NEW ORLEANS – Entergy Corporation (NYSE: ETR) and the Vermont Yankee
Nuclear Power Corporation have reached an agreement to sell the Vermont Yankee
nuclear power plant in Vernon, Vt., to Entergy for $180 million.
Vermont Yankee will become Entergy’s 10th nuclear unit and its
fifth in the Northeast. Entergy Nuclear has operated five nuclear units in
Arkansas, Mississippi, and Louisiana for more than 20 years and began buying its
properties in the Northeast in 1999.
The $180 million in cash represents $145 million for the plant and related
assets and $35 million for nuclear fuel.
"We expect to realize significant operating efficiencies since Vermont
Yankee is a sister plant to our Pilgrim plant in Plymouth, Mass., and our
FitzPatrick plant in Oswego County, N.Y.," said Wayne Leonard, Chief
Executive Officer of Entergy. All three are boiling water reactors designed by
General Electric and, as a result, many resources such as inventories and spare
parts, best safety practices, group purchasing, specialized technical skills,
manpower, key management, and financing can be shared.
Ross Barkhurst, President and Chief Executive Officer of Vermont Yankee,
said, "We are pleased to be selling this outstanding nuclear plant to a
national leader in nuclear plant operations with a strong track record of safe
operations. We are very pleased that the auction process run by JPMorgan has
been so successful. We were able to execute the auction on a timely basis with a
process which garnered significant interest and clearly maximized the value of
In addition to paying $180 million, Entergy will retain the plant’s 450
employees at their same salary and comparable benefits.
Entergy will also receive nuclear fuel and all materials and spare parts
inventory as well as the plant, switchyard, and related real estate in nearby
Brattleboro. Entergy will also assume decommissioning liability for the plant
and the plant’s decommissioning trust fund, which is required by the U.S.
Nuclear Regulatory Commission. No decommissioning top-off or any other financing
by Vermont Yankee Nuclear Power Corporation is anticipated with the transaction.
The deal includes a power purchase agreement requiring Entergy to sell all
the plant’s power to present Vermont Yankee sponsors through 2012, the
remaining years of the plant’s operating license, at average annual prices
ranging from $39 to $45 a megawatt-hour.
The agreement includes a "low market adjuster" that protects
Vermont Yankee owner-utilities and their power consumers in case power market
prices drop significantly. If a prior year’s average market
price of power is more than five percent below the annual agreement price
for the current year, the agreement price would drop to 105 percent of the
previous year’s average market price.
The Vermont Yankee Nuclear Power Corporation is owned by 12 New England
utilities. The largest shareholder is Central Vermont Public Service Corp. in
Rutland, Vt., 31.3 percent, and the others are New England Power Co., 22.5
percent; Green Mountain Power Corp., 17.9 percent; Connecticut Light and Power
Co., 9.5 percent; Central Maine Power Co. and Public Service Company of New
Hampshire, 4 percent each; Burlington Electric Department, 3.6 percent;
Cambridge Electric Light and Western Massachusetts Electric Co., 2.5 percent
each; Vermont Electric Cooperative, Inc., 1 percent; and Washington Electric
Cooperative Inc. and Village of Lyndonville Electric Department, 0.6 percent
Entergy Nuclear Chief Executive Officer Jerry Yelverton said the power
purchase agreement benefits Entergy as well as New England. "New England
power consumers will have a reliable source of electricity with built-in price
stability. That reduces our risk and allows us to focus our time and attention
on increasing the plant’s capacity factor, achieving cost synergies with other
plants, and maintaining the highest level of safe operations."
The sale is subject to the approval of the Public Service Board of Vermont,
the U.S. Nuclear Regulatory Commission, the Federal Energy Regulatory
Commission, and other regulatory authorities. After their approvals, a closing
is targeted for the spring of 2002.
Vermont Yankee is the largest power generator in Vermont, producing about 30
percent of the power used by Vermont consumers. With a 510-megawatt capacity,
the unit can produce enough power to supply about 500,000 homes.
The plant has been an excellent performer with an average capacity factor of
89 percent over the past 10 years, the second highest of all boiling water power
reactors in the nation.
"The men and women of Vermont Yankee have worked hard fulfilling our
commitment to a high standard of operations," said Barkhurst, Vermont
Yankee’s president. "Entergy’s purchase is a clear indication that our
hard work is valued by a nuclear industry leader. Our employees’ culture of
excellence will be welcomed by Entergy’s successful national operation."
Yelverton, Entergy Nuclear’s CEO, said Entergy will be committed to high
environmental standards and close, supportive relations with local communities,
as the current Vermont Yankee owners have been.
Vermont Yankee Chairman Robert Young said, "This agreement preserves the
economic benefits that Vermont Yankee provides the state and the region, and the
price stability inherent in the purchase power agreement helps protect New
England’s electric consumers from the volatility of the electricity market. We
look forward to bringing this agreement before our regulators for a thorough
review in the coming months."
The plant and related assets will be transferred to Entergy Nuclear Vermont
Yankee LLC, an Entergy subsidiary, and will become part of the Entergy Nuclear
In addition to the three boiling water reactors mentioned, Entergy also owns
and operates the Indian Point 3 unit, purchased from the New York Power
Authority last November, and is preparing to close the purchase of the Indian
Point 2 plant from Con Edison this fall. Both are Westinghouse pressurized water
reactors and located on the same site in north Westchester County, N.Y.
The nuclear businesses of Entergy Corporation are headquartered in Jackson,
Miss. As a global energy company, Entergy, based in New Orleans, is the third
largest power generator in the nation with more than 30,000 megawatts of
generating capacity, about $9 billion in annual revenue and over 2.6 million
customers in Arkansas, Mississippi, Louisiana, and Texas.
Entergy Nuclear South operates five nuclear units from its regional office in
Jackson, Miss. Its newly acquired units are managed from its Entergy Nuclear
Northeast regional office in White Plains, N.Y. Entergy Nuclear also manages
decommissioning activities and furnishes license renewal engineering services to
the U.S. nuclear power industry.
JPMorgan acted as exclusive financial advisor to Vermont Yankee on the sale
and has been advisor on the sale of 11 of the last 13 nuclear units sold in the
U.S., including Millstone, Nine Mile Point, Indian Point 3, and James A.
Entergy’s on-line address is www.entergy-nuclear.com
Vermont Yankee’s on-line address is www.vermontyankee.com
The following constitutes a "Safe Harbor" statement
under the Private Securities Litigation Reform Act of 1995:
Investors are cautioned that forward-looking statements contained herein with
respect to the revenues, earnings, performance, strategies, prospects and other
aspects of the business of Entergy Corporation, Entergy Arkansas, Inc., Entergy
Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy
New Orleans, Inc., and System Energy Resources, Inc. and their affiliated
companies may involve risks and uncertainties. A number of factors could cause
actual results or outcomes to differ materially from those indicated by such
forward-looking statements. These factors include, but are not limited to, risks
and uncertainties relating to: the effects of weather, the performance of
generating units and transmission systems, the possession of nuclear materials,
fuel and purchased power prices and availability, the effects of regulatory
decisions and changes in law, litigation, capital spending requirements, the
onset of competition, including the ability to recover net regulatory assets and
other potential stranded costs, the effects of recent developments in the
California electricity market on the utility industry nationally, advances in
technology, changes in accounting standards, corporate restructuring and changes
in capital structure, the success of new business ventures, changes in the
markets for electricity and other energy-related commodities, changes in
interest rates and in financial and foreign currency markets generally, the
economic climate and growth in Entergy’s service territories, changes in
corporate strategies, and other factors.