Vermont Yankee: Where Activists, Lawyers And Politicians Failed, the Market Succeeded
August 29, 2013
Anne Galloway / Vermont Digger
The Vermont Yankee nuclear power plant has been the subject of one of the longest and most intensive anti-nuke campaigns in the region. Even before the plant was constructed in 1972, anti-nuclear activists protested the project. After the facility began to show signs of aging (a collapsed cooling tower, a transmission fire and tritium leaks), the state's Democrats and Progressives joined the anti-nuclear protestors and took up the cause, too.
Vermont Yankee: Where Activists, Lawyers
And Politicians Failed, the Market Succeeded
Anne Galloway / Vermont Digger
(August 28, 2013) -- The Vermont Yankee nuclear power plant has been the subject of one of the longest and most intensive anti-nuke campaigns in the region. Even before the plant was constructed on the banks of the Connecticut River in 1972, anti-nuclear activists demonstrated against Vermont Yankee with a fervor that bordered on religious conviction.
Anti-nuke groups formed -- the New England Coalition, Citizens Awareness Network, Shut It Down Affinity Group and the Safe and Green Campaign -- and environmental organizations like VPIRG, the Vermont Natural Resources Council and the Conservation Law Foundation took up the cause, too. From the 1970s and 1980s and again in the early 2000s, Vermont Yankee attracted a wide range of activists who pressed for one ultimate goal: closing the plant.
When a new out-of-state owner -- Entergy Corp. -- purchased the Vernon plant for $180 million in 2002, and the facility began to age and show signs of deterioration (including the collapse of a cooling tower, a transmission fire and tritium leaks from underground pipes), activists ramped up the outrage, and eventually politicians -- the state's Democrats and Progressives -- took up the cause, too.
In 2010, Sen. Peter Shumlin, a Democrat from Windham County where the plant is located, engineered a vote in the Senate to deny Entergy an opportunity to extend its license to operate beyond a predetermined shutdown date of March 21, 2012.
On Tuesday, the anti-nukers and Shumlin, who is now governor, got their wish: Entergy announced that they plan to close Vermont Yankee in October 2014.
Entergy officials insist the shutdown has nothing to do with the shenanigans of activists, political pressure, changes to state law, a hostile regulatory environment or the ongoing legal battles between the company and the state. It has everything to do with larger economic forces, namely the availability of cheap power from natural gas and the increased cost of maintaining an aging nuclear power plant as the Nuclear Regulatory Commission implements new standards in the wake of the Fukushima accident in March of 2012.
Bill Mohl, Entergy's president of wholesale commodities, told reporters packed into a room at the Vermont Yankee administrative offices that the plant was no longer financially viable, and so the company had no choice but to close the plant.
"This decision was based on the economics of the plant, not operational performance, not litigation risk, nor political pressure. Simply put: The plant costs exceed the plant revenue," Mohl said. "After careful analysis, it becomes painfully clear that Vermont Yankee is no longer financially viable."
Mohl pointed to three key factors that led to the plant's financial disposition. First, the rapid growth of low-priced natural gas is weighing on the nuclear industry. Second, the cost of maintaining the 41-year-old, single unit plant is prohibitively high, as Entergy has invested more than $400 million in Vermont Yankee since 2002. Lastly, Mohr said Vermont Yankee cannot compete in New England's wholesale market because of flaws that artificially keep power prices from other sources low.
Entergy's decision to shut down Vermont Yankee came as something of a surprise to many activists, politicians and business leaders in Vermont, but Wall Street watchers have been anticipating the possible closure of the plant for some time.
Last month, Entergy laid off 800 workers nationwide and cut 30 positions in Vernon; shares of Entergy dropped more than 50 percent from 2012 to 2013; and the fair market value of the Vermont Yankee plant fell by 69 percent, from $517.5 million to $162 million earlier this year.
UBS Securities downgraded Entergy Corp.'s stock from "neutral" to "sell." The Swiss financial services firm also projected the closure of an Entergy nuclear facility in 2013, saying "Vermont Yankee is the most the most tenuously positioned plant."
In addition, Entergy would have had to have invested hundreds of millions of dollars in the plant next year in order to keep the facility operating. Arnie Gundersen, a nuclear engineer and former member of the public oversight commission for Vermont Yankee, says they needed to replace or repair the condenser, which would cost $100 million, and they had to plow another $100 million into the plant in modifications to meet new federal requirements that were put in place after the Fukushima accident took place in March 2011.
Vermont Yankee is Entergy's lowest capacity plant, and it's the only facility executives say they are currently planning to decommission. Mohl said Entergy's board decided to close the plant Sunday night and officials spoke to Gov. Peter Shumlin on Tuesday morning. The company pledged to work with the state to close the plant safely and in a manner that is best for local communities.
The announcement is a watershed moment for the state. Though no power from the plant is being sold to utilities in Vermont now, for decades the facility was the state's No. 1 source of baseload electricity. Over the last few years, Vermont Yankee's rates, which had been locked in at 4 cents per kilowatt-hour, suddenly increased and were no longer as competitive.
At the same time, natural gas flooded the electricity market and lowered costs throughout New England. The state's largest utility, Green Mountain Power, struck a favorable deal with Seabrook, a nuclear power plant in New Hampshire, and Hydro-Quebec, for access to low-cost electricity from a series of megadam projects in Canada.
At the same time, in an attempt to meet the state's ambitious renewable energy goals, utilities invested in local wind and solar projects.
The shutdown could also effectively neutralize the third rail of Vermont politics. Vermont Yankee has been politically polarizing for decades, and the rift between conservatives and liberals over safety and environmental impacts of nuclear power has deepened over time.
Republicans have typically supported the plant, while Democrats and Progressives have more often backed the arguments of anti-nuke opponents. Shumlin ran for governor in 2010 on a shut down Yankee platform (as did his Democratic primary opponents), and a tritium leak at the plant that year made Vermont Yankee an easy target of criticism.
Though Shumlin has long had an antagonistic relationship with Entergy officials, in a press conference on Tuesday, he struck a conciliatory chord, pledging to work with the company to ensure workers get placed in new jobs.
"As you know, Entergy Louisiana this morning made announcement it is shuttering the Vermont Yankee nuclear plant in October 2014," Shumlin said. "This is the right decision for Vermont and the right decision for Vermont's clean energy future."
The governor compared the plant shutdown to a base closing, and he used phrases from his tried-and-true election stump speech: Shumlin says he sees the project as an "opportunity to grow jobs and economic opportunity" and as an opportunity for the state to continue to foster renewable energy.
About a dozen organizations -- left, right and center -- weighed in on the news, and press releases from the groups reflect the divide between partisans. Environmental and activist groups praised Entergy's decision, while most business groups bemoaned the job losses associated with the closure.
Municipal officials say the layoffs will continue to erode the economy of southern Vermont in general and Windham County in particular. Forty percent of 650 workers are from Vermont. Local residents anticipate significant economic blowback from the closure at a time when Windham County is already experiencing population losses and falling incomes.
While Entergy and state officials say the plant will be fully funded until the plant closes, they wouldn't say how many workers would be laid off in the last quarter of 2014; one nuclear expert said he would anticipate that about half of the staff would receive pink slips once the plant is no longer operating.
Rep. Mike Hebert, R-Vernon, said the closing will have an irreparable impact on local towns.
"It's going to be devastating to our communities because of the volunteers," he said. "Our local rescue is predominantly Yankee employees, the volunteer fire department is predominantly Yankee employees, just about every charitable organization in the county has received something from Yankee.
"It will be a brain drain," he added. "It's not just the economic impact."
The economic impact will be significant. Since 2007, the Windham Regional Commission, which is the county planning commission, has been preparing for the one of the area's largest economic engines to turn off.
"There's a significant impact to having those very highly paid jobs," Hebert said. "Those are the people that buy your cars and eat in your restaurants."
Entergy workers make roughly $90,000 a year, and the company contributes nearly $100 million to the state's economy through wages, charitable donations and payments in local and state fees and taxes. Once Vermont Yankee closes these sources of income will begin to dry up.
A 2012 report from the Southeastern Vermont Economic Development Strategies predicts there will also be a 5 percent to 15 percent major declines in real estate value.
Gundersen says when the plant stops operating next year, it's likely that Entergy will cut the workforce in half. Those who remain will monitor the facility for five years until the fuel cools down. Then the company will drain the spent fuel pool, at which point it will need about 150 workers to keep an eye on the facility. When Entergy decommissions the plant, i.e., dismantles it sometime before 2074, it will need about 1,000 workers on site for about seven years, Gundersen says.
"The economics of nuclear are driving this," Gundersen said. "At Vermont Yankee it takes 650 people to get the same power out of gas plant which takes 100 people."
Five nuclear plants in the United States have closed this year, he said, because it's no longer as profitable to generate nuclear power. People are conserving energy and utilities are increasingly reliant on natural gas, Gundersen says.
"It costs $1 billion to build a gas plant, to build a nuclear plant it costs $10 billion, plus you have to have a big staff, plus gas is so damn cheap," Gundersen says. "The net effect is these marginal old plants that have modifications in front of them are in jeopardy."
Mothballing Vermont Yankee?
Under federal law, Entergy has up to 60 years to decommission the plant. In the interim, the company can mothball the plant, leaving all of the buildings, equipment and highly radioactive spent fuel in place, according to Neil Sheehan, a spokesman for the Nuclear Regulatory Commission.
Sheehan says the company could decide to dismantle the facility as soon as the spent fuel has cooled. Vermont Yankee has 1,507 fuel rod assemblies submerged in a spent fuel pool that was originally designed to hold about 350.
Spent fuel must be kept under water in order to prevent the Zirconium cladding (the metal tubes that contain the fuel pellets) from igniting. Vermont Yankee's spent fuel pool, located in a metal warehouse structure, has more than five full reactor cores worth of radioactive material.
It typically takes about 10 years to deconstruct a nuclear power plant, Sheehan said.
Entergy has made it clear that it wants to mothball the plant, put the spent fuel in concrete "dry casks," and wait at least several decades before dismantling the plant.
Two years from the plant shutdown, the company has to submit a plan to the NRC detailing when it plans to remove the infrastructure and finish putting the fuel in dry cask storage.
Either way, the fuel will likely remain on site for decades because the federal government, which had guaranteed nuclear operators it would create a national repository for the waste, failed to secure Yucca Mountain in Nevada. For the time being, there is no other option but to keep high-level waste on the Vermont Yankee site.
Chris Campany, director of the regional planning commission, says it would be best for the region's economy if Entergy used the DECON method of decommissioning, which calls for a full dismantling of the plant in a shorter time frame.
"Based on our research, that would be the softer landing because you retain those legacy employees for a longer period of time," he said. "There would be value to Entergy to have those people stay on to advise how to take the plant apart."
The company, however, wants to effectively mothball the plant for as long as 60 years without disposing of the plant infrastructure or dealing with the spent fuel rods now sitting in a large pool of water. Jeff Forbes, Entergy vice president of nuclear operations did not indicate when the fuel would be moved from the plant's spent fuel pool to dry cask storage. (Many nuclear experts consider dry cask storage to be a safe method of keeping radioactive waste.)
The US Department of Energy would then remove the fuel at an undetermined point in time, and Entergy would completely dismantle the site. In the interim, workers would secure and monitor the site.
Campany wants Entergy to begin moving spent fuel from its on-site spent fuel pool to dry casks during operation, so that the plant can absorb those costs in its operating budget and have more decommissioning funds up front to dismantle the plant more quickly.
"The company will establish a decommissioning organization that will be responsible for planning and executing the safe decommissioning of the facility," he said. "Decommissioning is a long process that could take decades. Once the plant is shut down, workers will defuel the reactor and place it in SAFSTOR, which is an NRC [Nuclear Regulatory Commission] approved process."
But the company is unlikely to begin transferring the spent fuel into long-term storage before it has officially begun the decommissioning process. That's because Entergy doesn't want to eat into operating revenues (and profits) -- it wants to tap the decommissioning fund instead, Gundersen says.
The decommissioning fund is worth about $580 million. In 2012, Entergy completed a decommissioning cost analysis for Vermont Yankee that projects SAFSTOR could cost more than $1 billion.
Entergy has indicated it wants to wait until the decommissioning fund builds up before it begins the expensive process of dismantling the plant.
"We're $400 million short," Gundersen says. "If the stock market doesn't collapse, we could get there in 20 years."
Gundersen says the state has very little leverage to speed up the decommissioning process. The only way state officials could hasten it is by abandoning the notion of converting the Vermont Yankee compound into a greenfield for renewable energy (as Shumlin suggested at his press conference), and accepting the Nuclear Regulatory Commission's less stringent plan for decommissioning, he said.
On Tuesday, neither Mohl nor Forbes would provide specifics on decommissioning costs or future job numbers. They said Entergy would conduct a detailed analysis to determine how best to decommission the plant.
Until the plant closes, Mohl said, the plant will be fully staffed.
"Then we expect after we shut down the plant and defuel the reactor, we would be able to reduce the workforce by some amount," he said. "The actual numbers will depend on what plan we have, and we'll have to determine that at that time."
Andrew Stein contributed to this report.
Entergy Focus Under New CEO
May Shift to New York Nuclear Fight
Eileen O'Grady / Reuters & Vermont Digger
HOUSTON (August 27, 2013) -- Entergy Corp's (ETR.N) decision to shut its Vermont nuclear plant begins the final chapter in a battle with politicians seeking to close the station and may shift the firm's focus to the larger Indian Point nuclear plant in New York.
Entergy on Tuesday said it will shut the 620-megawatt Vermont Yankee by the end of 2014, saying the reactor is no longer economical to operate with current low power prices and rising regulatory costs.
The decision will end legal appeals and regulatory disputes and highlights the actions of Entergy's new chairman and chief executive, Leo Denault, who succeeded J. Wayne Leonard as CEO in February. Denault previously served as Entergy's chief financial officer for nine years.
Vermont Governor Peter Shumlin cited a "constructive" call with Denault on Tuesday and said he hopes to work with the new CEO going forward.
The past is the past; we're now dealing with the future and he pledged to work together as a team to get the best outcome we possibly can," Shumlin told reporters.
In New York, Entergy also faces a showdown with politicians, regulators and environmental groups in its effort to keep the two Indian Point reactors running after their current licenses expire later this year and in 2015.
New York Governor Andrew Cuomo opposes Indian Point's license renewal because of the plant's proximity to the New York City metropolitan area that is home to 19 million people
At Cuomo's direction, state power agencies are pursuing plans to modernize the New York grid so that it can operate without the 2,037-MW Indian Point plant.
Denault told Reuters the company's current Indian Point strategy is to continue the safe, reliable operation of the plant located 40 miles north of New York City, but he remains open to talks to determine the plant's future.
Like Vermont Yankee, Indian Point also faces the double economic challenges of falling wholesale prices and uncertain capital costs to deal with changing nuclear regulatory mandates, Denault said.
Entergy is "open to a resolution with the state that makes sense for us and for the objectives of the state," Denault said.
However, the much larger Indian Point plant -- which can supply one-quarter of the power used in New York City and Westchester -- operates in a different power market and can take better advantage of scale, Denault said.
"It's a different animal," he said.
Indian Point also contributes to the local economy with high-paying jobs and taxes, supplying low-cost power that releases no carbon dioxide or other pollutants, Denault said.
He said he wants to make sure Entergy has recovered the large investment it has made since purchasing the first Indian Point reactor in 2000 from the state power authority.
Additional reporting by Scott Malone in Boston. Editing by Andrew Hay)
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