Entergy Creates Nuclear Energy Spinoff

From the Wall Street Journal:

Entergy Corp. plans to spin off about half of its nuclear-power plants and create the nation's first stand-alone, publicly traded nuclear-energy company, underscoring how the once-shunned nuclear sector is getting a lift from increasing anxiety about other methods of making electricity.

Less than a decade ago, Entergy was picking up distressed nuclear assets on the cheap. In one case, it bought a plant for little more than the value of fuel on hand. Now Entergy, a New Orleans company with utilities in four Southeastern states, estimates it will be able to take assets for which it paid about $2 billion and put them in a new company with a market value approaching $20 billion, according to Chief Executive Officer Wayne Leonard.

The move puts pressure on other big nuclear operators to consider similar action. CEO John Rowe of Chicago's Exelon Corp., the biggest owner of nuclear capacity in the U.S., said: "It's something we constantly look at." The company reaped most of its third-quarter profit from its nuclear fleet, not its regulated utilities.

U.S. policy makers are giving nuclear power new respect out of concern about emissions blamed for global warming from existing coal-fired plants, and they are increasingly pessimistic about prospects for new ones. Existing nuclear plants have more value as the estimated cost of building new units rises.

For more on the economics of nuclear energy, see our Financial Center.