VERNON — Entergy plans to cut about 30 jobs at the Vermont Yankee nuclear plant by the end of the year, a vice president at the Louisiana-based corporation said Tuesday.
The news comes on the same day Entergy reported to the U.S. Securities and Exchange Commission that the company would eliminate about 800 positions from its nationwide workforce of 15,000.
Entergy employs about 650 workers at Vermont Yankee in Vernon, meaning layoffs would affect about 4 percent of employees.
“It's really across the board,” said Terry Young, Entergy's vice president of communications, of the job reductions. “What we did through this process is really redesign the way we do business and redesigned the nuclear organization's structure.”
The 800 layoffs reflect about 6 percent of Entergy's workforce, he said.
According to Young, Entergy's nuclear plants in Arkansas, Louisiana, and Mississippi operate in energy markets where a public service commission reviews costs. The company's other merchant plants, especially in the Northeast, operate in a competitive energy market.
He said merchant plants, such as Vermont Yankee, have been “challenged” by low natural gas prices.
Entergy's earnings are down more than 50 percent in the second quarter of 2013, from $2.11 a share last year to $1.01 a share this year. To adjust for these decreases, Entergy is reorganizing via its “human capital management initiative.”
As part of an organizational restructuring announced last year, Young said Entergy reworked its nuclear organization from scratch incorporating industry best practices. Entergy projects the restructuring will save the company $200 million to $250 million by 2016.
Reductions in staffing are one of seven strategic imperatives outlined in its 2012 sustainability report. The goal, he said, is to create an “optimal structure” that operates at the highest level of efficiency.
Financial woes
“Difficult decisions like job reductions are sometimes the very tough outcome of making long-term, fundamental improvements in the way a company works,” Entergy CEO Leo Denault said in the SEC filing.
“The redesign process has been comprehensive, thoughtful and focused squarely on being fair to our employees throughout the process and being responsive to the needs of our customers, our employees, our communities and our owners.”
In 2013, the fair value of the Vermont Yankee nuclear plant fell 69 percent, from $517.5 million to $162 million. UBS Securities downgraded Entergy Corp.'s stock from “neutral” to “sell.” The Swiss financial services firm also projected the closure of an Entergy nuclear facility in 2013, saying “Vermont Yankee is the most tenuously positioned plant.”
Julien Dumoulin-Smith, an analyst for UBS, told The Commons that Entergy's cost-cutting measures are an expected first step when the company has shown profit losses.
Essentially, the costs of operating nuclear plants are increasing while the money generated by nuclear is decreasing, said Dumoulin-Smith.
Fracking and lower prices for natural gas have cut energy prices to shreds, he said, and added that the regulatory environment is “mostly unsupportive of nuclear,” all of which spells significant pressure for Entergy's aging fleet of nuclear plants.
The viability of nuclear power in general is in question, he said.
What's still to be determined, said Dumoulin-Smith, is “Can you rationalize this [nuclear] business?”
Safety risks?
According to Raymond Shadis, technical adviser for the New England Coalition (NEC), an antinuclear group, the industry average for staffing a nuclear plant is one employee per megawatt of power generated.
Laying off 30 employees from the 605-megawatt plant will keep Entergy in line with the industry average, he said.
Whether layoffs will affect safety depends on which positions are cut, he said.
As a cautionary note, Shadis said, “Entergy never sings the same song with the same lyrics twice.”
The company constantly changes its mind and does what it wants to do, he added.
Citing recent problems with radiation detectors, Shadis said the company gave at least four explanations for settling on the detectors being thrown off by an electrical disturbance.
But, said Shadis, “It costs money to do a proper root-cause analysis.”
Shadis said he generally holds that despite the “extreme economic pressures” facing the company, laying off employees was not a good move.
Although the layoffs are across the board, Young said Entergy has taken care to not cut employees in departments charged with daily plant operations.
The layoffs won't affect reliability or safety, he said.
The job cuts mean the positions will go away, Young said. Some of the positions are filled. Others are vacant and will be eliminated as well.
He said he anticipated that attrition would claim additional positions in 2014 and 2015, though no additional layoffs are planned.