Aug 27 (Reuters) - Entergy Corp said it will shut its Vermont Yankee nuclear power plant, becoming the latest casualty of low power prices and utilities preferring cheap natural gas to generate electricity.
The 620-megawatt power station is not expected to produce power after its current fuel cycle and will be decommissioned in the fourth quarter of next year, the company said.
“This was an agonizing decision and an extremely tough call for us,” said Leo Denault, Entergy’s chief executive officer.
Power prices have followed the natural gas market to lows, as the market grapples with the shale gas boom and flagging demand due to the struggling economy.
Entergy said it will take an after-tax impairment charge of about $181 million in the third quarter due to the shut down.
It also expects charges of $55 million to $60 million related to future severance and employee retention costs through the end of next year.
Entergy said the decision to shut down the plant is expected to modestly benefit its operational earnings, excluding special items, within two years. Its cash flow is expected to increase about $150 million to $200 million through 2017.
The plant, which Entergy bought in 2002, has been the focus of years of political controversy over its operations. The most recent fight followed Entergy’s disclosure in January 2010 of a leak of radioactive tritium at the plant.
The station, which is the only nuclear plant in the state of Vermont, will remain under the oversight of the Nuclear Regulatory Commission throughout the decommissioning process.
Shares of the U.S. power company were down less than one percent at $62.66 Tuesday on the New York Stock Exchange.