Entergy Explores Potential Sale of Vermont Yankee Nuclear Power Plant
Stock Chart for Entergy Corp (ETR)
Entergy Corp., the second-largest owner of U.S. nuclear reactors, may sell its Vermont Yankee reactor after Vermont voters elected a governor who has opposed extending the plant’s operating life beyond 2012.
The company, which agreed to buy the plant in 2001 for $180 million, expects “interest from multiple parties,” according to a statement today. The 620-megawatt reactor is located in Vernon, Vermont, about 140 miles (225 kilometers) northwest of Boston, and provides a third of the electricity consumed in the state, according to New Orleans-based Entergy.
The Vermont Senate voted on Feb. 24 against extending the plant’s license after it expires in March 2012 because of leaks of tritium-laced water at the site. Vermont Senate President and Governor-Elect Peter Shumlin, a Democrat, has called for the state to reject a 20-year extension to the plant’s operating license.
“They would appear to not have a very good relationship with some of the authorities in Vermont,” said Kit Konolige, an analyst with Soleil Securities Corp. in New York who has a “buy” rating on Entergy and doesn’t own any shares. “Another owner might do better.”
Vermont Yankee should fetch at least $620 million to $800 million, Daniele Seitz, a New York-based analyst for Dudack Research Group, said in an interview.
Potential buyers include NextEra Energy Inc., which already operates nuclear plants in New England, and Exelon Corp., the largest U.S. nuclear operator, she said.
Trying for ‘Months’
Entergy is selling the plant because a sale is in the “best interest of stakeholders” and not because of Shumlin’s election, said Michael Burns, a spokesman for the New Orleans- based company.
“Entergy’s been trying to sell the plant for months,” Shumlin said in an interview today on Radio Vermont’s Mark Johnson Show. “The plant is old and tired. It’s been my judgment that it should be retired in 2012.”
The reactor came under scrutiny from the U.S. Nuclear Regulatory Commission and state regulators after leaks of water laced with tritium were identified in January. Tritium is a radioactive form of hydrogen and a byproduct of nuclear power generation that in large doses can increase the risk of cancer.
The company is in the process of cleaning the areas affected by the tritium leak and would “substantially complete” the effort before any sale, Burns said.
Entergy submitted an application to renew the license for Vermont Yankee in January 2006, said Diane Screnci, a spokeswoman for the Nuclear Regulatory Commission. The current license expires on March 21, 2012.
When it purchased the plant, Entergy agreed to give the state legislature veto power over extending the license, said Konolige. Vermont is the only state where that is the case and a new owner will have to have license-renewal discussions with the state, he said.
Entergy rose 74 cents, or 1 percent, to $75.40 at 4:04 p.m. in composite trading on the New York Stock Exchange. The shares have fallen 7.9 percent this year.
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