Entergy Spin-Off Delayed

Entergy Corp.’s (ETR - Analyst Report) proposed spin-off of its Non-utility Nuclear power business has been relegated to fiscal 2010.

Recently, the New York Public Service Commission’s two administrative law judges in a ruling stated their apprehension regarding the new company having the financial viability to operate three units located in the state of New York. Of this, two units are located in the Indian Point Energy Center in Westchester County and a reactor at the James A. Fitzpatrick station in Oswego County.

The New York Public Service Commission expressed its apprehension that the $3.5 billion worth of long-term unsecured bonds that Entergy plans to issue for the spin-off will drag down the bond rating of the new company, affecting its financial capacity. The Commission has also relegated its next hearing to December 2009 followed by a final decision on the spin-off in January 2010.

Entergy has been contemplating the spin-off since fiscal 2007 to separate its regulated utilities and open-market generation units. The new company – Enexus Energy Corp. will take over nuclear plants located in Pilgrim in Plymouth, MA; Vermont Yankee in Vernon, VT; Indian Point in Westchester County, NY; Fitzpatrick in Oswego County, NY; and the Palisades plant in Covert, MI.

New Orleans-based Entergy is primarily engaged in electric power production and retail distribution operations. The company owns and operates power plants with approximately 30,000MW of electricity generating capacity. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy Nuclear is the second largest nuclear generator in the U.S., with interests in six nuclear plants. We maintain our market Neutral recommendation on the shares.