New York commission rejects Entergy spin-off plan
26 March 2010
Entergy's proposal to spin off six nuclear power plants, including three in New York state, into a new company called Enexus has been rejected by the New York Public Service Commission (NYPSC), which said the move was not in the public's interest.
Entergy announced the spin-off in November 2007. In April 2008, the company reported that it had created and named two new firms. Enexus would be a standalone owner of six of Entergy's current 11-reactor fleet, including the Pilgrim, James A FitzPatrick, Indian Point, Palisades and Vermont Yankee nuclear power plants. Together, the plants host six reactors totalling almost 5000 MWe of Entergy's 22,000 MWe generation capacity portfolio. Meanwhile, Equagen would take operating responsibility for Enexus' and Entergy's reactors. Entergy had originally planned to complete the spin-off in the third quarter of 2008.
The proposal was approved in 2008 by both the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC). It has also been given approval by Michigan and Massachusetts regulator. The Vermont Public Service Board has delayed making a decision on the proposal.
However, the NYPSC has decided to reject the 11 August 2009 amended petition and 2 March 2010 supplemental proposals submitted by Entergy for the spin-off.
In February, the NYPSC received an oral report from Department of Public Service advisory staff addressing the Entergy petition. In its oral report, advisory staff reported that the transaction, as proposed, was not in the public interest, and provided the commission information regarding the implications of rejecting the proposal versus making changes to the proposed transaction to improve the long-term financial stability of the three nuclear power plants in New York and to provide ratepayer benefits.
Advisory staff reported that the proposed transaction was problematic because the amount of debt leverage employed to finance Enexus is excessive and the business risks of this new merchant nuclear plant enterprise are significant.
In response to the advisory staff report, Entergy submitted a number of proposals intended to address advisory staff's concerns.
The NYPSC said that its decision to reject the proposed transaction was based upon its review of the entire record in this case, including the most recent comments. Under commission rules, Entergy will have the option to seek a re-hearing or to file a new petition.
Researched and written
by World Nuclear News