Indian Point Closure: No Immediate Impact on Local Public Finance Ratings Says S&P Global

NEW YORK — S&P Global Ratings said Tuesday that it does not expect that the planned 2021 closure of the Indian Point nuclear plant will lead to near-term rating changes for local governments that depend on the plant's payments in lieu of taxes (PILOT).

On Monday, New York Gov. Andrew Cuomo, environmental watchdog Riverkeeper and the plant's owner, Entergy, announced that the three, involved in complex litigation, had reached an agreement to cease power production at Indian Point by April 2021.

SEE:

• Shutting Indian Point a Financial Decision: Entergy
• Future of Indian Point Nuclear Waste Site, Neighborhood, County: Officials
  
• Plan for Indian Point Closing, Aftermath

Here's the rest of S&P Global's statement:

Entergy currently pays the following four local municipalities through a PILOT: Westchester County (rated AAA/Stable), Hendrick Hudson Central School District (A+/Stable), Village of Buchanan (not rated), and Town of Cortlandt (not rated).

Among the PILOT recipients, the Hendrick Hudson Central School District stands out because it derives about 33 percent of its general fund revenues from Entergy, creating uncertainty regarding this component of its revenue stream. However, Entergy is expected to pay the PILOT through 2021 based on current agreements, which forestalls the potential impact of the closure and provides time for the district to explore alternative revenue sources.

In addition, we understand the state plans to work with local municipalities to mitigate possible declines in revenue because of the plant shutdown.

We note that the closure will also have an indirect impact on Westchester County and local municipalities given that the plant employs 1,000. Also, the loss of the plant's estimated 2,000 megawatts of generation capacity, which we understand provides about 25 percent of the power the downstate region consumes, might lead to higher consumer electricity costs as utilities seek to develop or purchase power from alternative sources. Higher costs might also have a spillover effect on regional economic activity.

The governor's office has estimated that the proposed shutdown will add about $3 a month to electric bills in the New York City area.

Only a rating committee may determine a rating action and this report does not constitute a rating action.

S&P Global Ratings, part of S&P Global Inc. (NYSE: SPGI), is the world's leading provider of independent credit risk research. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 26 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information that helps to support the growth of transparent, liquid debt markets worldwide.