Entergy calls off plan to spin off its nuclear plants into separate company

Entergy cancels plans to spin off nuclear plants

NEW ORLEANS — Power generator Entergy on Monday said it was canceling its plan to spin off five nuclear plants into a separate company.

The plan has encountered opposition since it was announced nearly two years ago. The decision comes after New York regulators rejected the plan last month.

Entergy, based in New Orleans, said it will record a charge of 40 to 45 cents per share — $75.6 million to $85.1 million — for costs associated with unwinding the proposal.

The plants are in New York, Massachusetts, Vermont and Michigan.

The company said it decided to call off the deal given the potential for the legal process to continue for an extended period.

The New York Public Service Commission acted after its staff determined the deal wasn’t in the public interest, primarily because the resulting company, Enexus Energy Corp., would be saddled with too much debt. The commission worried that if the company became insolvent and couldn’t operate the plants, the public would be affected because the energy market would have to scramble to replace that power, and rates would go up.

Entergy announced the plan in August 2008. Entergy wanted to take full advantage of being able to sell power on spot markets, but worried that prices can fall as quickly as they can rise and that could lead to credit downgrades and higher interest costs for the company.

The reactors generate electricity sold into wholesale markets as opposed to Energy’s traditional utility business that provides electricity for its 2.7 million customers in Arkansas, Louisiana, Mississippi and Texas.

Critics also worried that not enough money would be set aside to mothball nuclear reactors at the end of their life spans and that taxpayers would get stuck with the bill.

In Vermont, the company has been trying to get the license for its Yankee plant extended by 20 years while fighting calls to shut it because of leaks of the radioactive isotope tritium that have contaminated soil and groundwater. The leaks have been stopped, and there is no indication that it got into drinking water or the nearby Connecticut River.

Besides the Yankee plant in Vernon, Vermont, the other plans that included in the deal would have been the Pilgrim Nuclear Station near Plymouth, Massachusetts, the James A. Fitzpatrick station in Oswego County, New York, two units at the Indian Point Energy Center in Westchester County, New York, and Palisades Power Plant in Covert, Michigan.

The company, based in New Orleans, also said it raised its quarterly dividend to 83 cents from 75 cents, payable June 1 to shareholders of record as of May 12.

Entergy shares fell 71 cents to close at $81.61.