Federal regulators want more information about Entergy Corp.’s finances after the company dramatically dropped the value of its Vermont Yankee plant.
Entergy says the aging nuclear plant is now worth less than a third what it was in part because of competitive pressure in the wholesale power market.
Entergy told the Securities and Exchange Commission in November that the fair value of Yankee had dropped to $162 million, down from $517 million. The company says the fair value is what it could expect to receive if the plant were sold.
The November disclosure to the SEC caught the attention of Nuclear Regulatory Commission. Neil Sheehan is a commission spokesman.
"Based on that, we did issue a request for additional information for the company about what exactly this latest information means and how it could impact the company’s financial qualifications to continue to operate the plant," he said.
Sheehan said the commission usually probes a company’s financial health if it’s buying a nuclear plant.
But he says the NRC can also seek assurances that a company has enough money to decommission a plant, and to run it safely.
"For us, the bottom line is do they still have the financial qualifications to continue to operate the plant safely and if not, what are they going to do to address that?" he said.
Yankee is what’s known in the energy business as a "merchant generator" – which means it’s not owned by a utility and sells power into the wholesale, competitive market.
And that market has become tougher because of abundant, low-cost natural gas. Sheehan says competition from natural gas has affected other nuclear units in the Northeast.
"These plants are now selling their power out on the open market and obviously the prices of natural gas and some other factors are affecting their financial qualifications," he said.
Anti-nuclear activists have also asked the NRC to rule that Entergy does not have the financial qualifications to run Yankee.
Entergy’s stock was recently downgraded by the UBS Financial Securities. Over the last five years, Entergy’s shares have declined about 40 percent in value, while the Dow Jones average rose about 20 percent.
A Yankee spokesman would not comment on the NRC request for more financial information, except to say that the company would respond within the 45 days that allowed under the regulation.
Vermont Yankee is currently shutdown for refueling.