Summary
Dominion Energy, Inc. (D) announced on October 22, 2012, a significant operational change: the permanent cessation of generation at its Kewaunee nuclear power station in Wisconsin, effective in 2013. This decision, approved by the board on October 18, 2012, follows unsuccessful attempts to sell the facility and the upcoming expiration of power purchase agreements in December 2013, coinciding with projected low wholesale electricity prices. These factors have rendered the 556-megawatt facility uneconomic to operate. As a consequence of this closure, Dominion will recognize substantial one-time charges in its third quarter 2012 earnings. These include an estimated $281 million after-tax charge primarily for asset impairment, along with $16 million for severance. An additional $30 million in after-tax charges is anticipated for employee retention costs. The company stated that the Kewaunee decommissioning trust funds are expected to be sufficient to cover all decommissioning expenses.
Key Highlights
- 1Dominion Energy to permanently cease operations at the Kewaunee nuclear power station in 2013.
- 2Decision driven by inability to find a buyer and expiring power purchase agreements coupled with low projected wholesale electricity prices.
- 3The company will record an estimated $281 million after-tax charge for asset impairment and other exit costs in Q3 2012.
- 4An additional $16 million after-tax charge for severance payments will also be recognized.
- 5Anticipates further after-tax charges of approximately $30 million for employee retention.
- 6Kewaunee station is a 556-megawatt nuclear facility in Carlton, Wisconsin.
- 7Decommissioning trust funds are expected to be sufficient to cover decommissioning costs.