The company charged with the dismantling of Zion nuclear power plant announced Tuesday that it will restructure to reduce costs and improve profitability.
Utah-based EnergySolutions is taking apart the plant – which sits on the shores of Lake Michigan and has been closed since 1998 – in a process that is expected to take 10 years. In an unprecedented arrangement, owner Exelon Corp. handed over the keys to the plant, along with an approximately $800 million trust fund paid into by ratepayers, to handle the decommissioning.
The news follows a recent sea change in the executive suite. In June, EnergySolutions suddenly replaced its chief executive and chief financial officer for the second time in two years, causing the company’s stock to plunge 55 percent and its credit ratings to fall two notches amid a weak earnings forecast.
According to a regulatory filing, the company is reorganizing its business reporting units, reducing the footprint of its facilities and will lay off approximately 265 people across the company by the end of 2012. As a result, the company said, it expects to reduce expenses by about $35 million annually, not including restructuring charges, which could be as much as $16 million in cash.
The Zion project has come under recent scrutiny over concerns about a dwindling cushion between the costs of decommissioning and the money available in the trust fund. The project is protected by a $200 million letter of credit, which rolls over to Exelon for the dismantling, if EnergySolutions is unable to pay for any budget overruns with cash or debt.
A spokesman for EnergySolutions was not immediately available for comment but said recently that the Zion decommissioning was ahead of schedule.
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