Entergy Arkansas applied Dec. 20 at the Arkansas Public Service Commission for approval of a new “synthetic” rail car lease, covering cars needed to deliver coal to the White Bluff and Independence power plants.
Steven McNeal, a finance official at Entergy Arkansas and parent Entergy Corp., said there is a current lease ofr aluminum railcars that are used to transport coal to White Bluff and Independence. The original lease agreement (called the “Current Synthetic Lease”) was approved by the commission in a 2009 docket.
The equipment leased will be approximately 2,071 aluminum rotary dump high side gondola railcars with a 4,480 cubic foot capacity (level), manufactured and delivered by Johnstown America Corp. in 1995, and 256 similar specification railcars delivered in 2002, all of which are currently being leased under the Current Synthetic Lease.
The Amended Synthetic Lease will extend the Current Synthetic Lease with RBS Asset Finance for a new term of five years (20 quarters), with a new quarterly fixed rental factor, which includes principal and interest. This rental amount is subject to change until the lease amendment commencement date.
Entergy evaluated alternatives, such as purchasing the railcars in 2014 or allowing the Current Synthetic Lease to expire in 2015 and purchasing the railcars at that time. The evaluation indicated that refinancing the cars under the proposed RBS extension in 2014 provided net present value savings.