Exelon said it would pay $110 million to the plant's current owner, Entergy, for the operating license and would refuel the James A. FitzPatrick plant in Scriba, N.Y. in January. Exelon said the roughly 600 people working there would keep their jobs. The plant's license, renewed in 2008, does not expire until 2034.
Cuomo, who has been caught up in the politics of energy, hailed the deal. He has opposed fracking for natural gas and he has pushed a Clean Energy Standard requiring utilities to use non-carbon emitting sources of energy such as solar and wind to generate 50 percent of their electricity by 2030.
Entergy had said last November that it would close the nuclear unit because of "market conditions," making the 838-megawatt plant another victim of low natural gas prices. Those low prices are a product of the fracking boom, especially in neighboring Pennsylvania.
But last week Cuomo announced a plan that would effectively subsidize the state's nuclear power plants by forcing the utilities that rely on them to pay "zero emission credits" to the operators of those reactors. That is expected to help the plants, which provide 30 percent of New York state's electricity, to stay open — though critics say that it could drive up electricity rates.
"Keeping this clean energy resource running means New York will not lose the progress we've already made in reducing harmful carbon emissions while we ramp up renewables to meet the Governor's mandate for 50 percent renewables by 2030," said Richard Kauffman, chairman of energy and finance for New York.
Cuomo's office said replacing the nuclear plant with fossil fuels would have produced an additional 3 million tons of greenhouse gases, the equivalent of the emissions of 600,000 cars annually. The Fitzpatrick plant provides enough electricity to power more than 800,000 average-sized homes, Cuomo's office said.
Exelon operates two other nuclear plants in upstate New York, R.E. Ginna and Nine Mile Point, which lies adjacent to the FitzPatrick unit. The company said it would spend $400 million to $500 million on operations, integration and refueling of those plants and Fitzpatrick as a result of the state subsidy plan.
The Cuomo plan to subsidize the nuclear plants carries a hefty price, which the utilities will be allowed to pass along to consumers. An analysis of the proposal, by the staff of the Public Service Commission, found it might cost $965 million over a span of two years, but lead to a net benefit of around $4 billion due to the value of lower carbon dioxide emissions and less air pollution, among other benefits.
Moody's credit rating service said in a note to investors that the zero-emission credits in the 12-year subsidy plan were "quite substantial" and estimated it would amount to $17.48 for each megawatt hour of power production, starting April 1, 2017. It said that for the nuclear utilities, the subsidy would equal about a 45 percent price increase.
Moody's said that Exelon would receive about $160 million a year ($100 million after taxes) for the two plants it currently owns. It said that by acquiring the FitzPatrick reactor, Exelon could get another $120 million in pre-tax cash payments from the zero-emission credits.
"New York State's approval of the [Zero Emissions Credits] could have broader implications for the entire nuclear power industry," said Moody's analyst Toby Shea. "Many nuclear power plants operating in deregulated power markets in the US are generating minimal or negative cash flow. Many are also located in rural areas where the nuclear plant is the primary source of employment and tax base. Closures of these plants risks harming local economies and hampering states' compliance with greenhouse emission goals."