Thursday, April 21, 2011

Entergy and Vermont Part 2: Shumlin Fights Entergy

The Entergy lawsuit is a story that will play out over time. Instead of attempting to look forward very far, I thought I would look around a bit at the issues, and even look backward. The second of a series of posts.

The Governor and the Attorney General Are Ready for Battle: Looking Around

Entergy filed a lawsuit to keep Vermont Yankee open, as I described in previous posts. Of course, Shumlin vowed to fight the lawsuit.

Aside: If you read the title of Shumlin's press release, you will note that Shumlin thinks Vermont is being sued by Entergy Louisiana, a transmission and distribution utility that serves the Gulf States. Discussing that fact would be a different blog post. End Aside.

Shumlin does plan to fight. The Brattleboro Reformer quoted William Sorrell, the Attorney General (AG) in the following passage:

Attorney General Bill Sorrell said his office has been preparing for well over a month for the possibility that either Entergy would be suing the state or it would continue operating the plant, forcing the state to sue Entergy.

"We've known this was going to end up in court," he said. "The governor authorized us to get more resources, both in staffing and expert witnesses. We've got a lot of work to do, but we're not scrambling woefully behind."

Emphasis added by blogger.

Ready for Battle: Looking Backward

In the past, Shumlin had infinite resources to fight Vermont Yankee. He pulled resources from "The Bank of Entergy". Yes, Entergy paid the costs for Shumlin to fight Entergy.

By law, Entergy is required to pay all the expenses involved in its application for a Certificate of Public Good. For example, when the legislature wanted a Public Oversight Panel, the panel was authorized, and the panelists were paid at $300 an hour each. This was no expense to the state, and no problem for Shumlin. These costs were passed on to Entergy.

Here's a link to one of the Vermont contracts about Vermont Yankee. This contract is with Fairewinds, Arnie Gundersen's company. This isn't a contract for the Public Oversight Panel; it's a contract for the Joint Fiscal Office. On page 2, you can see the billable rate as $185/hour. At the top of attachment A, you can see that the "expenses shall be allocated" to the "company or companies involved in those proceedings" (that is, to Entergy).

Despite much searching, I have not been able to find the contracts for the Public Oversight Panel. However, I am still looking and emailing people in the various state offices. I did get a helpful email response about the Public Oversight Panel contract yesterday, April 20, from Sarah Hofmann, Deputy Commissioner of the Vermont Department of Public Service. Here's a quote from an email Ms. Hofmann sent:

The compensation was set jointly as per the statute by, "the speaker of the house, the president pro tempore of the senate, and the secretary of administration." Act 189 at Sec. 8. You are correct the compensation was set at $300 per hour for the POP members. David Lochbaum only accepted his expenses and not any hourly compensation.

The costs were billed-back to Entergy as per the statutory language of Act 189 which stated, "The compensation and costs incurred by the public oversight panel shall be charged to the petitioner for a license extension under the provision of 30 V.S.A. §§ 20 and 21.” Act 189, Section 9.

In other words, when the Joint Fiscal Office set a price for Gundersen's services, it was $185/hour. When legislators, including Shumlin as President Pro Tem, set a price for Gundersen's services, it was $300/hour. In either case, they were spending Entergy's money.

As far as I can tell, from Shumlin's point of view, Entergy supplied as much money as Shumlin wanted, as long as Shumlin could say the costs related to Entergy's request for the Certificate of Public Good.

Ready for Battle: Resources?

Now, Entergy is suing Vermont, and the state will have to pay for its own expert witnesses and lawyers. Shumlin has authorized "more resources" for the fight. What will be the cost of these "more resources"? Will the lawyers and expert witnesses be paid as they were on the oversight panels during the hearings?

There might be a lot of money needed, over a long period of time. Attorney General Sorrell is not expecting a quick trial. To quote the Reformer article again:

Despite which way the federal judge rules, Sorrell said he expected the case to wend its way to the federal appeals court in New York City and most likely to the U.S. Supreme Court.
"I would be shocked if the litigation ended in district court," he said.

I'm not the only one worried about this. The State Auditor, Tom Salmon, wrote an open letter in which he asked:
  • How much is this defense expected to cost? Is it budgeted?
  • How much outside expertise will be required to be hired?
  • Had this matter been directed to the Public Service Board, would the costs of that process incurred by the state be billed back to Entergy?

Ready for Battle: The Future?

Every lawsuit is a horse race, to some extent. You don't know who won until it's over.

For this race, Shumlin plans to spend millions or tens of millions of dollars. We are talking about:
  • expert witnesses,
  • more legal resources
  • arguing the case up to the Supreme Court

All to close down Vermont Yankee. We only have 600,000 people in Vermont. I don't think they are going to be eager to support these millions or tens of millions of dollars.

Right now, teachers are being laid off, highway funds are being cut, the state has troubles. The budget deficit is about a hundred million dollars. Shumlin has said "no new taxes" but he plans to raise over twenty million by taxing medical providers and dentists. This is not making anyone happy.

It's a bad time to "authorize resources" for a court battle to shut down a major employer.

The Bank of Entergy

I don't think Shumlin really understands that the game has changed. The "Bank of Entergy" is closed to him. It was open for years, after all, and paid promptly for anything related to the Certificate for Public Good. But now there's a lawsuit, not a procedure before the Public Service Board. Now, Shumlin can't do whatever he wants and bill it to Entergy. His only source of funding right now is the taxpayer.

Shumlin may be about to have a learning experience.

Note about the budget deficit in Vermont. For a while I read $120 million. Then it was $100 million. My newspaper this a.m. says $176 million. Anyhow, it's big for a state of 600K people. We don't need to add to it by arguing complex cases up to the Supreme Court, especially when "winning" Vermont's case would mean shutting down a major employer and taxpayer.


Tom Murphy said...

The State should defend its laws in court or abolish them. I don't think the cost should be an issue.

Turning this around, how would you feel it there was a VT law that you support which was not defended by the State government due to the costs?

So I wonder if this argument of costs only has weight based on how you view the underlying law being contested?

As always, thank you for your excellent blog.

Tom Murphy

Simha said...

Well written Past..Present..Future article. I disagree on your opinion though. First of all keeping VY open another 20 years on account of 200 VT jobs and 400 out of state jobs is a little ridiculous. VTs use of $$$$ is all you address. Why don't you address Entergy's inability to even secure enough funds to pay for temporary fuel storage, continuously trying to use the already deficient decommissioning funds to cover it, or their illegal use of the connecticut river as a cooling tower because they are penny pinching their "profits" and don't want to use their cooling towers, or when in '09 when they postponed buying a vital part to fix a leak in the condenser, on and on VY $$$$ "green" rated operational efficiency "sustainable" "low cost" production of electricity. This is an issue of Ethics and responsibility to the Future of Vermont not present economics.

The NRC has never turned down the request of a nuclear power plant to be relicensed in the United States.

What are we supposed to do with all this radioactive waste? You want to make more and more, there is NO known way to securely contain spent fuel for the time it takes to stabilize.

Anonymous said...

Your headline should read, "Entergy fights Vermont".

Here's yet another reason why we should say no to VY:
BERLIN - From the U.S. to Japan, it's illegal to drive a car without sufficient insurance, yet governments have chosen to run the world's 443 nuclear power plants with hardly any insurance coverage whatsoever.

Japan's Fukushima Dai-ichi nuclear disaster, which will leave taxpayers there with a massive bill, highlights one of the industry's key weaknesses — that nuclear power is a viable source for cheap energy only if plants go uninsured. The plant's operator, Tepco, had no disaster insurance.

Governments that use nuclear energy are torn between the benefit of low-cost electricity and the risk of a nuclear catastrophe, which could total trillions of dollars and even bankrupt a country.

Meredith Angwin said...

Tom. Thank you for thanking me for my blog. I work hard to make it as accurate and readable as I can manage. A comment like yours makes my day!

I do disagree though, about cost being an issue. It's always an issue. Everyone, including states, has to set priorities with limited funds. Of course, I oppose this use of funds because I support VY. BUT, I am also very suspicious of most Attorney Generals. I think many of them chose their battles on the basis of what will have high visibility for their political ambitions, not what is best for their state. In my opinion, this case is at least partially an example of that sort of choice. "Gimme the money and I will argue it up to the Supreme Court and everyone in the state will see my name in headlines, all the time!"

Meredith Angwin said...

Simha. I also thank you for your comment. You make many assertions, and it would take me too long to respond to them all. But I want to respond to at least one of them.

Vermont Yankee uses its cooling towers to keep its discharge below the water temperature limits set by the state. It walks a difficult line there, because when the weather is hot, the grid needs LOTS of power. But those are also the days that Vermont Yankee needs to make less power to meet its water temperature requirements. So the plant gets pulled both ways, one way by the grid operator and the other way by the water regulations.

The plant ALWAYS meets the water regulations, and saying it doesn't do so is just plain not true. Now, you may believe those regulations are too lenient. In which case, you should work toward getting them changed. VY meets the regulations that are in place, every year, every day, all the time. Saying Vermont Yankee runs in an illegal manner about water discharges in order to "pinch pennies" is false. Period.

Meredith Angwin said...

Anonymous...I almost dumped this comment. It was anonymous, it started out by telling me what to do "Your headline should read" and it had that weird thing about dateline Berlin. What was that, huh? A letter to the editor that you had published but you don't want to put your name here? However, I printed your comment because I want to talk about insurance.

I have no idea what the insurance rules are in Japan, which has a very different legal system from ours. In America, each plant must buy $375 million from private insurers. If an incident costs more than that. all the plants are required to kick in over $100 million to a joint pool, making a total of about $13 billion in insurance available to the area with the accident.

In comparison, if a hydro plant breaks, good luck! $500 million in damages in Idaho netted $200 million in LOANS, not recompense.

I encourage you to read about the Price Anderson Act (which most people think is a totally government-funded "subsidy") here.