Olga Peters of The Commons contributed to this report.
Originally published in The Commons issue #213 (Wednesday, July 24, 2013).
BRATTLEBORO—Entergy Corp., which owns the Vermont Yankee nuclear plant, is preparing to cut back its labor force in an effort to reorganize the company.
“We do expect workforce reductions to be one result of this initiative,” national spokesman Chanel Lagarde said in a statement last week. “We don’t have final specifics at this time regarding who or how many employees will be affected. We remain focused on all our key stakeholders throughout this process, and we will deal fairly and communicate openly and honestly.”
A source inside the Vernon plant says managers are telling workers that the company could lay off 10 percent of the facility’s roughly 650 workers.
This news comes shortly after Entergy announced that it anticipates decreased earnings in the second quarter of 2013, dropping from $2.11 a share last year to an estimated $1 per share. Representatives of the Louisiana-based company said in a news release that the decrease is due to “substantially higher income tax expense.”
Entergy also spoke about its “human capital imperative” in its 2013 first quarter earnings report.
According to Entergy corporate spokesman Michael Burns, the company is engaged in a broad re-evaluation.
“We have a number of company-wide strategic imperatives underway examining how we meet both the challenges and opportunities of today’s business realities,” wrote Burns in an emailed statement. “One specific initiative is focused on finding ways to increase efficiencies in all parts of our business. We do expect workforce reductions to be one result of this initiative.
“We don’t have final specifics at this time regarding who or how many employees will be affected. We remain focused on all our key stakeholders throughout this process, and we will deal fairly and communicate openly and honestly. We will not compromise safety, security, reliability, customer service, or compliance as we move forward,” concluded Burns’ statement.
According to a transcript of a first quarter earnings call, Leo P. Denault, chairman, chief executive officer and chairman of executive committee, said re-organizing the company and its “human capital” component were cost-saving measures.
Denault pointed to some of the company’s financial concerns, saying, “As we have always done, we will work to maintain our solid financial footing even in light of the reduction in cash flow at EWC from low natural gas and power prices and markets which do not provide a fair market value for capacity due to poor market rules, and in some cases, face constant intervention by state regulators which suppresses the fair market value of these resources.”
In its 2012 annual and sustainability reports, Entergy documented its companywide re-evaluation.
As part of the evaluation, Entergy wrote in its sustainability report that it aimed to optimize the company through seven measures including re-evaluating the employee side of the business. Entergy’s review included benefit and compensation packages.
Mark Cooper, a senior economics fellow at Vermont Law School, published a paper last week entitled, “Renaissance in Reverse: Competition Pushes Aging U.S. Nuclear Reactors to the Brink of Economic Abandonment.” Cooper drew from the Wall Street reports of Moody’s, UBS, and Credit Suisse for his analysis.
“Economic reality has slammed the door on nuclear power,” Cooper concluded. “In the near-term old reactors are uneconomic because lower-cost alternatives have squeezed their cash margins to the point where they no longer cover the cost of nuclear operation ... In the long term new reactors are uneconomic because there are numerous low-carbon alternatives that are less costly and less risk (sic).”
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.”
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