UPDATE: NY Ruling On Entergy Nuclear Spin-Off Possible In Jan

New York regulators will decide in January or later on Entergy Corp.'s (ETR) plans to spin off five of its nuclear power plants, falling short of the company's schedule.

Two state administrative law judges in a ruling released late Friday wrote that a request by Entergy for a November decision is not feasible. A decision in January is possible, but could be delayed, the judges wrote.

The New Orleans-based power company has been looking to create the nation's first stand-alone nuclear power company for more than a year and a half. The deal was stymied by the global credit freeze as Entergy needs to access billions of dollars in new debt to create the company, to be called Enexus Energy Corp. A return of activity in the market for below-investment-grade debt has Entergy again focusing on regulatory approvals needed for the spin-off, recently filing an amended financing plan with New York regulators.

In Friday's ruling, Administrative Law Judges Gerald Lynch and David Prestemon also commented on the amended plan, writing that the filing does not "effectively show" the spin-off is as capable of meeting financial obligations as Entergy. Further discovery is required on environmental issues as well.

The schedule detailed in the judges' ruling conflicts with Entergy's timeline. The company requested a November decision from the New York Public Service Commission so that the spin-off could be completed by the end of the year. Entergy needs approval from regulators in New York where two of the plants involved in the spin-off - Indian Point and James Fitzpatrick - are located.

The ruling stated Entergy suggested a less-preferable schedule of a mid-December ruling with the transaction closing at the end of January. Entergy in a statement said it continues to move forward on the spin-off as quickly as possible. Enexus would allow Entergy to separate its merchant nuclear power plant business that relies on market-based prices from its utility businesses that rely on regulated rates.

In New York, the law judges will eventually make a recommendation to the commission on the spin-off, with the commission having final authority. Objections to the judges' recommendation could further delay a commission decision.

Entergy shares recently traded down 41 cents to $81.37.

-By Mark Peters, Dow Jones Newswires; 212-416-2457; [e-mail]