Entergy to sell Vermont Yankee to NorthStar to accelerate Decommissioning
Entergy Corp. announced an agreement to sell Entergy Nuclear Vermont Yankee and transfer the US Nuclear Regulatory Commission licenses to subsidiaries of NorthStar Group Services, Inc. to accelerate decommissioning and site restoration by decades. In addition, Entergy announced plans to accelerate the transfer of all spent nuclear fuel to dry cask storage at the Vermont Yankee Nuclear Power Station, from 2020 to 2018.
The sale of Entergy Nuclear Vermont Yankee (ENVY) is subject to closing conditions, including approval by the NRC and the Vermont Public Service Board. Entergy and NorthStar will ask the Public Service Board to approve proposed site restoration standards that are generally consistent with those of other regional decommissioning projects. The companies anticipate that the transaction will close by the end of 2018.
“By accelerating decommissioning, we are fulfilling a commitment we made in 2013 to decommission Vermont Yankee as soon as reasonably possible,” said Bill Mohl, President, Entergy Wholesale Commodities. “Decommissioning and site restoration, drawing on NorthStar’s expertise, will provide economic development for the region.”
Mohl added, “For Entergy, this transaction enables us to manage financial risk and reduce our company’s merchant power footprint.”
NorthStar, based in New York, is one of the premier US dismantling and remediation companies and is partnering through a subsidiary with industry leaders AREVA, Waste Control Specialists and Burns & McDonnell to perform specialized services drawing on each company’s core competencies. The NorthStar team members have collectively worked on more than 300 nuclear and non-nuclear power plant projects over the past 15 years and bring deep expertise in complex and specialized tasks such as reactor vessel segmentation, waste packaging/transportation/disposal, environmental remediation, site closure and spent fuel management.
“Our in-house expertise, combined with the proven track record of our partners, provides the complete package of skills needed to ensure the timely, safe, cost-efficient decommissioning and restoration of the Vermont Yankee site,” said Scott State, NorthStar’s chief executive officer. “Our primary objective is to complete the decommissioning of the non-Independent Spent Fuel Storage Installation portion of the site decades earlier than originally planned so that a majority of Vermont Yankee can be re-developed to promote business for the region.”
Under Entergy’s original schedule, as outlined in its Post Shutdown Decommissioning Activities Report filed with the NRC, Entergy expected to initiate decontamination and dismantlement in 2068, with projected completion of both decommissioning and site restoration by 2075. Under the agreement with Entergy, NorthStar has committed to initiate decontamination and dismantlement by 2021 and to complete decommissioning and restoration of the Vermont Yankee site (with the exception of the ISFSI), by 2030. Thereafter, NorthStar will continue to operate and maintain the ISFSI until the US Department of Energy fulfills its statutory and contractual obligations to remove all of the spent nuclear fuel from Vermont Yankee. NorthStar will then decommission the ISFSI, terminate the NRC license and complete site restoration.
Holtec International, the manufacturer of the dry storage systems used at Vermont Yankee, submitted license amendment requests to the NRC earlier this year, which if approved, will support complete transfer of all of Vermont Yankee’s spent nuclear fuel to dry storage by the end of 2018.
Financial Information
As consideration for its interest in ENVY, Entergy will receive nominal cash consideration and a promissory note payable to Entergy in an amount equal to the amount owed at the time of closing under a credit facility to finance Vermont Yankee’s dry fuel storage costs, which facility will be either assumed or refinanced by an Entergy subsidiary at or before the closing. The transfer of ENVY to NorthStar will include the transfer of ENVY’s nuclear decommissioning trust and its obligations for spent fuel management and decommissioning. As a result, the nuclear decommissioning trust and associated asset retirement obligation will be removed from Entergy’s balance sheet at closing. The transaction is expected to result in a loss at closing, the amount of which cannot be determined at this time, based on the difference between Entergy’s book basis in ENVY at the time of closing and the sale price plus any agreed adjustments. Subject to satisfaction or waiver of the conditions to closing, the transaction is expected to be completed in late 2018. On an ongoing basis, the sale is expected to be mildly accretive to operational results once the transaction is completed, primarily due to the elimination of future decommissioning accretion expenses.
A contractually agreed minimum level of funding at close in Vermont Yankee’s nuclear decommissioning trust (“NDT”) is a condition to close. The amount of any contribution to the NDT that may be required to meet the minimum funding level is highly uncertain and will depend on, among other things, the level of future reimbursements from the NDT for work performed prior to closing and the market performance of the investments in the NDT through closing. However, assuming a December 31, 2018, closing and a level of expenditures from the NDT for work prior to the closing that is consistent with Entergy’s current estimates, Entergy estimates that no contribution would be required to meet this condition if the rate of return on the NDT assets from September 30, 2016, through closing is at least 5.5% per annum and that a contribution of approximately $10 million to $12 million would be required for every 1.0% by which the rate of return falls below 5.5% over such period. Entergy is not required to make any contribution to the NDT to cause this condition to be satisfied, but would have the option to do so prior to closing.