Power company Entergy said Wednesday its earnings rose -m the first quarter of 2018 with assistance from the federal tax break and better weather. The numbers in the company’s nuclear power-intensive Wholesale Commodities segment also improved, though it remained a drag on the overall business.
The New Orleans-based utility owner reported consolidated earnings of $133 million ($0.73 per share) on an as-reported basis and $211 million ($1.16 per share) on an operational basis. Those numbers were up across the board year over year from $83 million ($0.46 per share) on an as-reported basis and $178 million ($0.99) on an operational basis.
Along with the reduced federal income tax rate, “favorable weather” provided a $0.09 per-share boost, the company said in its earnings press release. However, Entergy took a $0.04 hit from implementation of a January 2016 accounting standards update from the Financial Accounting Standards Board.
“ASU 2016-01 changed how we record earnings on the equity investments in [Entergy Wholesale Commodities’ nuclear decommissioning] trust,” spokeswoman Emily Parenteau said by email Thursday. “We now mark-to-market the equity investments in the decommissioning trusts to the income statement when previously we only realized gains from those investments in the income statement.”
Entergy Wholesale Commodities plans in coming years to close all three of its operational nuclear power plants: Indian Point in New York state; Palisades in Michigan; and Pilgrim in Massachusetts. In the latest quarter, the business lost $18 million ($0.10 per share) on an as-reported basis and earned $60 million ($0.33 per share) on an operational basis. Those numbers compare to a first-quarter 2017 loss of $28 million ($0.16 per share) on an as-reported basis and earnings of $67 million ($0.37 per share) on an operational basis.
Beyond the 2017 sale of its James A. FitzPatrick Nuclear Power Plant in New York to Exelon, “the key driver for EWC was weak market performance in the quarter for EWC’s nuclear decommissioning trust fund,” Entergy Chief Financial Officer Drew Marsh said Wednesday in a conference call with financial analysts.
The trust held $4 billion as of March 31. It would cover decommissioning costs for Pilgrim, Palisades, and Indian Point, along with the already-retired Vermont Yankee plant.
Entergy plans to sell Vermont Yankee to New York City-based NorthStar Group Services by the end of this year, pending approval from the Vermont Public Utility Commission and U.S. Nuclear Regulatory Commission. Its funds for decommissioning and spent fuel management at the site would then pass to its new owner.
The NRC should issue its ruling in the third quarter, Marsh said.
Nearly all parties to the state review in March reached a settlement on terms for the sale. The Vermont Public Utility Commission has scheduled evidentiary hearings in its review for May, and Entergy is eyeing a decision by July, Marsh added.
“[T]he key value driver for decommissioning is identifying economies of scale and engineering solutions that could reduce the ultimate cost, we’re aggressively pursuing these types of solutions,” he said.
The CFO did not elaborate, but Entergy is known to have been in talks to sell at least Pilgrim and Palisades to Accelerated Decommissioning Partners, a venture of NorthStar and Orano (formerly AREVA). Much like the deal for Vermont Yankee, ADP would then get the plants’ decommissioning trusts and responsibility for their cleanup.
There was no immediate update on the status of those discussions. “We have stated previously that the Vermont Yankee transaction is a model that we would like to use for our other EWC nuclear plants once they are closed,” according to Parenteau.
