Entergy Spin Off Could Go Forward Without Yankee

03/16/10 6:34AM By John Dillon

(Host) The Entergy Corporation says it could go-ahead with a planned corporate spin off even if Vermont Yankee is not part of the deal.

Entergy needs approval from regulators in New York and Vermont to transfer ownership of six nuclear plants into a new company called Enexus.

Staff members at the New York Public Service Commission have raised questions about the deal, which would leave the new company owing about $3 billion in debt.

The staff also said Yankee should not be part of the transaction since the Vermont Senate voted last month against extending the plant's operating license.

Steven Agresta is the general counsel for Enexus Energy. He told the commission last week that the company is prepared to pull Yankee out of the spin-off.

(Agresta) "We have not modified the proposed transaction. The petition as filed includes Vermont Yankee. The company has stated publicly in a number of times that it would close the transaction without Vermont Yankee if that were necessary."

(Host) Enexus had modified its proposal to win approval in New York state. But John Stewart, the commission's director of rates and services, says the deal is still too risky. He said that financial rating agencies would probably give Enexus a low bond rating.

(Stewart) "Nuclear plants tend to have higher operating risks.  I think that's pretty well documented - that when there's problems, bad things can happen. There's decommissioning concerns at the end. And finally, just from an overall credit quality perspective, the repurchase of shares is not generally viewed as positive from a bond rating perspective. So there's a lot of reasons we think the rating agencies will look at Enexus as a quite risky entity."

(Host) The New York commission is scheduled to meet again later next week to consider the Enexus proposal.

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