Saturday, April 3, 2010


The Enexus issue comes up, and because I blog at Yes Vermont Yankee, everybody expects that I have an opinion on it. Of course, I do have an opinion. However, I haven't blogged about Enexus because I prefer to write about areas that utilize my background in chemistry and nuclear operations, areas in which I bring some value-added to the discussion.

My opinion on Enexus is just one person's opinion. This blog is an opinion piece.

The Background

Slightly over two years ago, Entergy announced that they planned to spin off their northern nuclear plants to a new company called Enexus. Late last month, the New York Public Service Commission turned down their request to start the new company and transfer the New York power plants to it. Basically, the New York Commissioners calculated that Enexus debt would be would be so high that that the company's bonds would be ranked "below investment grade." So the Commissioners decided not to allow this proposed company to own New York power plants.

Commissioners are supposed to ensure that utility infrastructure is owned by financially sound companies. In Vermont, the Public Service Board has had two black eyes recently in the telecomm area. Fairpoint Communications took over from Verizon, and within two years, Fairpoint went bankrupt. The same sort of thing happened with Burlington Telecomm, which is struggling to meet its debt payments. Utility commissions in the Northeast are pretty shy about debt now. Once burned, twice shy.

My Opinion

Well, I think New York State was right to turn Enexus down. Enexus was going to be a company with too much debt. As a matter of fact, when Entergy announced the proposed spin-off, I was annoyed. Isn't it going to be tough enough to get the VY license extension without THIS complication? I have stayed slightly annoyed, which is another reason I haven't blogged about it.

On the other hand, there are two ways that Enexus had some good things to offer. First, it was going to be a pure-play owner of nuclear plants. One of the most cogent arguments for nuclear is that it is better than coal. However, every utility that owns nuclear plants also owns coal plants. Therefore, no major utility makes the argument against coal. Only us lonely bloggers are willing to do daily comparisons with coal. It would have been nice to have one pure-play nuclear company out there, one willing to publicize: Nuclear Better Than Coal!

The second good thing would have been that Enexus could keep one set of books, not two. I don't mean that in a bad way. I just mean that if part of your company is regulated and part is not, the accounting can be nightmarish. Entergy has regulated nuclear plants in the South, and merchant nuclear plants in the North.

Difficult Accounting

I remember my own company. We had EPRI contracts, and EPRI audited our overhead rates. We were treated like a government contractor: direct, indirect, overhead, general-and-administrative. EPRI needed to know it all. How much time were we spending on direct and indirect? How much money were we spending on health insurance? Did all of this meet their guidelines?

We also had utility contracts. Utilities just asked our billing rates and paid a flat hourly rate. If the rate looked good to them, they signed the contract. They didn't care what else we were spending our time on.

Our lucrative utility contracts hurt our EPRI billing rates during the audits. It was a kind of no-win nightmare. I can see why Entergy would want to become two companies: one that accepted regulatory audits, one that didn't. Heck, there were moments that I wanted my four-person Fourth Floor Databases company to be two companies. I don't blame Entergy for trying to get the two parts of their business separate. But in this climate, and with that amount of debt, it wasn't going to work.


Everybody listens to radio station: WIFM. What's InIt For Me. I think Entergy didn't understand that. The Enexus spin-off would have been allowed IF the Commissioners saw it as in the best interests of the ratepayers. I don't remember ever hearing an Entergy argument that went: "Your rates will go down with this spin-off. Everyone in the Northeast will be better off with this spinoff because..." Maybe it was just a failure to communicate.

But in the meantime, it handed the anti-VY people yet another weapon. Vermont Yankee is a well-run plant. It is over 500 days into a power run right now. Only well-run plants can do this sort of thing. Badly run plants break down in some manner and have to go off-line. Also, VY found and fixed the tritium leak quickly. People who hate the plant won't accept this, but it's a good plant.

VY could stay a well-run plant under Entergy or Enexus or being sold to Duke Power or....whatever. The corporate structure never struck me as a tremendously relevant issue. To me, the Enexus spin-off was just another problem that did not have to exist. Not that it was a crazy idea (pure-play nuclear, all merchant plants, no regulated plants). But it wasn't going to fly, and it hurt people's opinion of VY, and VY's chances in the Senate.

What we have here is a failure to communicate on the part of Entergy. Or perhaps, a failure have good story to communicate. A good story would have answered the question What's In It For Me about Enexus? from the ratepayer point of view.

Entergy Scraps Enexus: An Update

I put up this blog post over the weekend, and this morning, Entergy announced that it is not going ahead with Enexus. I'm glad about this decision, but I am still annoyed at the memory of all the meetings I attended where anti-nukes could say: "We don't even know who is going to own this plant! Some company that doesn't exist, some company with a lot of debt." The Enexus plan didn't make life easier for plant supporters. I never felt I could defend it. I'm happy it's over.

Don't forget. I'm still running the Helen Caldicott Satire Contest. Why cars, toothpaste and paper (so far) are terribly dangerous. Get your entry in soon. Contest ends April 15. Enter early and often!

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