TwomeyTestimony

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ASSEMBLY STANDING COMMITTEE ON ENERGY

ASSEMBLYMAN KEVIN A. CAHILL, CHAIRMAN

ASSEMBLY STANDING COMMITTEE ON CORPORATIONS, AUTHORITIES AND

COMMISSIONS

ASSEMBLYMAN JAMES F. BRENNAN, CHAIRMAN

JANUARY 12, 2012 PUBLIC HEARING

WRITTEN TESTIMONY OF T. MICHAEL TWOMEY

ON BEHALF OF ENTERGY

Good morning/afternoon Chairman Cahill, Chairman Brennan, and the members of the New

York State Assembly Committee on Energy and the Committee on Corporations, Authorities, and

Commissions. My name is Mike Twomey and I am the Vice President for External Affairs for Entergy

Wholesale Commodities, 440 Hamilton Avenue, White Plains, New York. I appreciate the opportunity

to discuss Indian Point with you today. The facility plays a critical role in ensuring a safe, clean,

reliable, and reasonably-priced electricity supply for New York City and the lower Hudson Valley.

My presentation today addresses four topics: first, some background information on Entergy and

Indian Point; second, an overview of license renewal; third, the role of Indian Point in powering the

region; and fourth, specific responses to the Committees inquiries relating to certain financial

information and decommissioning plans.

Although we are focused on Indian Point today, I would like to place this discussion into a

broader context. The 104 operating nuclear power plants in the U.S. generate approximately 20% of the

electricity for our country. There are nuclear power plants near many major American cities, including

Boston, Philadelphia, Pittsburgh, Chicago, Detroit, Cleveland, Washington D.C., Baltimore, Charlotte,

Miami, New Orleans, Phoenix, and San Diego, to name a few. Nuclear power plants do not burn

hydrocarbons to generate electricity, so they produce virtually no greenhouse gases. In 2009, U.S.

nuclear plants prevented the release of 647 million metric tons of carbon dioxide into the atmosphere.


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This is nearly as much carbon dioxide as is released from all U.S. passenger cars. Only 29% of our

nations electricity comes from clean air sources, and nuclear power plants generate almost 70% of it.

New Yorkers have the distinction of living in a state with the fourth lowest greenhouse gas emissions

per capita a situation made possible, in part, by the fact that New York State receives close to 31% of

its power from nuclear plants.

BACKGROUND INFORMATION ON ENTERGY

Entergy is the second largest nuclear operator in the United States. It owns and operates eleven

nuclear power units in New York, Massachusetts, Vermont, Michigan, Arkansas, Louisiana, and

Mississippi. It also provides management support services for a twelfth unit owned by the Nebraska

Public Power District. Entergy has approximately 30,000 megawatts of electrical generating capacity

and delivers electricity as a retail utility provider to 2.7 million customers in the southeast U.S. Entergy

was the first U.S. utility to voluntarily stabilize greenhouse gas emissions. Entergy has earned local,

national, and international recognition for its leadership on a wide range of issues, including those

related to the environment, corporate governance, and low-income assistance.

For example, in 2011, for the tenth straight year, Entergy was recognized by the Dow Jones

Sustainability Index for its leadership in the areas of climate strategy, corporate governance,

occupational health and safety, price and risk management, and scorecard measurements. Entergy has

been included on either the Dow Jones Sustainability World Index or North America Index, or both,

every year since 2002, a distinction held by no other U.S. utility.

In 2011, Corporate Responsibility magazine named Entergy one of the 100 Best Corporate

Citizens in the nation. It was the fourth time in five years that Entergy earned the distinction. The


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magazines annual ranking is based on performance in seven areas: climate change, environment,

philanthropy, employee relations, financial, governance, and human rights.

In 2010, the National Fuel Funds Network recognized Entergy with its Corporate Excellence

Award. Entergy received the honor for its work fighting poverty through its Low-Income Customer

Assistance Initiative, a collection of programs that serve as a model for our industry peers and others.

In 1987, Entergy became the first electric utility holding company in the nation to commit to the

NAACPs Fair Share Principles. In the last ten years, Entergy has spent more than $2 billion with

minority- and women-owned suppliers who provide a wide range of goods and services.

As part of electric deregulation in New York, Entergy purchased Indian Point Unit 3 and the

James A. FitzPatrick facility in Oswego, NY from the New York Power Authority (NYPA) in 2000

through a competitive bid process. Entergy purchased Indian Point 2 from ConEdison in 2001. In the

last ten years, Entergy has invested more than $1 billion in upgrades to the Indian Point facility.

Entergys operation of Indian Point has been outstanding. The facility ranks among the most

reliable in the nation. Indian Point has held the highest safety ratings (Green) for the last six years and

passed key safety assessments performed by both the Nuclear Regulatory Commission (NRC) and the

Advisory Committee on Reactor Safeguards as part of the license renewal application. A 2008

Independent Safety Evaluation stated that Indian Point nuclear operations are conducted competently

and professionally, and that plant safety systems are well maintained, reliable, and backed with full

resource commitment by Entergy. The capacity factor of the Indian Point facility that is, the

percentage of time the units are available to produce electricity has increased substantially under

Entergys ownership.

Entergy employs approximately 2,000 individuals in New York. The Indian Point facility

employs over 1,100 highly-skilled, full-time individuals, many of whom are members of the Teamsters


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and the UWUA Local 1-2. In addition, on an annual basis during operations and refueling outages, we

employ hundreds of additional union personnel, including Boilermakers, Carpenters, Laborers,

Steamfitters, Millwrights, Divers, and Engineers.

The State of New York enjoys substantial economic benefits from Entergys ownership of these

nuclear units. These benefits include approximately $130 million in full time annual employee payroll,

more than $350 million in annual local purchases, $75 million in annual property tax payments and

value sharing agreement payments to state and local governments, and approximately $2 million in

annual charitable contributions.

According to an economic study done by the Nuclear Energy Institute in 2004, the Indian Point

facility generates close to $1 billion in annual economic activity for the region.

LICENSE RENEWAL

The current licenses for Indian Point Units 2 and 3 expire in September 2013 and December

2015, respectively. In April 2007, Entergy submitted a license renewal application for the Indian Point

facility to the NRC. In August 2011, the NRC issued a safety review finding Indian Point to be safe and

supporting the relicensing of the facility. In the license renewal proceeding, there are twenty

contentions raised by various parties such as Riverkeeper and New York State that will be the subject of

hearings before the Atomic Safety and Licensing Board. The hearings are expected to begin in

2012. After resolution of the admitted contentions, the NRC may proceed with a final decision

regarding whether to grant renewed licenses. Under federal law, because the application was submitted

five years prior to the license end dates, Indian Point may continue to operate while the NRC proceeding

is pending.


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INDIAN POINT POWERS NEW YORK

In New York State, the flow of electricity is from west to east and north to south, where demand

is greatest. This flow corresponds to population density within New York and where the demand for

electricity is higher. Due to the transmission constraints limiting the delivery of power into New York

City and Westchester County, the local power plants that serve this load are vital.

Indian Point is of particular importance to the region. On an almost continuous basis, Indian

Point supplies approximately 2,000 megawatts of baseload power 24 hours a day, seven days a week to

homes, businesses, municipalities, hospitals and other critical regional infrastructure. To put this

number in perspective, 2,000 MW is enough power to serve at least two million homes. According to

the NYISO, Indian Point currently provides between 25% and 30% of the electricity needed to serve

load in NYISO zones G, H, I and J (encompassing all New York City, all of Westchester County, and

parts of several other Hudson Valley counties).

New York utility customers depend on Indian Point. For example, in August 2011, Entergy and

ConEdison signed a contract extension for 500 megawatts of power from Indian Point. The term of the

five year agreement extends to 2017, and is contingent on license renewal. In addition, NYPA (which

serves government entities including the MTA, operator of MetroNorth and New York Citys subways)

stated in its 2010 annual report that it has contractual obligations to purchase 200 megawatts from Indian

Point. These purchase power agreements (PPAs) represent only one method through which utilities

purchase power from Indian Point. Some critics of the facility frequently mischaracterize Indian Points

contribution to the regional grid by looking only at the amount of power it delivers to utilities under

PPAs and not the total amount of power it supplies. In fact, utilities typically supply their needs with a

mix of PPAs and short-term open market purchases. The mix of these purchases from Indian Point can

change, but approximately 2,000 megawatts from the facility is continuously provided to the New York


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electric system at the competitive wholesale market price. Without Indian Point, the competitive

wholesale market price would be higher -- and retail prices for residential, business, and industrial

customers would also be higher -- because Indian Points output would be replaced by higher cost power

plants, including plants that generate air pollution in lower income areas of the region.

Due to its size and location, Indian Point plays a major role in maintaining grid reliability.

Through its ability to provide what is known as reactive power, Indian Point helps to ensure stable

power flows across the transmission system whether that power is generated by Indian Point or

another generation facility. It is worth noting that New York has expressed strong interest in attracting

high tech manufacturing facilities. A stable and reliable flow of electricity is critical for such facilities.

In August 2011, the City of New Yorks Department of Environmental Protection (NYCDEP)

released an independent report (the CRA Report) on the impact of a possible Indian Point shutdown

on New York City. You have heard from the Citys representatives today, so I will not discuss the

report in detail. It bears repeating, however, that without Indian Point New York City consumers would

likely face an increase of $2 to $3 billion in electricity prices through 2030 and there would be a state-

wide increase of $10 to $12 billion over the same period; New York would see approximately a 15%

increase in carbon emissions under most conventional replacement scenarios, with roughly a 7 - 8%

increase in nitrogen oxide emissions; and the reliability of the Citys electrical system would be

compromised without the addition of generation and/or transmission facilities.

The CRA Reports key findings are consistent with similar independent studies that have been

conducted over the last several years, including the City of New Yorks 2011 PlaNYC Report, which

stated that closing Indian Point would increase local air pollution due to increased reliance on carbon-

intensive energy sources; the 2010 New York State Energy Plan, which stated that the retirement of

Indian Point may present tradeoffs including higher electricity prices and higher CO2 emissions; and a


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2006 National Academy of Sciences study, which stated that Indian Point is a vital part of the system

supplying electricity to the New York City region and any significant interruption of power could have

serious consequences.

Critics of Indian Point argue that there is a current surplus of energy in New York. While true,

this simplistic statement fails to acknowledge that removing a relatively low-cost resource, such as

Indian Point, from the generation supply would increase costs to customers because all replacement

options are more expensive than Indian Point. And, while some argue that capacity installed anywhere

in the State can be used as a substitute for Indian Point, that statement ignores the realities of the

transmission system and the physical properties of electricity.

Some point to a Renewable Portfolio Standard (RPS) as an option to replace Indian Point.

Through 2010, New York has achieved only 40% of its 2015 RPS goal. 2,200 MW of new generation is

needed just to satisfy the un-met RPS goal. Moreover, the intermittent supply of electricity from wind

or solar power does not offer a realistic substitute for the baseload electricity supplied by Indian Point.

And, the price of electricity from wind or solar resources is typically far higher than from conventional

generation facilities. Customers in New York already pay among the highest electric rates in the United

States substantial reliance on renewable energy would unquestionably lead to much higher rates.

Some claim that energy efficiency programs can reduce the need for Indian Point generation. To

date, New York utility customers have invested more than $1 billion in energy efficiency programs. For

the years 2008-2010, however, the NYISO reported that only 47% of New York's energy efficiency

portfolio standard targets had been achieved.

Frequently, opponents of Indian Point embrace various generation or transmission projects as

alternatives to Indian Point. It is important to note that Entergy has no plans to shut down the Indian

Point facility. The NRC license renewal proceeding can be expected to continue for several years and,


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as noted above, the plant has a right to operate throughout the NRC proceeding, regardless of how long

it takes to be completed. Thus, the so-called alternatives to Indian Point should be viewed each on its

own merits, irrespective of the status of Indian Point. For each project, the following questions, at a

minimum, should be answered:

How much will it cost New Yorkers? Which customers will bear what portion of the cost? How

does the cost of the project compare to existing or proposed alternatives? What are the environmental

benefits and burdens of the project? Who will receive those benefits and who will bear the burdens?

How do the environmental benefits and burdens compare to those presented by existing facilities?

What are the reliability consequences of the project? What risks are being taken by pursuing the project

as compared to other alternatives? How do the reliability consequences of the project compare to

existing facilities?

THE NEW YORK STATE DEPARTMENT OF

ENVIRONMENTAL CONSERVATION AND COOLING TOWERS

The notice of todays hearing requested information concerning the potential construction of

cooling towers at Indian Point. Presently, Entergy is engaged in a proceeding before the New York

State Department of Environmental Conservation (DEC) where a central issue is the staffs proposed

decision regarding the potential installation of cooling towers. Entergy believes wedgewire screens are a

far better alternative for protecting the Hudson River.

Cooling towers, each the size of Yankee Stadium, would take 10-12 years to construct

including four years of blasting at an estimated cost of at least $1.2 billion. Both units at Indian Point

would be off-line simultaneously for close to a year. And, it is not clear that cooling towers could

receive the necessary construction, blasting, and zoning permits required. A major interstate gas pipeline

owned by another company will have to be dug up and relocated a process that requires approval from

the Federal Energy Regulatory Commission (FERC). Furthermore, if placed into operation, on an


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annual basis, the cooling towers would emit more than 100 tons of particulate air pollution into the

atmosphere in an area that is already in non-attainment status with respect to federal air quality

standards.

In February 2010, Entergy presented DEC staff with the findings of an independent engineering

firm and leading, nationally recognized biological experts that wedgewire screens would be superior to

cooling towers for protecting the Hudson River over the 20-year license renewal period. Wedgewire

screens have a proven track record of effectiveness on large-scale power plants. In fact, the DEC

approved wedgewire screens for use at the Charles Point Resource Recovery Facility, located adjacent

to Indian Point in Peekskill.

FINANCIAL INFORMATION AND DECOMMISSIONING

In the notice of hearing for todays proceeding, the Committees included requests for certain

financial information from Entergy. We must respectfully decline the requests, consistent with our

responses to earlier requests for such information. The specific data requested, which is outlined in

Section 66(6) of the New York State Public Service Law (PSL), is designed to assist the New York

State Public Service Commission in regulating a utilitys rates. Such information may be relevant to an

agencys determination of the appropriate rates a utility should be permitted to charge in a regulated

environment. But wholesale generators, such as Indian Point, sell electricity in a competitive market,

and thus are not subject to this provision. If Indian Point were required to disclose confidential,

competitive information, it would be at a serious disadvantage in the competitive marketplace. The

State of New York is preempted by the Federal Power Act from requiring wholesale generators to report

information on an entitys revenue and financial transactions of the parent company. The FERC has

exclusive jurisdiction over wholesale generators electric sales, a determination long upheld by federal

courts.


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Wholesale generators annually file at FERC the records and information that FERC has found to

be necessary and appropriate. These reports are made electronically. Wholesale generators have been

required to file these reports with FERC since as early as 1991, and the reports have been, and continue

to be, available to the public on FERCs website.

The notice of todays hearing also requested certain information regarding plans for

decommissioning the Indian Point facility as well as documents relating to the decommissioning fund

controlled by NYPA. Under NRC regulations, nuclear plant licensees are not required to develop a

plan for decommissioning activities until two years following permanent cessation of operations of the

nuclear plant. Because Indian Point Units 2 and 3 are still operational, those facilities have not been

required to, and have not, developed decommissioning plans at this time. The NRC requires each

nuclear power licensee to report to the NRC on a bi-annual basis the status of its decommissioning fund

for each reactor it owns. Entergy made a filing with the NRC on March 31, 2011 for all its nuclear

plants, including Indian Point Units 2 and 3. The filing, using the December 31, 2010 trust fund balances

and parent guarantee amounts, indicates that the plants covered by this submittal met or exceeded the

NRC's funding requirements.

The decommissioning funds for Indian Point 3 are held by NYPA. As part of the agreement

whereby Entergy acquired Indian Point 3, NYPA retained the obligation to decommission the plant.

Pursuant to that agreement, however, NYPA can assign to Entergy the plant decommissioning

obligation, along with a transfer to Entergy of decommissioning funds being held by NYPA. To date,

NYPA has not made that assignment, and it still holds the trust funds and the decommissioning

obligation. NYPA reports to Entergy trust fund balance information for purposes of Entergys reporting

to the NRC on decommissioning, but Entergy does not maintain documents concerning the fund.


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CONCLUSION

Indian Point is vital for the power it produces, the jobs it provides, and the overall economic,

environmental, and electric reliability benefits it provides to the region and to the State. Alternatives to

Indian Point would increase electric rates, will likely decrease reliability, and will likely increase air

pollution. We will continue to give New Yorkers the facts about our proven and continued commitment

to safe operations as well as the significant benefits that Indian Point provides.

With respect to the debate over the extraction of natural gas using hydraulic fracturing, Governor

Cuomo recently said: I know that the temperature is high. . . . We have a process. Lets get the facts.

Let the science and the facts make the determination, not emotion and not politics. That

recommendation applies with equal force to the issues surrounding the future of Indian Point.

This concludes my prepared remarks. I am available to answer questions. Thank you.

TwomeyTestimony

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