We strive to increase our nuclear generation through high capacity factors to meet the growing demand for power.
We aspire to operate safe, secure and vital resources. We strive to deliver industry-leading performance. We have driven significant improvement in production costs in our Northeast fleet.
n the pursuit of sustainable growth, goals often appear to be at odds: affordable power or clean air but not both. To sustain growth, however, solutions must be found that drive progress toward multiple goals simultaneously. At Entergy, we firmly believe that safe, affordable and emission-free nuclear generation is vital to sustainable growth.
We are currently the second-largest nuclear operator in the United States. We own and operate 10 plants in the Northeast and South and operate another in the Midwest under a service agreement. In 2006, we reached an agreement to purchase the Palisades Nuclear Plant near South Haven, Michigan, from Consumers Energy for a net amount of $350 million. With our positive point of view on nuclear generation, we continue to aggressively pursue opportunities to expand our nuclear business.
Safety and Security First
In each of our nuclear plants, we work diligently to maintain safety and security at the highest levels. Only then do we seek to improve operating efficiency and productivity.
Our safety performance is world-class. Six of our nuclear plants are currently designated OSHA VPP Star status. Our Vermont Yankee nuclear plant received Merit designation, which is considered an effective stepping stone to Star status.
Each of our nuclear sites meets or exceeds the security standards set by the Nuclear Regulatory Commission. These standards are the highest of any American industry and include site security measures, security force and operator training, controlled access and behavioral observation programs. We work closely with outside security experts to continually enhance and reinforce the security programs at all our nuclear sites.
Operating and Management
Expertise That Makes a Difference
With strong leadership and an experienced, talented team of engineers, technicians and operators, we have consistently delivered industry-leading performance in our nuclear operations. For example:
In 2006, we placed an additional 95 MW of capacity into production at our Vermont Yankee Nuclear Power Station. Approval from the Nuclear Regulatory Commission to increase the power output came after the most extensive engineering review of any uprate. The review process took 29 months and resulted in a unanimous approval recommendation. Through 2006, we have added 512 MW of nuclear capacity through uprates and capacity improvements. Increasing our nuclear generation through uprates and high capacity factors enables us to meet our customers' growing demand for energy without increasing harmful emissions. Currently, about one-third of our generation capacity is supplied by nuclear power.
In 2006, the Nuclear Regulatory Commission accepted our applications to renew our operating licenses for an additional 20 years at the Vermont Yankee Nuclear Power Station in Vermont, the Pilgrim Nuclear Power Station in Massachusetts and the James A. FitzPatrick Nuclear Power Plant in New York. The operating licenses for Vermont Yankee, Pilgrim and FitzPatrick are currently scheduled to expire in 2012, 2012 and 2014, respectively. In 2006, the NRC renewed the operating license for the Palisades Nuclear Plant for an additional 20 years, through 2031. Finally, in November 2006, we formally announced our intention to extend the license of our Indian Point Energy Center. Former New York City Mayor Rudy Giuliani and Greenpeace Co-founder Dr. Patrick Moore joined us in announcing our "Right for New York" license extension campaign.
We maintain dynamic points of view on external factors such as commodity prices, the regulation of carbon emissions and infra-structure constraints in the generation and transmission of energy. We use our points of view to guide our hedging strategy for the output of our Northeast fleet. Our hedging strategy seeks to balance the risks and rewards of volatile commodity prices. We layer in hedges to avoid the risk of timing the market but retain the ability to leave up to 15 percent open during the year. At the end of 2006, 95 percent of our planned generation for 2007 was under contract, 85 percent for 2008 and 64 percent for 2009 at average energy prices per MWh of $49, $53 and $57, respectively.
Opportunities to Drive Growth and Create Value
We continue to seek opportunities to grow and create value in our nuclear business. We will strive to close the Palisades acquisition in the second quarter of 2007 and successfully transition the plant into the Entergy fleet over the course of 2007.
We also believe opportunity exists to further expand our fleet. We have grown our fleet from five nuclear units eight years ago to 11 units with the pending acquisition of Palisades. In addition, the service contract under which we operate the Cooper Nuclear Station has also contributed to growth in this business. However, while not currently on the market, we believe a number of consolidation opportunities remain in the U.S. market for nuclear generation. Roughly two dozen small nuclear fleet operators exist across the United States that have either below industry average capacity factors, above average costs, regulatory issues or event risk. We remain open to expanding our portfolio of nuclear businesses in the future through acquisitions, management service agreements or other deal structures.
We are also preserving our option to participate in the next generation of new nuclear development. Entergy is on track to receive one of the first early site permits to be issued by the Nuclear Regulatory Commission in first quarter 2007, qualifying the Grand Gulf Nuclear Station near Port Gibson, Mississippi, as an acceptable site for a new nuclear reactor. We are also pursuing a combined construction and operating license for the new unit at Grand Gulf, as well as our River Bend Station near St. Francisville, Louisiana. Our decision to proceed with any new nuclear development is contingent on achieving the necessary legislative and regulatory actions to enable efficient financing and timely cost recovery.
Our aspirations are clear and will guide our strategies and decision-making in the years ahead. We continue to aspire to a balanced set of financial aspirations, with top-quartile total shareholder returns as the overarching aspiration.
While we strive to realize our financial aspirations, we strive to meet our societal commitments to all our stakeholders. We aspire to meet our second five-year CO2 stabilization commitment. We aspire to meet the particular needs of our low-income customers. We aspire to a workforce that performs every job safely and that reflects the diversity of our communities.
As diligently as we will work in the years ahead toward our aspirations, we will continue to imagine a world beyond what we can achieve today. An environment that poses no threat to future generations. A society where no one suffers in poverty. A world with unlimited energy and unlimited possibilities. Imagine having all that. Imagine, then Aspire and Achieve.