Oct. 9--BRATTLEBORO -- The Department of Public Service agreed Thursday to support Entergy's plan to spin off Vermont Yankee nuclear power plant into a new subsidiary called Enexus.

In July, the DPS urged the Vermont Public Service Board not to issue a certificate of public good unless certain conditions were met.

Those conditions included the status of the plant's condenser and its back-up power transformer, the decommissioning fund, on-site spent fuel handling costs and a power purchase agreement.

Most of those conditions were resolved, said Stephen Wark, spokesman for the DPS, except for the necessity of a power purchase agreement to guarantee Vermont residents get favorable electric rates if the spin off proceeds.

He called the lack of a power purchase agreement "a critical miss."

"However, the relicensing docket and activity before the Legislature remains open," said Wark. "And the Public Service Board is well positioned to deal with that as the negotiations continue."

Entergy, which owns and operates Yankee, has applied to the Nuclear Regulatory Commission to extend the operating license of Yankee for another 20 years, from 2012 to 2032.

In addition to NRC approval, Entergy must also receive a certificate of public good from the Public Service Board and the OK from the Vermont Legislature.

The CPG for the Enexus spinoff is separate from the CPG for continued operation.

"If Entergy has any expectation for

continued operation, it has to include a favorable purchase agreement," said Wark. "We would not support relicensure until such a time that there is a PPA that is favorable to Vermonters."

Vermont utilities, including Central Vermont Public Service and Green Mountain Power, are currently negotiating an agreement with Entergy.

Last year, Entergy announced it was planning to spin off five of its merchant power plants into a new subsidiary. Merchant power plants are those that sell electricity directly to the spot market and are not regulated by state agencies.

The intent of the spinoff is to separate the five plants from Entergy's regulated nuclear power plants and its non-nuclear production facilities. It is also intended to raise $3.5 billion through stock offerings to pay off outstanding debt incurred by Entergy and to reward stockholders, which include corporate executives.

The other plants involved in the spinoff are Pilgrim in Plymouth, Mass., Palisades in Michigan and Fitzpatrick and Indian Point in New York.