Entergy Nuclear Buys Pilgrim Plant

Entergy Nuclear has agreed to acquire the Pilgrim Nuclear Power Station in Plymouth, MA for $80 million, which includes $67 million for the plant's nuclear fuel in a deal potentially valued at $121 million for Boston Edison customers. The purchase includes the power plant and facilities and the plant's 1,600-acre site on Cape Cod Bay.

This purchase makes Entergy the first company in the nation to purchase a nuclear plant through the competitive bid process. The acquisition is still subject to state and federal approvals, However, a closing expected early next year.

According to the terms of the agreement, close to 670 Boston Edison employees will become Entergy employees after the final sale closing. The terms of the sale also include power purchase agreements with Boston Edison, Commonwealth Electric, and Montaup Electric Company through 2004. This purchase is the second deal entered into by Entergy in the New England area. The other contract is for the decommissioning of the Maine Yankee nuclear power plant. Entergy is targeting additional acquisitions of nuclear plants and will also actively compete for decommissioning and management services contracts.

Pilgrim is the first nuclear plant acquired by Entergy Nuclear as part of a business strategy that focuses on competitive nuclear power acquisition, power generation, and power marketing and trading as primary growth areas. The new business strategy was announced in August 1998. According to this strategy, Entergy's goal is to be one of a small number of utilities successfully acquiring and operating nuclear plants in the United States. Entergy's five existing units presently operate at a combined average capacity factor of 90%, well over the industry average of 73%.

According to Entergy nuclear companies group president Don Hintz "We're excited about adding Pilgrim to Entergy's nuclear team. Pilgrim's excellent operating performance is a credit to the capable employees at the plant. The plant has operated safely and successfully as a stand-alone unit. We will build on this success as we move forward with our strategy to acquire and operate safe, competitive nuclear plants. In addition, we welcome the opportunity to become an involved neighbor in the Town of Plymouth, the surrounding communities, and the Commonwealth of Massachusetts."

Entergy expects to realize on average a contribution of 5 to 7 cents to earnings per share from Pilgrim's operation. "Pilgrim's solid performance will contribute positive cash flows beginning with the first year of operation," says Hintz. Under the agreement, Boston Edison will transfer the NRC operating license to Entergy and will fully fund a decommissioning trust in the amount of $466 million at closing. Entergy has direct decommissioning experience through its decommissioning contract at the Maine Yankee plant. This experience, combined with expert independent studies, confirms the estimated cost and adequacy of the decommissioning trust fund.