NEW ORLEANS -- Power provider Entergy Corp. has agreed to financial concessions in an attempt to win approval from New York regulators for its proposed spinoff of six nuclear units.
The New York State Public Service Commission is scheduled Thursday to consider whether to allow the New Orleans-based Entergy to create a separate, publicly traded company known as Enexus Energy Corp.
Enexus would take over Entergy's reactors that generate electricity sold on the supply-and-demand wholesale market, including the James A. Fitzpatrick station in Oswego County, N.Y., and two units at the Indian Point Energy Center in Westchester County, N.Y.
On Feb. 11, the staff of the New York commission recommended rejection of the spinoff, telling regulators Entergy's proposal -- as it now stands -- is not in the public's best interest, primarily because the new company would be saddled with too much debt.
A spokesman for the New York PSC said the commission would discuss Entergy's offer today but it has no obligation t issue a decision on Entergy's request for the spinoff.
"It remains to be seen what action the commission will take," said James Denn, including whether it will honor a request made by New York Assemblyman Richard Brodsky, D-Westchester, that it postpone the hearing until all interested parties have had a chance to review the new offer.
In addition to the New York units, Enexus would own the Pilgrim Nuclear Station
On Feb. 23, one day before the Vermont State Senate voted 26 to 4 against Vermont Yankee's continued operation, Entergy offered 25 megawatts of reduced-price power for businesses that create jobs.
An Entergy spokesman called the offer "a gift" while some of those opposed to continued operation called it "a bribe."
"It's not seen as a bribe," said Denn, about Entergy's March 2 filing with New York. "It's seen as a response to issues raised by staff on Feb. 11."
In a Wednesday filing with the commission, Entergy said:
-- Enexus' initial long-term debt would be reduced by $500 million to no more than $3 billion.
-- Dividend payouts to shareholders would be restricted until Enexus receives a credit rating of at least BB+ by Standard & Poor's or Ba1 by Moody's Investors Service, or the new company obtains a debt-to-capitalization ratio of 50 percent or lower.
-- Enexus will pay up to $300 million to New York's energy efficiency fund if future power prices exceed certain levels. The fund offers a hedge to some consumers if power prices spike.
"We're offering to cut debt, improve liquidity and share revenue," said Entergy spokesman Mike Burns. "It will strengthen Enexus and protect the long-term interests of New York residents."
Entergy shareholders would get 80 percent of Enexus stock. The remaining 20 percent would be in a trust and shareholders could later exchange Entergy stock for Enexus stock in a tax-free deal.
The spinoff plan was announced in late 2007. Entergy also has regulated utilities in Louisiana, Mississippi, Texas and Arkansas.
Reformer Staffer Bob Audette contributed to this story.
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