By John Stang
Strong investment returns on the decommissioning trust funds for the Pilgrim and Indian Point nuclear power complexes helped Entergy improve its financial pictures for 2019.
The better numbers came from a mix of financial sources – along with the decommissioning trust returns, Entergy benefited from more favorable income tax returns, lower asset write-offs, and reduced operations-and-maintenance costs after the Pilgrim reactor in Massachusetts shut down last May, according to company executives.
“2019 was a very successful year for our company,” Chairman and CEO Leo Denault said in a Wednesday teleconference with analysts on the New Orleans-based power company’s latest earnings.
However, the Pilgrim fund is no longer part of Entergy’s corporate finances, Denault noted. Last summer, Entergy sold the retired single-reactor facility on Cape Cod to Holtec International. The New Jersey-based energy technology company now owns the decommissioning trust, along with all responsibility for decommissioning, spent fuel management, and site restoration on the property.
Similarly, Entergy wants Holtec by 2021 to assume ownership of the three reactors at the Indian Point Energy Center and their decommissioning trusts. At the Buchanan, N.Y., site, Entergy plans to retire reactor Unit 2 by April 30, 2020, and Unit 3 by April 30, 2021. Reactor Unit 1 has been closed since 1974.
Indian Point’s decommissioning trust funds are valued at a total of $2.1 billion for a projected $2.3 billion decommissioning project, according to late 2019 and early 2020 figures. Pilgrim’s trust fund had slightly more than $1 billion for a $1.134 billion project, according to late 2018 figures.
In company-wide figures for the quarter, Entergy posted as-reported earnings of $385 million, compared to a loss of $66 million in the fourth quarter of 2018. For the latest reporting period, that translated to $1.92 per share in earnings, compared to a loss of $0.36 per share the year before.
The heavy fourth-quarter loss in 2018 was partly caused by low returns on the decommissioning trust funds and a general drop in revenue as Entergy winds down the nuclear power segment of its Wholesale Commodities subsidiary.
For the entire year of 2019, Entergy posted as-reported earnings of $1.241 billion and $6.30 per share, compared to 2018 figures of $849 million and $4.63 per share.
Entergy reported earnings guidance of $5.45 to $5.75 per share for 2020.
While Entergy discussed its fourth-quarter and full-year 2019 finances, it does not expect to submit its filings with the Securities and Exchange Commission until March 2.
The sale of Indian Point would leave the Palisades Power Plant in Michigan as Entergy Wholesale Commodities’ last nuclear power operation. Management plans to retire that reactor in 2022 and to sell the property to Holtec. The company owns several nuclear sites in the southeast under its Entergy Nuclear subsidiary.
Entergy faces resistance to the completed sale of the Pilgrim Nuclear Power Station and the pending deal for the Indian Point Energy Center.
The commonwealth of Massachusetts and advocacy group Pilgrim Watch in February 2019 both petitioned to intervene in the license transfer application at the Nuclear Regulatory Commission for the sale of Pilgrim. The commission has yet to rule on the petitions, even though staff approved the transfer and the sale was completed in August 2019.
The commonwealth has approached the U.S. Court of Appeals for the District of Columbia Circuit to halt the transfer of Pilgrim’s reactor and spent fuel storage licenses to Holtec. Its attorneys argue questions exist regarding whether enough money has to been aside yet to decommission the reactor and whether adequate environmental reviews have been done for the project.
The commission could still reverse the staff-approved license transfer and authorize intervention in the proceeding, under which Massachusetts and Pilgrim Watch could argue their cases in hearings.
Meanwhile, the New York state Attorney General’s Office, a group of local government bodies, and two environmental organizations filed petitions earlier this month for NRC hearings on the proposed license transfer and sale of Indian Point. They voiced similar concerns about whether prospective plant owner Holtec would be able to fully fund decommissioning and whether the project’s corporate family tree shields the company from responsibility if the cleanup money falls short.
In both locations, Holtec and Entergy say available decommissioning funds are sufficient to cover all costs.
