Continuing its nuclear power plant acquisition spree, Entergy Corp. Wednesday said it agreed buy the 510 Mw Vermont Yankee nuclear plant from Vermont Yankee Nuclear Power Corp. for $180 million.
Vermont Yankee in Vernon, Vt., will become Entergy’s tenth nuclear unit and its fifth in the Northeast. Entergy Nuclear has operated five nuclear units in Arkansas, Mississippi, and Louisiana for more than 20 years and began buying properties in the Northeast in 1999.
The $180 million in cash represents $145 million for the plant and related assets and $35 million for nuclear fuel. Vermont Yankee is the largest power generator in Vermont, producing about 30% of the state’s needs.
“We expect to realize significant operating efficiencies since Vermont Yankee is a sister plant to our Pilgrim plant in Plymouth, Mass., and our FitzPatrick plant in Oswego County, NY,” said Entergy CEO Wayne Leonard, in a statement.
Vermont Yankee put the plant up for sale through an auction after prices for nuclear plants began escalating. The deal, which must be approved by state and federal regulators, includes a power purchase agreement requiring Entergy to sell all the plant’s power to present Vermont Yankee sponsors through 2012, at prices ranging from $39-$45/Mw-hr.
The agreement also includes a “low market adjuster” that protects Vermont Yankee owner-utilities and consumers in case power market prices drop significantly. If a prior year’s average market price of power is more than 5% below the annual agreement price for the current year, it would drop to 105% of the previous year’s average market price.
Entergy Nuclear CEO Jerry Yelverton said the power purchase agreement reduces risk and will allow the company to focus time and attention on increasing the plant’s capacity factor, achieving cost synergies with other plants, and maintaining safe operation.
Entergy, New Orleans, La., will also receive nuclear fuel and all materials and spare parts inventory as well as the plant, switchyard, and related real estate in nearby Brattleboro. Entergy said it will also assume decommissioning liability for the plant and the plant’s decommissioning trust fund, which is required by the US Nuclear Regulatory Commission.
If the transaction is approved, the plant and related assets will be transferred to Entergy Nuclear Vermont Yankee LLC, an Entergy subsidiary, and will become part of the Entergy Nuclear Northeast fleet. The transaction is expected to close next spring.
Entergy Nuclear South operates five nuclear units from its regional office in Jackson, Miss. Its newly acquired units are managed from its Entergy Nuclear Northeast regional office in White Plains, NY.
Vermont Yankee CEO Ross Barkhurst said the successful auction “clearly maximized the value of the plant.”
The Vermont Yankee Nuclear Power Corporation is owned by 12 New England utilities. The largest shareholder is Central Vermont Public Service Corp., Rutland, Vt., 31.3%; and the others are New England Power Co., 22.5%; Green Mountain Power Corp., 17.9%; Connecticut Light & Power Co., 9.5%; Central Maine Power Co. and Public Service Co. of New Hampshire, 4% each; Burlington Electric Department, 3.6%; Cambridge Electric Light & Western Massachusetts Electric Co., 2.5% each; Vermont Electric Cooperative Inc., 1%; and Washington Electric Cooperative Inc. and Village of Lyndonville Electric Department, 0.6% each.