Douglas administration raises questions about Entergy's corporate restructuring

05/30/08 5:50PM By John Dillon
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(Host) The Douglas Administration is raising questions about the financial stability of the new owners of the Vermont Yankee nuclear plant.

The administration says the new company will be financially weak because it will have to borrow billions of dollars.

But the new questions are prompting critics to ask why the governor vetoed a recent Vermont Yankee bill. The bill would have required the new owners to guarantee it has enough money set aside to decommission the plant.

VPR's John Dillon has more:

(Dillon) The administration's concerns are outlined in detailed testimony filed with the Public Service Board.

Essentially, the issue boils down to debt. The new company - now called Enexus - plans to borrow more than $4.5 billion. The state says that with that that much debt, the company will be highly leveraged, and may not have enough money to cover unanticipated costs.

David O'Brien is the commissioner of Public Service, which represents consumers in utility cases.

(O'Brien) ``The unanswered question is ... if this company is going to be in the financial position that they're proposing, how will that affect its long term health, how will it affect Vermont Yankee specifically in terms of their needs for financial resources, capital to maintain the facility, to upgrade or improve the facility?''

(Dillon) The state says before it can support the corporate reorganization, the new company should take steps to reduce its debt load or improve its credit rating.

(O'Brien) ``However it's very possible that if the deal as it's structured does not change - and the risks are not dealt with - that we'll simply have to oppose the transaction because it's not the right answer for Vermont and Vermont ratepayers.

(Dillon) But the Legislature this year also tried to force some financial conditions on the new owners of Vermont Yankee. The bill - which was vetoed by the governor - required the company to make sure it had enough money to dismantle the plant when its license expires.

Now critics are wondering why the administration opposed that bill.

(Stannard) ``I'd like to welcome the administration to the discussions of the last five months.''

(Dillon) Bob Stannard is a former lawmaker who now lobbies for the Citizens Awareness Network, a nuclear watchdog group. He said lawmakers knew that a highly-leveraged company posed risks. That's why, he said, the legislature passed the decommissioning bill.

(Stannard) ``My suggestion that now that they've awoken to the situation that we all went through that perhaps the governor should reconvene the legislature and have the legislature override his veto.''

(Dillon) But O'Brien says the legislation was misguided, and went after the wrong problem. He said the decommissioning fund is safe, and is overseen by federal regulators.

For VPR News, I'm John Dillon in Montpelier.

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