On Thursday, October 9, the Vermont Department of Public Service announced that they had arrived at an agreement with the owners of the Vermont Yankee nuclear power plant to pass the facility along to a spin-off company called Enexus.
In an eight-page memorandum of understanding, the state officials who negotiated the deal said the agreement was made possible by financial guarantees from Entergy Vermont Nuclear that this new company would safety and effectively operate Vermont Yankee. This marks a reversal from the position previously held by the Department, which had said earlier that the deal would not be approved.
The key provisions of the deal between the state of Vermont, Entergy, and Enexus include:
Access to the $100 million for Enexus from Entergy, funding that is currently unavailable to Entergy Vermont Yankee.
The ability to use a $60 million line of credit, which replaces a similar amount guaranteed by the parent company and can be directed towards the decommissioning of the facility.
The stipulation that Enexus must take out a $50 million line of credit to operate the facility if it's credit rating falls further than one mark below investment grade.
According to Department Commissioner David O'Brien, these provisions were made in addition to changes to the proposed plan submitted to regulators in New York. Among the changes were the requirement that Enexus have debt less than $3.5 billion, maintain a minimum liquidity commitment of $350 million, an unrestricted cash balance of $750 million, and raise an additional $800 million to support reliability improvements.
In addition, the Nuclear Regulatory Commission requires a $700 million support agreement between Enexus and Entergy Vermont towards any safety concerns at the facility. The Nuclear Regulatory Commission has already approved the spin-off deal.
The announcement of an agreement, which was promptly filed with the Vermont Public Service Board, arrives at a time when the future of Vermont Yankee is still in question. In 2012, the plant's license to operate will expire, and Entergy is currently petitioning the state to renew the license for an additional 20 years.
In a press conference made on the same day, Governor Jim Douglas urged lawmakers not to concern themselves with cost of power from Vermont Yankee if the plant continues to operate after 2012, leaving those details to the Public Service Board instead. Democratic leaders in the state legislature have said that they would not support relicensing unless there was a power purchase agreement made with the state's utilities which would firmly establish rates at Vermont Yankee. Legislators are looking for such an agreement to be made by November 1.
In their announcements on October 9, the Public Service Department said that it was their understanding that talks between Entergy and the utilities had stalled out. Jay Thayer, the vice president of Entergy Vermont Yankee, denied the claims, stating that talks would continue and that the spin-off agreement was part of the ongoing process.
Concerns were raised that Enexus would suffer the same fate as FairPoint Communications, which was backed by the Department last year to purchase Verizon's landline and internet operations and now faces bankruptcy. Commissioner O'Brien said that it was not an apt comparison, and that Enexus would not be burdened with debt from the beginning of the spin-off.
According to a statement from Rob Williams at Vermont Yankee, Enexus is also expected to include the James A. FitzPatrick, Indian Point Energy Center, Palisades and Pilgrim nuclear plants, and a power marketing operation.