
about 18
Constellation
R E Ginna
495
408
June 2004
810
31
Genco & CPS
South Texas
630
279
May 2005
443
18
Dominion
Kewaunee
540
192
July 2005
355
39
FPL Energy
Duane Arnold
419
300
Jan 2006
716
80
Entergy
Palisades
798
242
April 2007
303
12
FPL Energy
Point Beach
1012
719
Sept 2007
710
30
Duke, NCEMC
Catawba
229
200
mid-2008
874
35
EDF
Calvert Cliffs, Nine Mile Point, Ginna
1997
4500
Jan 2009
2253
 

* Price excludes fuel
** Value based on years between announcement and end of operating licence

Corporate mergers

The $32 billion merger of Unicom and PECO in 2000 to form Exelon created the largest nuclear power producer in the USA, and the third largest in the world. In December 2003, Exelon purchased British Energy's 50% interest in AmerGen, which was originally a 50:50 partnership between PECO and British Energy. AmerGen owned the Clinton, Oyster Creek and Three Mile Island 1 nuclear reactors. Exelon had 10 operating nuclear plants with 17 reactors that generated 20% of US nuclear production in 2007. A proposed merger in 2004 between Exelon, with headquarters in Illinois, and PSEG in New Jersey was rejected by the state of New Jersey. In 2008, Exelon made a $6.2 billion takeover bid for NRG Energy, which operates the two South Texas reactors, but this was rebuffed in mid-2009. 

In 2000, Carolina Power & Light merged with Florida Progress Corporation to become Progress Energy, which now owns five reactors in North Carolina, South Carolina and Florida. Thirty-five percent of the electricity in those three states comes from nuclear power. In 2001, FirstEnergy Corporation, based in Ohio and itself the product of a merger three years earlier, merged with GPU Inc., based in New Jersey. The successor company, FirstEnergy, operates four reactors that provide 28% of the electricity for customers in Ohio, Pennsylvania and New Jersey.

In October 2007, TXU Corp. and Texas Energy Future Holdings Limited Partnership merged to form Energy Future Holdings Corp, whose power generation subsidiary, Luminant is the owner and operator of the two-unit Comanche Peak nuclear plant.

In January 2011 Duke Energy agreed to purchase Progress Energy, and this $26 billion deal was approved by federal regulators in June 2012. The combined company was set to operate 12 power reactors, the largest regulated nuclear fleet in the USA, but Crystal River was shut down in February 2013, reducing this to 11.

Management rationalization

The Nuclear Management Company, a joint venture formed in 1999 by four Midwest utilities, was approved by the Nuclear Regulatory Commission as a nuclear operating company. It took over operation, fuel procurement and maintenance of eight nuclear units (4,500 MWe) at six sites, which continued to be owned by the utilities, each with 20% of NMC. These remained responsible for used fuel and decommissioning. As with mergers, the main drivers for NMC were cost reductions and streamlined operations. However, due to sales of four plants achieving consolidation in that way, only two plants (three reactors) – Monticello and Prairie Island – remained with NMC and these had the same owner. Accordingly the operating licence was transferred back to the owner and NMC was incorporated into Xcel Energy, the parent company, in 2008.

In March 2012 Exelon merged with Constellation Energy (CENG) which operated five reactors at three plants (taking a 50.01% share, EDF retained 49.99%), and two years later the fleets were integrated operationally so that Exelon operated 23 reactors with over 22 GWe capacity and holds the licences. These are all merchant plants. Exelon in 2012 took over management of Omaha’s Fort Calhoun plant on a 20-year contract which was terminated when the plant closed in 2016.

The Utilities Services Alliance was established in 1995 by Fluor Daniel and seven utilities, each of which owned a single operating nuclear reactor. In 1999, four utilities joined the Alliance, bringing the total number of members to 11 with 14 reactors (12.6 GWe capacity). This new group of utilities – Pacific Gas & Electric, STP Nuclear Operating Company, TXU Electric, and Ameren UE – along with Wolf Creek, formed the STARS (Strategic Teaming And Resource Sharing) sub-group within the Alliance to focus on their common Westinghouse four-loop PWR design. In 2012, the STARS sites ceased to be full participating members of the Utilities Services Alliance. Following further changes of membership, the Alliance now comprises eight utilities operating 16 reactors (16.7 GWe).*

*American Electric Power (Cook 1&2), Detroit Edison (Fermi 2), Energy Northwest (Columbia), Luminant (Comanche Peak 1&2), Talen Energy Corporation (Susquehanna 1&2), Public Service Enterprise Group (Salem 1&2 and Hope Creek), South Texas Project NOC (STP 1&2), Xcel Energy (Prairie Island 1&2 and Monticello); STARS members (Utilities Services Alliance Class "C" membership) include: Nebraska Public Power District (Cooper), Omaha Public Power District (Fort Calhoun).


General sources

US Nuclear Plant Sales table on the Nuclear Energy Institute website

 


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