by Andrew Stein July 18, 2013 vtdigger.org Entergy Corp, which owns the Vermont Yankee nuclear plant, is preparing to cut back its labor force in an effort to reorganize the company.
‘We do expect workforce reductions to be one result of this initiative,’national spokesman Chanel Lagarde said in a statement Thursday. ‘We don’t have final specifics at this time regarding who or how many employees will be affected. We remain focused on all our key stakeholders throughout this process, and we will deal fairly and communicate openly and honestly.’
A source inside the Vernon plant says managers are telling workers that the company could lay off 10 percent of the facility’s roughly 650 workers.
This news comes shortly after Entergy announced that it anticipates decreased earnings in the second quarter of 2013, dropping from $2.11 a share last year to an estimated $1 per share. Representatives of the Louisiana-based company said in a news release that the decrease is due to ‘substantially higher income tax expense.’SEE STORY
Entergy's prelminary earnings report, dated July 16, states in part: "The decrease in EWC (Entergy Wholesale Commodities) net revenue was driven by lower volume and energy prices on EWC's nuclear fleet. Nuclear production declined due to more unplanned and refueling outages. Refueling days at Pilgrim Nuclear Power Station and Vermont Yankee Nuclear Power Station totaled 50 days in second quarter 2013, versus 35 days at two other plants for the same quarter last year."
Mark Cooper, a senior economics fellow at Vermont Law School, published a paper Wednesday titled, ‘Renaissance in Reverse: Competition Pushes Aging U.S. Nuclear Reactors to the Brink of Economic Abandonment.’Cooper drew from the Wall Street reports of Moody’s, UBS and Credit Suisse for his analysis. SEE STORY
‘Economic reality has slammed the door on nuclear power,’Cooper concluded. ‘In the near-term old reactors are uneconomic because lower cost alternatives have squeezed their cash margins to the point where they no longer cover the cost of nuclear operation â ¦ In the long term new reactors are uneconomic because there are numerous low-carbon alternatives that are less costly and less risk (sic).’
In 2013, the fair value of the Vermont Yankee nuclear plant fell 69 percent, from $517.5 million to $162 million. UBS Securities downgraded Entergy Corp.’s stock from ‘neutral’to ‘sell.’The Swiss financial services firm also projected the closure of an Entergy nuclear facility in 2013, saying ‘Vermont Yankee is the most tenuously positioned plant.’
UBS, the global financial services firm based in Switzerland, had suggested in early February 2013 that Vermont Yankee owner Entergy might shut the plant down this year, because it isn’t generating enough cash. In short, it might be cheaper for Entergy to close it rather than keep it open. Until at least the fall of 2014, however, Vermont Yankee will continue to operate.
UBS had suggested the Vermont Yankee nuclear plant and other older plants in the Entergy fleet, such as New York Fitzpatrick and Indian Point, 40 miles up the Hudson River from New York City, could become burdens to Entergy in the next few years.
Julien Dumoulin-Smith of UBS Securities LLC said January 4 in a report that, "We believe both its New York Fitzpatrick and Vermont Yankee plants are at risk of retirement given their small size." He questioned whether operating such plants at a loss made sense.
Dumoulin-Smith told Vermont Business Magazine back in February that he wouldn't speculate on why Entergy decided to refuel Yankee, but said, ‘It’s clear that management has committed to operate the plant at a cash negative.’SEE STORY
An internal document provided to VTDigger about ‘Entergy’s Human Capital Management initiative’shows that Entergy employees are essentially being asked to reapply for their jobs.
‘We are staffing our new organization using a selection process to help us match employees’knowledge, skills and abilities with future jobs in the organization,’the document says.
The document contains almost 18 pages of questions and answers and doesn’t cite an exact number of layoffs or where they might occur. But the document does indicate that layoffs are coming.
‘Will layoffs occur as a result of HCM?’one question asks.
‘Yes. As a result of the redesign of the organization, some jobs will be eliminated.’
Rob Williams, spokesman for Vermont Yankee, referred questions about layoffs to Lagarde, who would not add to the prepared statement.
Tim McQuiston of Vermont Business Magazine contributed to this story.