Monday, April 18, 2011

Entergy Files Suit

This morning, Entergy filed suit to keep the plant open by requiring Vermont to honor its signed contracts. The State of Vermont signed a Memorandum of Understanding with Entergy in 2002. The State has attempted to amend that contract on a one-sided basis. Entergy's lawsuit was described in a Burlington Free Press article this morning. You can also download the filed lawsuit here.

According to the Memorandum of Understanding (page 6) the parties "espressly and irrevocably decree that the Board (Public Service Board) (1) has jurisdiction under current law to grant or deny approval of operation of VYNPS beyond March 12, 2011."

However, in 2006, the legislature voted that the PSB could not issue such a certificate without legislative approval (Act 160). This was basically a one-sided change to a written contract. There are tons of precedents that one side cannot change a contract without the other side's approval. Let's see the list of such precedents.
  1. There's the Parol Evidence Rule for ordinary contracts. The written contract is the ruling document.
  2. But this is a state, right? According to the Supreme Court, even states can't break contracts. This goes back to the Fletcher v Peck case of 1810, where a state attempted to pass a law that invalidated a contract the state had already signed. In 1810, the Supreme Court said the state could not do that. The precedent stands. (Last year, I noted this precedent in my blog post The Day After.)
  3. Finally, there's the U.S. Constitution. According to Article 1, Section 10, no state shall pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts.
According the the Vermont Yankee press release, there are further precedents, not closely related to Act 160. (Note, the precedents cited above are my opinions, not taken from Entergy documents.) Here's a quote from the Entergy press release about some nuclear and interstate commerce law precedents.

  • Atomic Energy Act Preemption. Under the Supremacy Clause of the U.S Constitution, the U.S. Supreme Court held in 1983 in a case involving Pacific Gas & Electric that a state has no authority over (1) nuclear power plant licensing and operations or (2) the radiological safety of a nuclear power plant. In violation of these legal principles, Vermont has asserted that it can shut down a federally licensed and operating nuclear power plant, and that it can regulate the plant based upon Vermont’s safety concerns.
  • Federal Power Act Preemption and the Commerce Clause of the U.S. Constitution. Vermont is prohibited from conditioning post-March 2012 operation of the Vermont Yankee Station on the plant’s agreement to provide power to Vermont utilities at preferential wholesale rates. The Federal Power Act preempts any state interference with the Federal Energy Regulatory Commission’s exclusive regulation of rates in the wholesale power market. The Commerce Clause of the U.S. Constitution bars a state from discriminatory regulation of private markets that favors in-state over out-of-state residents.

The Governor

Not surprisingly, it comes down to Shumlin again.

Another quote from the press release:

In a meeting with Entergy representatives on March 30, 2011, the governor reiterated his firm opposition to the operation of Vermont Yankee after March 21, 2012.

Ah well. At least he's consistent, I suppose. He campaigned against Vermont Yankee, and he was losing. Then he began campaigning on reproductive rights and healthcare and sneaked to victory.

Was I Behind the Curve on This?

Sometimes, I think I am the last person to know these things. Do you remember this chart of Vermont's Committed Resources that I put in my blog about a week ago? The chart comes from a Department of Public Service presentation from March of this year. Note that Vermont Yankee electricity supply doesn't end on March 21, 2012, but continues for a while. If there's a lawsuit, the plant can almost certainly keep running while the suit continues. Why didn't I notice this aspect of the chart before?

Update: Joffan is quite right in his comment. This chart shows VY supplying similar amounts of power in 2010 and 2011, one-fourth that amount of power in 2012, and no power in 2013. I misread it. However, I am going to leave the chart in place because it shows how Vermont depends on Vermont Yankee (2000 out of 6000 GWh) and what a big gap would need to be filled.


Anonymous said...

I don't see how 160 changes the MOU. The nature of the MOU remains the same, the PSB must issue a certificate of public good for VY to remain in operation.

What has changed is the mechanism by which the PSB issues a certificate.

Am I missing something?

Meredith Angwin said...

I am sure that the state will argue that Act 160 doesn't change the M O U. Entergy will argue (and I think correctly) that it signed up to be evaluated by the PSB, and Act 160 materially changes that contract, and is therefore illegal.

All lawsuits are like horse races. You don't know who will win until it is over. I think Entergy has a strong case, but they still may not win.

By the way, I only publish maybe one-fourth of the anonymous comments I get. So if others are looking here for their comment, and they sent it in anonymously, it is probably in the bit bucket. Snarky anonymous comments are always dumped.

Joffan said...

I don't think the DPS presentation implies continued operation for Vermont Yankee past March 2012. It graphs one point per year; 2010 and 2011 are similar values, 2012 is 1/4 the value and 2013 is zero.

Meredith Angwin said...

Joffan. You are right.

Robert Hargraves said...

"a small college ... and yet there are those who love it"

Local Dartmouth buffs should delight in realizing that precedent for overturning the Vermont legislature in favor of Vermont Yankee is none other than the famous Dartmouth College case, argued by Daniel Webster before the US Supreme Court. Wikipedia tells us:

In 1815 ... the legislature of New Hampshire attempted to alter Dartmouth's charter in order to reinstate the College's deposed president, placing the ability to appoint positions in the hands of the governor...

The Court ruled that Dartmouth College's corporate charter qualified as a contract between private parties, the King and the trustees, with which the legislature could not interfere. ...the contract is still valid because the Constitution says that a state cannot pass laws to impair a contract.

Don Worth said...

Is the Good Life Possible with Vermont Yankee?

Vermont has “pro-nukes,” “anti-nukes” and those residents not seeming to fit in either group…perhaps there’s room for another category entitled, “anti-Vermont Yankee?” Some Vermonters have said they’re not against nuclear power, (if) the leaks can be stopped, the spent fuel rod storage problem can be solved and the structures can be fabricated to withstand all possible weather anomalies.

Vermont Yankee (VY) is located in the town of Vernon which sits in the southeastern corner of the state at the junction formed by the Connecticut River and the Massachusetts border, and was once actually a part of the town of Hinsdale, NH. Purportedly, Vernon’s 2141 people have even discussed seceding from Vermont (to either NH or MA) if the Legislature refuses to grant VY a license extension beyond 2012.

VY, operating since 1972 and employing about 650 people, is the state’s largest power source with a nominal 540 megawatt boiling water reactor, and is one of five operating nuclear plants in New England. In 2002, VY was sold by eight New England utilities to Entergy Nuclear Vermont Yankee, LLC, a subsidiary of the Entergy Corporation of New Orleans, the second largest nuclear generator in the US.

In February of 2010, the VT Senate voted 26-4 against allowing the Public Service Board (PSB) to consider re-certifying VY after 2012, citing radioactive (tritium) leaks, misstatements in testimony by plant officials, a cooling tower collapse in 2007 and other problems. In the event the PSB refuses to issue them a Certificate of Public Good, VY could elect to continue to operate and the case would be decided in court, since the federal Nuclear Regulatory Commission (NRC) has recently granted a license renewal to operate until 2032.

So, where does all this see-sawing leave the customer who’s concerned about how high electric bills will be if VY closes? Since the Vernon plant supplies about a third of the state’s total power, how will that amount be replaced? The average Vermont Electric Cooperative (VEC) member would pay between 50 & 60 cents extra each month if VY closes. Replacement power will have to be purchased from the New England grid, which isn’t the most cost-effective way to obtain electricity, but it appears to be the best option right now.

If Vermont Yankee’s past record predicts its future and safety modifications aren’t made, many Vermonters feel it should be closed permanently. Most VEC members seem to agree. Perhaps divining its prospects, two days after Peter Shumlin became the new VT Governor, Entergy put Vermont Yankee up for sale.

(Don Worth is the Director for District 1 on the VEC Board of Directors and is running for re-election in May. The foregoing does not express the opinion of VEC or its Board.)

Meredith Angwin said...

A note on Vermont Electric Cooperative.

Vermont Electric Cooperative is the utility that completed negotiations with Vermont Yankee in early April, but has not yet approved the contract. I blogged about this on April 6, in Press Releases and Signalling: Entergy and Vermont Electric Cooperative