Nuclear Operator Seeks to End Revenue Deal With New York

By DANNY HAKIM

Published: July 21, 2008

ALBANY — The owner of three nuclear power plants in New York is trying to get out of a revenue sharing agreement that was expected to bring as much as $432 million to the state over the next six years, according to company officials and securities filings.

The owner, Entergy Nuclear, is structuring a spinoff of its plants that the company claims would effectively end the agreement. State officials fear the plan could also free Entergy from several hundred million dollars in costs associated with the eventual decommissioning of the two Indian Point plants in Westchester County and the FitzPatrick plant in Oswego County. That could increase the risk that state taxpayers would have to one day foot the bill for closing the plants.

Details of Entergy’s strategy were included in a lengthy securities filing issued this year in which the company laid out a plan to spin off nuclear plants in New York and elsewhere into a new company called Enexus. In a clause in one of its filings, Entergy claims that Enexus would not have to live up to a revenue sharing agreement between Entergy and New York. Under the agreement, the company is supposed to pay New York up to $72 million annually through 2014, and state officials had expected to receive the full amount.

Alex J. Schott, a spokesman for Entergy, said the spinoff “optimizes the value for all our stakeholders.”

As for the revenue sharing agreement, he said the state “was aware that Entergy was considering alternative structures for the nuclear business at the time the agreement was reached.”

“We remain hopeful that the spinoff will happen by the end of September,” he said.

Attorney General Andrew M. Cuomo said: “Entergy’s plan is ill conceived on a number of levels. It could ultimately cost taxpayers hundreds of millions of dollars, does nothing to guarantee adequate decontamination of the site, and does not anticipate a future New York without Indian Point.”

Under the agreement, the $432 million worth of revenue is to go to the State Power Authority, which provides low-cost electricity to businesses and municipalities and administers various programs like replacing coal furnaces in public schools and providing energy-efficient refrigerators to public housing residents.

The Federal Energy Regulatory Commission has already approved the spinoff, though the plan still needs the backing of the Nuclear Regulatory Commission as well as regulators in New York and Vermont, where Entergy owns an old reactor that it wants to include in the spinoff.