NEW YORK, Feb 11 (Reuters) – New York’s utility regulator said on Thursday its staff found Entergy Corp’s (ETR.N) plan to spin off six nuclear power plants, including three in New York, to a new company, Enexus Energy Corp, was not in the public interest.
The New York State Public Service Commission said in a release it was considering other options, including changes to the transaction to improve the financial stability of the three New York reactors and provide benefits to ratepayers.
Officials at Entergy did not immediately comment.
Entergy wants to transfer the James A. FitzPatrick nuclear station in Oswego County and the Indian Point nuclear station in Westchester County to Enexus.
Entergy shareholders would eventually receive all of Enexus’s capital stock and receive cash and reductions in outstanding debt worth about $3.5 billion. Upon completion of the transaction, the shares of Entergy and Enexus would trade independently.
The PSC staff said the proposed transaction was problematic because the amount of debt leverage to finance Enexus was excessive.
The PSC did not say when it would reconsider the Enexus spinoff but noted it would look at staff recommendations and hear from interested parties before bringing the matter back “for final deliberations at the earliest possible Commission session.”
Entergy announced the spinoff in November 2007. In January 2008, Entergy sought a ruling that the New York PSC need not review the proposed spinoff. But in May 2008, the PSC said it would review the spinoff because of its potential to harm captive New York utility ratepayers.
After review by administrative law judges and months of negotiations, Entergy in July 2009 requested the PSC take action no later than November so the proposed spinoff could be completed by the end of 2009.
In addition to New York approval, transfer of the nuclear units requires authorization from the U.S. Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission (NRC) and the Vermont Public Service Board.
FERC and the NRC gave their initial approvals on June 12, 2008, and July 28, 2008, respectively. Hearings in the Vermont case were completed in August 2008. Final action has not been taken by the Vermont Public Service Board.
Entergy wants to spinoff six reactors: FitzPatrick, Indian Point 2 and 3, Pilgrim in Massachusetts, Palisades in Michigan and Vermont Yankee in Vermont. (Reporting by Scott DiSavino; Editing byDavid Gregorio)”