Shumlin says deal to spin off Vermont Yankee relies on too much debt

first_imgSenate President Pro Tem Peter Shumlin today addressed several concerns that Speaker Shap Smith and other legislative leaders have with the Memorandum of Understanding reached between the Department of Public Service and Entergy Corporation regarding Entergy’s petition to spin off Vermont Yankee to a highly leveraged company named Enexus. Earlier this month the Department of Public Service cited this MOU in the reversal of their position on Entergy’s petition to transfer ownership of Vermont Yankee to Enexus and decided to support the proposal. “Vermonters should be deeply concerned by the Department’s support of Entergy’s plan to spin off Vermont Yankee to a highly leveraged company,” said Senator Shumlin.  “While the MOU they have reached with Entergy contains steps in the right direction, Enexus will still be a below investment grade, highly debt ridden company and the decommissioning fund will remain approximately $600 million short of the funds necessary to clean up the plant.”The plan to spin off the plants entails Enexus raising money for the deal by going heavily into debt – bonding $3.5 billion and borrowing over an additional billion. Enexus will then have to put up its assests – the nuclear plants – as collateral for the loans.  The result is that if this deal is approved ownership of Vermont Yankee would pass from a healthy, debt-free, investment-grade company to a weaker, debt ridden and much riskier company.Department officials have claimed that the provisions in the MOU – including a $60 million line of credit that can purportedly be used for decommissioning costs – provide the necessary assurances for them to support the deal.  However, it is not clear that this $60 million lineof credit could be used for decommissioning purposes.   The credit isintended to cover the costs of transitioning the plant from an operating facility to a plant prepared to decommission.  Only money left over from this process could be put toward decommissioning costs.  Even if the full $60 million line of credit was able to be put toward decommissioning, the fund would still be approximately $600 million short of the estimated decommissioning costs of $1 billion.“Rather than addressing the core problems with the deal – Enexus’ bond ratings and the decommissioning fund – the Department of Public Service has settled for Entergy’s promise that Vermont Yankee will be able to borrow more money for its operations from Enexus subsidiaries than it could from Entergy subsidiaries,” said Senator Shumlin.  “At a time when we are digging ourselves out of a recession caused in part by companies and individuals relying on borrowing too much money it seems unwise to place our trust in such a promise.”   Senator Shumlin and Speaker Smith have requested that the Senate Finance and House Natural Resources Committees hold a hearing to further analyze the MOU and its repercussions on Vermont Yankee’s reliability and decommissioning fund.  “It is impossible not to draw parallels between this deal and the sale of our telecommunications network from Verizon to the debt-laden FairPoint,” said Senator Shumlin.  “We can simply not afford another similar mistake that leaves Vermonters paying the bill.”Source: Shumlin’s office. 10.21.2009###last_img

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