“ALBANY, N.Y. – Entergy Corp.’s plan to spin off its northeastern nuclear division into a standalone company has hit a snag in New York.
Lawyers for Entergy _ which owns three nuclear plants in New York _ want state utility regulators to endorse the plan, which they say will be good for consumers because it will provide the company with more financial flexibility.
Opponents say the plan would enrich Entergy and its stockholders at the expense of New York consumers while allowing the company to avoid responsibility and liability for the plants.
The New York Public Service Commission, which oversees utilities in the state, is expected to consider the plan at its meeting Wednesday, said commission spokesman James Denn.
New Orleans-based Entergy wants to separate five of its nuclear plants that sell electricity on the open market into a standalone company. Entergy would keep a 50 percent stake in the new company, while the other half would go to its shareholders.
The spinoff would include two plants at the Indian Point station on the banks of the Hudson River in Westchester County as well Oswego County’s James FitzPatrick plant. The two other plants are Vermont Yankee in Vernon, Vt., and the Pilgrim plant in Plymouth, Mass.
New York’s attorney general _ who is also opposing re-licensing the Indian Point plants _ and Westchester County officials have asked the Public Service Commission to reject the plan.
In a 156-page objection, Attorney General Andrew Cuomo’s office tells the Public Service Commission that the state is concerned that the spinoff _ which includes the new company borrowing up to $6.5 billion _ would significantly reduce the financial resources currently available to support the plants, which would rely on funds from riskier sources.
The attorney general also argues that the spinoff would enable Entergy to avoid paying up to $360 million to the New York Power Authority.
The Power Authority _ a state agency that sells power without profit _ sold one of the Indian Point plants as well as the FitzPatrick plant to Entergy in 2001. Entergy agreed to pay the authority up to $72 million a year until 2014 as part of that sale.
The attorney general’s office notes that in Entergy’s annual report for 2007, the company points out that a clause in that agreement terminates the payments if Entergy or an Entergy affiliate ceases to own the plants.
“Entergy predicts the reorganization will enable Entergy to disclaim ownership of Indian Point 3 and FitzPatrick in 2008 and thus get out of paying NYPA beyond the installment due in January 2009,” the attorney general’s filing says.
Westchester County Executive Andrew Spano is also trying to block the spinoff, which his office says would result in a complicated set of subsidiary companies that would throw into question who is responsible for the plants.
Stewart Glass, a senior assistant county attorney who is working on the issue, said the county is particularly concerned about what will happen when it comes time to decommission the plants.
“We’re worried that Entergy or its successor corporation will not live up to its responsibilities to the local communities and the local communities will be left to solve all the problems in the future,” he said.
Entergy executives did not return phone calls seeking comment.
In a 237-page written response to opponents’ objections, the company said they “provide no legitimate basis” to reject the plan or require a more thorough review.”