[Logo of Entergy]
For Further Information
Nancy Morovich, Vice President, Investor Relations
Phone 504/576-5506, Fax - 2897
INVESTOR NEWS nmorovi@entergy.com
August 15, 2001
Entergy Will Buy Vermont Yankee, Expanding Northeast Nuclear
Portfolio to 4,000 MW
Entergy Corporation today announced that it has reached an
agreement to acquire the Vermont Yankee nuclear plant near
Brattleboro, Vermont. The acquisition of Vermont Yankee brings
Entergy's Northeast generation portfolio to nearly 4,000
megawatts, and makes Entergy the largest nuclear operator in the
region. The Vermont Yankee plant will be acquired for
approximately $284/kW and is expected to contribute $0.03 to
Entergy's EPS in 2002 for a partial year of operation. This
amount is reflected in Entergy's previously-issued 2002 earnings
guidance of $3.30 to $3.50 per share.
Entergy will pay $145 million to the owners of Vermont Yankee for
the 510 MW plant. In addition, the owners agreed to sell fuel at
Vermont Yankee to Entergy for its book value at the time of
closing, which is estimated to be $35 million.
As part of the Vermont Yankee purchase, Entergy and twelve owners
of the plant executed a 10-year Purchase Power Agreement for 100%
of the plant's output up to 510 MW. The PPA price, which varies
by year, averages $42 per megawatt hour. From 2002 through 2005,
the PPA contract price is fixed. Thereafter, the PPA includes a
"low market adjuster" that protects VY owner-utilities and their
power consumers in case market power prices decline significantly.
If a prior year's average market price of power is more than five
percent below the annual PPA price for the current year, the PPA
price would drop to 105% of the previous year's average market
price.
Vermont Yankee will become the third General Electric boiling
water reactor in Entergy's Northeast fleet. Because of this,
Entergy expects to achieve operating efficiencies in the areas of
purchasing, inventory management and resource sharing. In
addition, Entergy expects to uprate the capacity of Vermont Yankee
by 10%, or 50 MW, over the next three years. The PPA does not
cover output associated with uprates.
The transaction is targeted to close in Spring 2002, pending
approval by the U.S. Nuclear Regulatory Commission and other
regulatory and state agencies.
Description
Plant Vermont Yankee
Location near Brattleboro, Vermont
Reactor type General Electric boiling water reactor
Capacity 510 MW
(uprates expected to add 50 MW)
Next refueling Fall 2002 (18-month cycle)
outage
1991-2000 89% average
capacity factor
License 2012
expiration
Terms of Sale
ETR cash requirements $180 million ($35 for fuel, $145 for
plant and other assets)
Decommissioning Owners will transfer $280 million trust
fund at closing
Purchase power Owners will purchase 100% of VY's 510 MW
agreement (PPA) output for 10 years on a unit contingent
basis at PPA prices that average $42/MWH
o From 2002 through 2005, PPA price
is fixed.
o From 2006 through 2012, PPA price
may be adjusted. The "low market
adjuster" applies if a prior year's
average market price of power is more
than 5% below the annual PPA price for
the current year. In this scenario, the
PPA price drops to 105% of the previous
year's average market price.
Economic Value of the Transaction
What Entergy is buying: $Millions
Fuel 35
Plant & Other assets 145
Total 180
A purchase price of $145 million for
510 MW of nuclear generation equates to $284/kW
Expected EPS Contribution1 Range 2002-05
Annual EPS contribution $0.07 to 0.10
from VY $(0.04) to (0.03)
Lost interest income at $0.03 to 0.07
Parent
Total EPS impact
Average
Project Metrics 2002-05
Operating Margin 30%
Net Margin 12%
Coverage 11X
ROE 15%
ROIC 12%
Entergy Nuclear's Northeast Presence
Inserted here is a map showing location and reactor type of
Entergy's Northeastern U.S. non-regulated nuclear plants.
The nuclear businesses of Entergy Corporation are headquartered in
Jackson, Mississippi. Entergy's nuclear businesses encompass five
power reactors at four locations in Arkansas, Mississippi and
Louisiana under regulatory jurisdictions, and the Corporation is
expanding into the competitive power market nationally by
purchasing additional nuclear plants. The Vermont Yankee purchase
will be Entergy's fourth purchase in the Northeast. The company
purchased Pilgrim Nuclear Station in 1999-the first nuclear plant
sale in a competitive bidding process, and the Indian Point 3 and
Fitzpatrick Nuclear Stations in 2000. The company is expected to
close the purchase of Indian Point 2 Nuclear Station in September
2001.
Entergy is a major global energy company with power production,
distribution operations, and related diversified services.
Entergy owns, manages, or invests in power plants generating more
than 30,000 megawatts of electricity domestically and
internationally, and delivers electricity to about 2.6 million
customers in portions of Arkansas, Louisiana, Mississippi, and
Texas. Through Entergy-Koch, L.P., it is also a leading provider
of wholesale energy marketing and trading services.
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Entergy's on-line address is: www.entergy.com.
The following constitutes a "Safe Harbor" statement under the
Private Securities Litigation Reform Act of 1995: Investors are
cautioned that forward-looking statements contained herein with
respect to the revenues, earnings, performance, strategies,
prospects and other aspects of the business of Entergy
Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc.,
Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New
Orleans, Inc., and System Energy Resources, Inc. and their
affiliated companies may involve risks and uncertainties. A
number of factors could cause actual results or outcomes to differ
materially from those indicated by such forward-looking
statements. These factors include, but are not limited to, risks
and uncertainties relating to: the effects of weather, the
performance of generating units and transmission systems, the
possession of nuclear materials, fuel and purchased power prices
and availability, the effects of regulatory decisions and changes
in law, litigation, capital spending requirements, the onset of
competition, including the ability to recover net regulatory
assets and other potential stranded costs, the effects of recent
developments in the California electricity market on the utility
industry nationally, advances in technology, changes in accounting
standards, corporate restructuring and changes in capital
structure, the success of new business ventures, changes in the
markets for electricity and other energy-related commodities,
changes in interest rates and in financial and foreign currency
markets generally, the economic climate and growth in Entergy's
service territories, changes in corporate strategies, and other
factors.
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1 Assuming 40% debt financing.