The planned 2021 closure of Indian Point nuclear power plant has no "immediate" credit impact for New York State local governments that depend on the facility's payments in lieu of taxes, according to S&P Global Ratings.
Gov. Andrew Cuomo announced Monday that the state had reached an agreement with the plant's operator, Entergy Corp., to cease power production at Indian Point in Buchanan by 2021. Anne Cosgrove, director of S&P's local governments group, noted in a Jan. 10 report that Entergy currently pays PILOT monies to Westchester County, the Hendrick Hudson Central School District, the Village of Buchanan and the Town of Cortlandt.
Cosgrove said the Hendrick Hudson Central School District "stands out" among the PILOT recipients because it derives about 33% of its general fund revenues from Entergy, "creating uncertainty" about this form of its revenue stream. Entergy is still expected to pay the PILOT through 2021 based on current agreements however, which Cosgrove says "forestalls the potential impact of the closure and provides time for the district to explore alternative revenue sources." The state is also planning to work with municipalities like Hendrick Hudson in mitigating possible declines in revenue due to the plant shutdown, Cosgrove noted.
S&P also pointed out that the closure will have an "indirect impact" on Westchester County affected localities since the plant employs roughly 1,000. Cosgrove added that losing the plant's estimated 2,000 megawatts of generation capacity that provide around 25% of power to Westchester and New York City homes, could lead to higher consumer electricity costs as utilities seek to develop or purchase power from alternative sources. Cuomo has estimated that shutdown will add about $3 a month to electric bills in the New York City area, which Cosgrove said could have a "spillover effect on regional economic activity."
