Entergy Puts Hope in Nuclear Power

["Sandy Perle" <sandyfl@earthlink.net>]

Entergy Puts Hope in Nuclear Power

NEW ORLEANS (AP) March 19 - In an era when nuclear energy 
has seen Three Mile Island and billions of dollars in cost overruns 
take away its luster, Entergy Corp. believes yesterday's idea of the 
future will turn into tomorrow's hefty profits. 

Provided, of course, that the price is right. 

The New Orleans-based utility holding company has become an 
aggressive player in what promises to be an entirely new and hotly 
competitive twist to nuclear energy - buying fission plants from 
utilities and selling the electricity on open, deregulated power 
markets. 

The formula is this: find large generating plants in high usage, high-
priced power markets, such as the Northeast. Then pay market 
value, a fraction of the construction cost, which already has been 
covered by ratepayers. 

As a result, Entergy could be generating power for as little as 1.5 
to 2 cents per kilowatt hour as compared with about 3 cents for 
new plants fired by natural gas, said Don Hintz, head of Entergy 
Nuclear, the Entergy subsidiary handling the nuclear power deals. 

``We don't see anything on the horizon, from a cost perspective, 
that will beat nuclear generating,'' Hintz said. 

The acquisition of nuclear plants is a new twist in an industry that 
bogged down in the 1980s and 1990s amid safety concerns, 
skyrocketing and out-of-control price tags for building new plants 
and unrealized fears that natural gas would no longer be readily 
available for fuel. 

The Watts Bar plant, a Tennessee Valley Authority project at 
Spring City, Tenn., was the last plant to come on line in 1996 - 23 
years after it was first proposed. Any plants ordered after 1973 
have never been finished. 

But the existing plants stand to take on a new role as deregulation 
approaches the power industry. 

Entergy, which had $8.77 billion in revenue last year, bought the 
Pilgrim Nuclear Power Station in Plymouth, Mass., in November for 
$81 million, becoming the first U.S. utility to purchase a nuclear 
plant built by another company. 

For the past month, Entergy has been in a bidding war to buy two 
nuclear generating plants from the New York Power Authority. The 
NYPA is also considering a bid from Dominion Resources Inc. of 
Richmond, Va., which offered to buy the plants for $857 million. On 
Friday, Entergy raised its offer to $1.12 billion. 

Entergy plans to spend up to $1.5 billion to acquire as many as a 
dozen plants. But it won't be without competition. In addition to 
Dominion Resources' expansion efforts, Philadelphia-based 
Amergen Energy Co. has purchased the Clinton plant in Illinois and 
the still-running Three Mile Island I plant in Pennsylvania. 

Entergy expects Charlotte, N.C.-based Duke Energy Corp. and 
Baltimore-based Constellation Energy Group to also join in the fray 
in the future. 

Although many utilities have nuclear-generating plants, running 
only one or two is not cost efficient, Hintz said. Entergy already 
owned and operated five nuclear generating units for its regulated 
power businesses in Arkansas, Mississippi and Louisiana before it 
ventured into the buying mode. 

``One of the reasons we like this business is that there are very few 
players who can compete in it,'' Hintz said. 

Entergy got into acquisitions of nuclear plants as part of a major 
about-face in a restructuring plan that started in the 1990s with 
holdings in telecommunications, home security and overseas 
power distribution systems. 

After the company's stock price largely sat still during the bull 
market, top management was ousted, the 1990s acquisitions were 
dumped and nuclear power moved to a major role in the company's 
future plans. 

The switch has been received well in the investment community. 

Dan Ford, an analyst with ABN AMRO Inc. who follows utilities, 
said Entergy is one of only a few with the necessities for the 
ventures: a good operational history of its own plants, strong 
relations with the Nuclear Regulatory Commission and a wealth of 
trained plant personnel. 

``For those companies, it's a very good strategy because there are 
a wealth of electric utilities that, for a variety or reasons, own and 
operate only one or two units,'' Ford said. ``That doesn't allow for 
any reasonable economies of scale.'' 

Based upon the sale prices thus far, it would cost roughly six 
times as much to buy a comparable fossil-fuel plant and eight 
times as much to build a new plant, Ford said. 

Entergy is targeting larger plants - at least 600 megawatts - and 
those with full decommissioning funds, which will cover the 
hundreds of millions of dollars required to take apart the plants 
once they close. 

The Northeast is particularly appealing because it has some of the 
highest regulated rates in the U.S., providing a lucrative market as 
consumers begin to choose between power providers and utilities 
go to the open market more and more price-shopping for the best 
rate, Hintz said. 

But as Three Mile Island demonstrated in 1979, there are serious 
safety concerns. 

``From our standpoint, the probability of an accident is extremely 
small,'' Hintz said. ``We feel with our expertise and the design of 
these plants in the U.S., and the training programs we have, we 
think that risk is so small, it's not a major concern.'' 

Public Citizen, a consumer watchdog group based in Washington, 
D.C., sees two sides to the safety issue. 

``If the new owners are better operators, they could operate the 
plants more efficiently and even more safely,'' said Charles Higley, 
a spokesman for the group's nuclear issues office. ``But at the 
same time, deregulation is forcing utilities to cuts costs and cutting 
costs can make nuclear reactors less safe. That's the concern.'' 

Ford said operational risks are part of the equation. 
----------------------------------------------------------------------------------------
Sandy Perle					Tel:(714) 545-0100 / (800) 548-5100   				    	
Director, Technical				Extension 2306 				     	
ICN Worldwide Dosimetry Division		Fax:(714) 668-3149 	                   		    
ICN Biomedicals, Inc.				E-Mail: sandyfl@earthlink.net 				                           
ICN Plaza, 3300 Hyland Avenue  		E-Mail: sperle@icnpharm.com          	          
Costa Mesa, CA 92626

Personal Website:  http://www.geocities.com/capecanaveral/1205
ICN Worldwide Dosimetry Website: http://www.dosimetry.com
************************************************************************
The RADSAFE Frequently Asked Questions list, archives and subscription
information can be accessed at http://www.ehs.uiuc.edu/~rad/radsafe.html