The New York State Public Service Commission (PSC) said 4 March that Entergy’s proposal to spin off its non-utility nuclear units, including three in New York state, would likely provide a small level of ratepayer benefits, and delayed its ruling to listen to comment.
“An initial analysis presented to the Commission by its advisory staff today indicated that the March 2 proposal does not reasonably address the long-term financial viability of Enexus and will likely provide a small level of ratepayer benefits.
“The results of this analysis will be augmented as a more complete review is conducted and the comments of the parties are considered,” the PSC said in a statement.
At the session on 4 March, the Commission called for a technical conference to be established to give parties an opportunity to ask questions in preparation for filing comments on 18 March. The technical conference took place on 10 March.
Plans are to spin-off the non-utility or merchant nuclear units – Vermont Yankee in Vermont, FitzPatrick and Indian Point 2&3 in New York, Palisades in Michigan and Pilgrim in Massachusetts– into a separate, publicly-traded company, Enexus. The non-utility part of the business is non-regulated and has generating plants in order to supplying electric power required for industrial and commercial operations.
Under the plan, Enexus (50%) and Entergy (50%) are expected to enter into a nuclear services business joint venture, EquaGen, which will operate the plants. Enexus will be financed with $3.5bn of long-term bonds, a $1.1bn secured credit facility and $750 million in unrestricted cash.
Entergy says the spin off will be in the “in the best interests of Entergy and its shareholders”. It will enable equity investors to invest directly into the business, optimize capital structure, isolate the commodity and other risks of the non-utility nuclear business from the regulated utility business and create more effective management incentives.
Last month the Vermont Senate decided to block a 20-year license extension for Vermont Yankee, which is also included in the potential spin-off. Although this decision could still be overturned, one of the questions New York lawmakers asked was whether Entergy wanted them to consider the proposal with, or without the Vermont plant.
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