The Gulf Coast energy corporation, Entergy has had a very busy day. First, as I reported here earlier today, “Entergy announced that it would act on its own to develop an application for a (Nuclear) reactor at a site next to its Waterford plant, in Louisiana.” Then, Entergy New Orleans announced it was filing for Bankruptcy, Chapter 11 protection.
Facing huge rebuilding costs and a loss of revenue following Hurricane Katrina, the New Orleans-based subsidiary of Entergy Corp. filed for bankruptcy protection Friday.
Entergy New Orleans also said it plans to borrow up to $200 million from its parent corporation to pay wages and benefits, pending court approval, make payments under existing power purchase and gas supply agreements and continue to repair and restore facilities wrecked by Katrina.
“We have an immediate need for cash because our goal is to continue the restoration effort,” Dan Packer, Entergy New Orleans’ chairman and chief executive officer, said in an Associated Press interview.
The New Orleans utility is Entergy’s smallest of five utilities, yet will bear the brunt of the parent company’s restoration costs. High-end estimates for the parent company total $1.1 billion, of which up to $475 million are expected to fall on Entergy New Orleans, Packer said.
A hearing was set for Monday on the bankruptcy petition and Entergy’s request for “debtor-in-possession” financing, which would ensure that the $200 million loan would be used for the stated purposes and that the parent company would be first in line to be repaid under any reorganization plan.
No doubt the contracts for the new Nuclear plants will help Entergy out of their pinch. And of course, those government incentives guaranteed with the pork-ladden Energy Bill are a huge lure for Entergy.
Under the federal energy bill passed by Congress this summer, the first few new nuclear plants will qualify for several federal incentives such as federal risk insurance against regulatory delays, 80 percent loan guarantees, and a production tax credit for the first eight years of operation. Entergy is attempting on behalf of its power customers to be ready to make a build decision at the soonest possible date.