NUCLEAR POWER PLANTS create interesting anomalies.

NUCLEAR POWER PLANTS create interesting anomalies.

February 01, 2003
NUCLEAR POWER PLANTS create interesting anomalies.

Entergy complained to the US Treasury Department in January that when Entergy buys nuclear power plants, the US tax rules require it to allocate purchase price first to securities held in any decommissioning fund that it inherits as part of the purchase.  Decommissioning funds are set up to ensure there will be enough money when the plant reaches the end of its life to pay decommissioning costs.  The fund should have no net value.  However, the problem is the US tax rules do not allow the purchaser of such a plant to take into account the expected offsetting liabilities, Entergy said in a letter the Treasury made public.

The result is the entire purchase price is allocated to securities in the decommissioning fund, leaving nothing to allocate to the power plant.

Entergy complained about the same problem last year.

Keith Martin