Entergy's Non-utility Nuclear Spinoff Plan Draws Opposition

by Arkansas Business Staff  on Friday, Apr. 11, 2008 10:42 am  

Entergy Corp. of New Orleans, which has approved a plan to pursue a separation of its non-utility nuclear business through a tax-free spinoff, has drawn opposition in New York, according to an article in The Wall Street Journal.

The article by Rebecca Smith, available here, said New York's attorney general, Andrew Cuomo, has asked the state's Public Service Commission to reject Entergy's plan to spin off its Indian Point and FitzPatrick nuclear stations.

Under the proposal, the Journal article said, the two plants and three other Entergy plants in Massachusetts, Michigan and Vermont would be transferred to the new publicly traded company. Entergy would keep a 50 percent interest in the new company and would transfer the other half to its shareholders in a tax-free exchange.

Cuomo said the transaction would not be in the public interest since it includes a request for authorization to borrow as much as $6.5 billion, which could result in excessive debt being loaded onto the properties.

Cuomo said a transfer would relieve Entergy of "financial incentive to scrupulously and appropriately manage, operate, remediate and decommission" its New York plants, the article said.

Entergy Operations Inc., the current NRC-licensed operator of Entergy's five utility nuclear plants, will remain a wholly-owned subsidiary of Entergy and will continue to be the operator of the utility nuclear plants, the company said in its annual report, available here.

Entergy is targeting third quarter 2008 as the effective date for the spinoff and nuclear services business joint venture transactions to be completed.




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