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NYPA's CEO clarifies details of the Power Authority's auction of nukes to Entergy.

Several comments are in order concerning the analysis by Dan Donoghue and David Haarmeyer of the pending sale of the New York Power Authority's Indian Point 3 and James A. FitzPatrick nuclear power plants to Entergy Corp. (, June 15, 2000, p. 90).

The authors substantially reduced their calculation of the sale's value in real dollars by assuming a high discount rate of 17-1/2 percent. They apparently did not account for the fact that Entergy's payments to NYPA will be backed by a letter of credit from an AA-rated bank. NYPA's financial adviser, J.P. Morgan Securities Inc., assumed a discount rate of 7-1/2 percent, a full 10 points less.

The article incorrectly stated that Dominion Resources had offered to pay an additional $50 million at closing of the agreement and had agreed to exclude a $25 million transfer payment from the Power Authority for employee benefits. Both utilities offered to pay $50 million at closing, and those offers did not change throughout the negotiating process. As for the transfer payments, the Power Authority had already accrued much of the money for the designated purposes, so the payments required by each of the utilities were not major factors in assessing the proposals.