Green Mountain Power receives $17 Million in Revenue Sharing from Vermont Yankee

Vermont Yankee

A deal is a deal, so Green Mountain Power gets the money

In 2010, Howard Shaffer and I debated two nuclear opponents on the subject of whether Vermont Yankee should keep operating.  One of the opponents was a very accomplished debater. He stuck to his talking point. He constantly re-iterated: A deal is a deal.  In his view, Vermont Yankee had a "deal" to operate for 40 years, end of story.

He was wrong. The actual Vermont Yankee deal means that Entergy will send a $17 million dollar check to Green Mountain Power. This is revenue sharing for the plant's operation past 2012. Operation past 2012 and revenue sharing were part of the state's agreement with Vermont Yankee.

The Vermont Yankee deal was signed in the Memorandum of Understanding by which Entergy bought the plant in 2002.  This agreement included financial arrangements for Vermont Yankee if it operated after 2012.

The Revenue Sharing Agreement

According to the Memorandum, if Vermont Yankee sold power at prices greater that $61 MWh (6.1 cents per kWh) after 2012, then Entergy had to split the "excess" payments with the utilities from whom Entergy had bought the plant. This revenue sharing was planned to last for ten years, through 2022. The price of 6.1 cents per kWh is sometimes called the "strike price."  It is the price at which the revenue sharing part of the deal kicks in.

Despite all the heartache, lawsuits, local utilities proudly saying they buy no power from Vermont Yankee, local utilities refusing to buy power from Vermont Yankee--Entergy is sticking to its part of the deal. Last year, the price on the grid rose, the revenue sharing kicked in, and Entergy is sharing revenue.

Last week, Entergy wrote a letter to Green Mountain Power saying that Entergy would pay almost $18 million dollars in revenue sharing to the utilities. This  sum was for revenue sharing for March 2013 through March 2014.  Terri Hallenbeck of Burlington Free Press broke the story: VY has parting present for GMP: $17M

What Will Happen to the Money?

According to the Green Mountain Power spokesperson Dorothy Schnure:“It’s great news for our customers...All the money we are entitled to will go to ratepayers.”

Some of us (like me) don't believe Schnure.  Seventeen million dollars is a sizable amount of money for a company with annual revenues of $240 million. More importantly, Green Mountain Power doesn't have a good track record about sharing windfall money.

Last time Green Mountain Power had a windfall, it was supposed to repay ratepayers for a loan.  Specifically, Green Mountain Power was supposed to refund $21 million dollars to ratepayers in the case of a utility merger.  Instead, Green Mountain Power kept the $21 million as a revolving fund. People can borrow from the fund for weatherization projects.

The AARP objected, saying that Green Mountain Power had broken its agreement, and that seniors in Vermont could use some actual money (not loans) in order to offset higher energy expenses.  The AARP was right, but the AARP lost .  A quote from the Vermont Digger article on the AARP appeal:  (Schnure) said, however, that the (Public Service Board, PSB) board had already gone to great lengths in its opinion to explain fully its reasons for denying AARP’s request that money go directly to ratepayers.

I doubt that the ratepayers will get Entergy's $17 million from Green Mountain Power, either. I think the utility will probably find some other way to use the money themselves, or have Efficiency Vermont use it. Green Mountain Power probably won't give it back to ratepayers, who would just spend it in dribs and drabs on whatever the ratepayers want to spend it on! How silly! (Okay, I know, sarcasm alert.)

But that is just my opinion. I'm a blogger. I have opinions.  Onwards to some facts.

Two  facts

First: the Revenue Sharing Agreement was worth something to the state of Vermont. The opponents of Vermont Yankee often claimed that grid prices would remain low for many years, and the revenue sharing agreement was worthless to Vermont.

They were wrong.  I doubt if they will apologize.

Second: This is the end or  close to the end for such payments. There may be another payment to Vermont utilities if local grid prices remain high between now and the end of the year.  But after that payment, there will be no more of these windfalls from Entergy to Vermont utilities.  As Hallenbeck described this payment: it was a "parting present" from VY to Green Mountain Power.

We can thank Entergy for the gift.  We can thank Entergy for living up to their obligations, once again.

We can thank Governor Shumlin and his supporters for the fact that this is a "parting" gift. (If we want to thank them, which I don't.)

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End notes:

"A deal is a deal" statements at the debate. See Howard Shaffer's December 2010 article at ANS Nuclear Cafe: Vermont's Nuclear Debate, Continued. 

Green Mountain Power will get most of this money, but some smaller utilities may also receive checks. The Department of Public Service will do the calculations, as described in the Hallenbeck article.

Obsessive readers of my blog may remember that Hallenbeck is the reporter who asked Governor Shumlin why he thought his memory of discussions about decommissioning was more important than what the state signed about decommissioning in the Memorandum of Understanding. In reply, Shumlin asked her if she was "working for Entergy today." You can hear the exchange in my 2011 blog post: In Vermont, Our Word is Our Bond, So We Don't Honor Contracts.

Green Mountain Power is a wholly-owned subsidiary of Gaz Metro of Canada.

IBM, Vermont Yankee and Shumlin: A Trip Down Memory Lane

Silicon Wafers

Wafer Fab facility for sale

The IBM wafer fab facility in Essex Junction employs approximately 4000 people, making it the largest private employer in the state.  It has been going through hard times, including laying off 400 people last year, and another 100 or so this year.

It is widely known that IBM wants to get out of the wafer fab business, and indeed, it has announced that its fab facilities are for sale. Earlier this month, an industry newsletter described the negotiations about selling the various IBM fab facilities: apparently Global Foundries is the front-runner.

Whatever new company buys the Essex Junction plant, it is unclear whether they will choose to keep it running or shutter it. The equipment is out of date, but not every type of chip needs to be made on the latest version of chip-making equipment.  The industry newsletter (referenced above) has a fairly long and complex essay on this subject.

In any case, the further operation of the Vermont IBM plant is certainly at risk.

Vermont to the Rescue?

In reporting on IBM's announcement of the latest round of layoffs in Vermont and elsewhere, Vermont Digger reported that Governor Cuomo of New York has struck a deal with IBM. IBM will add jobs in Buffalo and maintain jobs in the Hudson Valley.

In mid-April, Governor Shumlin announced a $4.5 million incentive fund: this fund will be used to induce a company to stay in Vermont.  When asked if IBM was the target recipient, Shumlin replied that: "I have read the same information that you have in the press about IBM."

The Vermont Digger article about this incentive plan is  IBM Candidate for Proposed $4.5 Million  Incentive. It has a vigorous comment stream.  Many comments point out that the multi-billion dollar sale of wafer fab assets will not be influenced by this relatively small sum from the state of Vermont.  I encourage you to read the comment stream.

Shumlin and IBM: Shumlin accused them of lying

A few years ago, IBM was concerned that fees assessed on Vermont Yankee would raise overall  electricity bills significantly. This would make it hard for the IBM plant to compete.  At that point, Shumlin had no compassion for the IBM plant, and no million-dollar incentives were forthcoming. Indeed, Shumlin accused the IBM lobbyist of lying.

In 2008, Shumlin was President Pro Tempore of the Vermont Senate.  The Senate was passing a bill saying that any company buying Vermont Yankee had to put up a line of credit of $300 million for decommissioning.  VPR reported:  Yankee decommissioning bill prompted political spat. 

John O'Kane, a lobbyist for IBM, objected to this plan. O'Kane said the decommissioning money was there already, and it was growing. If the state asked for more money, this would raise electricity rates for Vermonters.  Here's a quote from the VPR article:


O'Kane "Money has time value, and you're changing the time..
Shumlin: "We are not asking for the money. You're lying about that. We are not asking for the money.

Governor Peter Shumlin

The bill says..."
O'Kane: "Peter, that is.. You just called me a liar.."
Shumlin: "I said you're not telling the truth about that, John."
O'Kane: "You called me a liar. That is unacceptable. You're the president of the Senate, and you're calling me, a representative of the largest employer..."

Eventually, Governor Jim Douglas smoothed most of this over. You can read more in the VPR article.

IBM Should Build a Power Plant

The question remained, however--IBM cannot pay higher prices for electricity, so what should be done?  In 2011, about three years after Shumlin called the IBM lobbyist a liar, the economic development committee of the Vermont Senate visited IBM.  The WCAX story IBM Warns Lawmakers about the loss of Vt. Yankee describes this meeting.  Some quotes from that article:

IBM pays about $35 million a year to power its Vermont facility. And the company estimates those costs will go up by 25 percent if Vermont Yankee goes off line....

(Senator) Illuzzi wants to explore the idea of a combined heating and power plant created on IBM's campus as a way for the company to address its power needs.....

"I don't want to own and IBM doesn't want to own a power plant," Bombardier said. "We don't want to run a power plant; we want to invest in semiconductors-- we don't want to invest in power generation source."

In other words, Vermont suggested that IBM just build its own power plant.  IBM replied that it wasn't in the power plant business.  It was in the semi-conductor business.


It Probably Didn't Matter

Considering the economy, it probably didn't matter much that Shumlin insulted an IBM spokesman and that Vermont legislators suggested that the company build its own power plant.  So I don't want to refine too much on the reason IBM is selling its facilities.

But still.  How will the new owners look at this history?  Will $4.5 million make them eager to stay in Vermont?

End note: A blog post of mine on this subject from 2011. The post includes more references and is also a bit snarky.  Some notes on IBM and Yankee: How I found Vermont's Energy Plan.

The Public Service Board Order: Guest post by John McClaughry

John McClaughry

The Public Service Board (PSB) has approved the memorandum agreement between the Public Service Department and Entergy, dealing with closing down Vermont Yankee. PSB approval was given over the vocal protests of the New England Coalition people.

The PSB approved Yankee’s operation until the end of this year, noting gratuitously that it might well have demanded a shutdown if there was any prospect of the plant continuing beyond then.

The Order spent a lot of space discussing what it considers to be a “fair partner” with the state. It described what it called Entergy's "corrosive and bullying attitude  and said that Entergy had made "frivolous arguments to resist valid discovery.” Well, I admit that Entergy made some mistakes that it should not have made in its presentations to the Board.

 But what is curious to me is the Board’s totally ignoring the effect of the 2006 legislature’s  passing Act 160, the law that destroyed the 2002 memorandum of understanding between the state and Entergy. Act 160 is mentioned only once, and only in passing, in the 84 page order.

 So tell me: What kind of “fair partner” was the State of Vermont, when it irresponsibly turned the plant’s future over to legislative control, based on no standards at all? This was outrageous, and the Federal courts overturned it six years later. The Public service Board  harped on Entergy’s procedural shortcomings, but ignored the state’s far more severe misbehavior.

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This post first appeared as a radio commentary on WDEV on April 21, 2014.

John McClaughry is a founder and current vice-president of the Ethan Allen Institute. Meredith Angwin is head of the Energy Education Project, which is part of that institute.

The Public Service Board Rewrites History

Pressing Control-H?

A petulant Board says Entergy is not a fair partner.

In granting the Certificate of Public Good (CPG) for Vermont Yankee to operate for a final year, the Public Service Board (PSB) stressed that Entergy had not been a "fair partner" to Vermont.  I considered the Board's assertions misleading and petulant.

My recent post on this subject was PSB and the Certificate: Powerless and Petulant. I ended that post with a question: "Well, did the Board have good reason to believe Entergy was not a fair partner?  Or were they just being petulant, as I claim?"  In this post, I begin to answer that question.

Let's start with the Board's rewrite of history.

As usual, here's a link to the Board's order approving the Vermont Yankee CPG.  http://psb.vermont.gov/sites/psb/files/orders/2014/2014-03/7862%20Final%20Order.pdf 

Rewriting History

The Board is made up of lawyers who were not under oath ("the whole truth") on a witness stand.  They were writing an opinion. Without an oath to tell the truth and the whole truth, they could omit important history from their opinion.  And they did.

If you asked an average Vermonter about Vermont Yankee's history, he would probably say something like: "Well, the legislature voted against the plant but then that vote was overturned by the court."

The PSB chose to forget this part of the history.

What the PSB mentioned

Let's look at page 28-29 of the ruling. This is extracted from the rulings history-chronology which is a background to this order.  I will summarize a few items, quote a few items (in italics). You can read the rest if you follow the link to the ruling. 

Item 6: 2002, Board approves sale of plant to Entergy
Items 7 and 8: 2006, Board approves construction of Dry Cask Storage and Power Uprate
Item 9: 2011, Entergy receives a license extension from the Nuclear Regulatory Commission.

10. On March 3, 2008, Entergy VY filed a petition with the Board seeking authority to continue operation of the VY Station for an additional 20 years through March 21, 2032. Docket 7440, Petition of 3/3/08 at 2.55

11. On January 19, 2012, the United States District Court for the District of Vermont issued a decision holding that provisions of Act 160, codified at 30 V.S.A. § 248(e)(2), were preempted by the federal Atomic Energy Act, and enjoined the enforcement of these provisions. Entergy Nuclear Vermont Yankee, LLC v. Shumlin, 838 F. Supp. 2d 183, 243 (D. Vt. 2012),

What the PSB forgot to mention

Did you notice anything missing? The legislature passed Act 160 in 2006 requiring the legislature to allow the PSB to issue a CPG.  The Board didn't mention that.

Act 160 was a clear change to the contract that Entergy signed when they bought the plant. That contract said that the PSB had to consider whether the plant deserved a CPG.  The original contract said nothing about the legislature.  For information on this, I recommend John McClaughry's post: Can Entergy Trust the State?

The legislature took over the decision about issuing a CPG to the plant (by passing Act 160 in 2006).   The legislature discussed, at great length, the plant's nuclear safety. However, nuclear safety is a matter of federal jurisdiction, and the legislature knew this. The legislature used what Cavan Stone calls the Control-H defense. Basically, the legislature decided: "Let's use another word for safety."  We will hit Control-H and we will change that word.  See Cavan Stone's guest post The State and the Control-H Defense.

Having attempted to use other words for "safety," the Vermont Senate held a vote in 2010. This vote denied a CPG to  Vermont Yankee-- by refusing to let the PSB rule on a CPG.  Essentially, this vote ordered the plant to shut down in 2012.

Entergy then sued the state,  because the legislature had acted on the basis of nuclear safety. It is a federal prerogative to regulate nuclear safety. Entergy won that lawsuit. The state appealed, and Entergy won that appeal. This was embarrassing for the legislature, and maybe embarrassing for the PSB.

What the PSB was embarrassed to mention

I can read what the PSB wrote, but why they wrote it is forever a mystery.  Here's my opinion.

Governor Peter Shumlin
Led the Senate to vote against VY
(before he was Governor)

Neither the 2006 law nor the 2010 vote are mentioned in the PSB history.  Why not?  Is it because these show that the state of Vermont was not being a "fair partner"?  Is it perhaps because the legislature took the PSB's power away from it?  The legislature said: "You can't release your findings, PSB,  unless we legislators allow you to do so." To write about this, the PSB would have to admit another example of being powerless.  Was that the reason they didn't mention the vote?  Or was it that Entergy won the lawsuits, hands-down, and the PSB is basically lawyers who ended up on the wrong side?

Was the PSB just plain embarrassed at the whole history?

Who knows?  As I say, the PSB didn't write this opinion under an oath to tell the whole truth, so they wrote what they wanted to write. They left out the part of the history that most Vermonters would mention if asked about the history of Vermont Yankee.

I thought I would mention that history.

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Note: I have plans for more posts about the PSB ruling.

PSB and the Certificate: Powerless and Petulant

Spillway at HQ dam
Vermont's source of electricity

On March 28, the Public Service Board (PSB) issued a Certificate of Public Good (CPG) for the final year of operation of Vermont Yankee. I quickly posted a preliminary review of the ruling:  Board Issues CPG to Vermont Yankee through 2014.  In that post, I noted that I had not yet read the entire 97 page document.

So now I have read it.  I think it was an appalling document for a "quasi-judicial" body to issue.  Feel free to read the nearly-100-pages yourself, especially if you want to go through a document page by page, rebutting half the sentences.

http://psb.vermont.gov/sites/psb/files/orders/2014/2014-03/7862%20Final%20Order.pdf

The Board Admits to Being Powerless

In August 2013, when Entergy announced it would close Vermont Yankee, many people noticed that the Public Service Board had just lost most of its power over the plant.

Opponents urged the PSB to put as many constraints as possible on the final certificate because it would be the state's last chance to regulate the plant.   Similarly, Vermont Business Magazine wrote that decommissioning of VY was a federal issue, and the state might have very little to say about it. This editorial suggested that a willingness to deal with Entergy in earlier days might have led to a better outcome about decommissioning. (My blog post Looking Back Toward Decommissioning covers this.)

Time went by, and in December 2013, the state and Entergy reached an agreement about the final year of Vermont Yankee's operation and about some aspects of decommissioning.  The agreement was  embodied in the Settlement Agreement and the MOU (Memorandum of Understanding). The PSB needed to accept or reject this agreement by the end of March, or the agreement would no longer be valid. (Reasons the Public Service Board  Should Approve the CPG for Vermont Yankee.)

On March 29, the PSB ruled. In its ruling,  the PSB admitted it was pretty much powerless to change the end date of plant operation, anyway. On page 4 of the ruling:  The value of these benefits [benefits of accepting the Settlement and MOU] is complemented by the short duration of the permission we are granting Entergy VY. This limited period of time is likely not longer than the interval of time we would have allowed Entergy VY for winding up its operations had we decided, in the absence of the MOU, to deny the Company's request to extend its time for operating in Vermont.

In other words, the PSB would have to grant VY about the same time to wind up operations whether the PSB ruled for or against the MOU.  So the PSB figured they might as well rule for the MOU, because the MOU included cash benefits to the state.

The MOU specified many payments from Entergy to various funds in the state of Vermont. Shortly after the Board issued the CPG, the first of these payments from Entergy arrived: two million dollars for community development to the state Agency of Commerce and Community Development.

Powerlessness Turns the Board Petulant

In my opinion, the ruling has many examples of petulance. My paraphrase of the ruling: "They ran that plant and they made power and they paid their taxes and everything....but they did us wrong.  They didn't play fair.  They are not fair partners. They didn't always give us the right information.  No they didn't.  Not every time. Okay, we know, they DID make power, but so what, huh?"

As Will Darlymple at Nuclear Engineering International said: this order was grudging at best, scathing at worst. In contrast, plant opponents were delighted with the tone of the order, as you can read in an opponent op-ed in The Commons: What was surprising is how loathe the Public Service Board was to grant Entergy “fair partner” status, as has been widely reported in the press.

The ruling is amazingly repetitive on the theme that Entergy is not a "fair partner" for Vermont.

Page 5 refers to the  The Company's sustained record of misconduct has been troubling to observe over the years and has continued to trouble us as we determine whether to grant Entergy VY a license to operate. If Entergy VY were planning to operate the VY Station for another twenty years as originally requested, its track record may well have led us to find that ownership and operation would not promote the general good.

This focus on Entergy "misconduct" continues on pages 31 to 44. These pages explain that Entergy cannot be a Fair Partner to the state. The "Fair Partner" section is by far the longest section in the ruling, including (page 41) the statement that  This history is troubling and falls well below the level of conduct the Board expects of utilities authorized to conduct business in the State.

In other parts of the ruling, brief sections mention that Entergy paid taxes, made power reliably, gave the state Nuclear Engineer access to the plant, etc.  But the longest section is about "Entergy was not a fair partner."

Not a "Fair Partner" or a Petulant Board?

Well, did the Board have good reason to believe Entergy was not a fair partner?  Or were they just being petulant, as I claim?

The Board's reasons for saying that Entergy was"not a fair partner"  were basically wrong. Entergy was not perfect, but "not a fair partner" is an over-the-top judgement for the flaws that Entergy had. However, it will take at least one more blog post to show this. You can't answer 97 pages in a short blog post!

My follow-on posts are partially drafted.  But like the Board ruling, this present post is....long enough.

UPDATE:  Howard Shaffer has just posted a more complete assessment of the ruling at ANS Nuclear Cafe: A Pyrrhic Victory in Vermont for Nuclear Power?   I encourage you to read it!

Predicting the 60 MInutes Fukushima Story: Guest Post by James Greenidge

Natural Gas facility fire
After Tohoku Earthquake
Photo is labelled:
 "Disaster at Fukushima" 

On April 6, CBS 60 Minutes planned to broadcast a segment about the ghost towns of Fukushima. Meanwhile, on April 4, ANS Nuclear Cafe blog was featuring a blog post about Vogtle construction progress. However, the moderator at the ANS blog made a comment on the ANS Vogtle post. The moderator wanted to give readers a heads-up about the upcoming 60 Minutes Fukushima program.

James Greenidge answered the ANS notification with his own comment. Greenidge graciously gave me permission to use his comment as a guest post.

I quote below from the ANS Nuclear Cafe comment stream.
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ansnuclearcafe | April 4, 2014 at 14:46 |

60 Minutes video and story preview: http://www.cbsnews.com/news/60-minutes-returns-to-the-ghost-towns-of-fukushima/

James Greenidge | April 4, 2014 at 16:46 |

It will be the usual suspects of token and low-grade so-called nuclear consultants, and I’m sure CBS didn’t ring ANS or NEI or pro-nuclear blog pros for some cool calm reasoned insights. I vouch that this 60-Minutes broadcast will be somberly grim, with lots of flashes of tsunami damage and quake oil facility fires interspersed scenes of the nuclear plant in coyly tacit blame, and constant assertions of how “no one sane” can homestead here again or eat anything for generations or hundreds of years. There’ll be lots of scary bunny suits and water tanks leaking forever and crying babies being Geiger scanned.

Cosmo Oil Explosion in Japan
From Wikipedia

There will be no comparative background rad rates with other areas around the world and there will be less stress that a super-rare earthquake incited the incident and instead more of an undertone that there is something inherently flawed in all nuclear reactors behind the event which would’ve occurred eventually anyway.

There won’t be any public or worker mortality rate comparisons with other industries and there won’t be any mentions as to old-designed reactor robustness containing three meltdowns in a row when the media has long predicted that just one is Doomsday, and the report will mute down that no one was killed and attribute that to divine luck.

They will lump every nuclear plant that exists as clones of Fukushima and you have one which just can’t wait to blow in your backyard. The show will end in a desolate looking pan of the Fukushima ghost town and landscape that is implied lost for a thousand years and maybe a sly glimpse of a windmill in the corner.

Then afterwards ask whether CBS did a _fair_ and non-alarmist accurate job or just suave cautionary FUD.

Hope I’m not a suspense spoiler!

James Greenidge
Queens NY

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I didn't watch the CBS show, but I suspect Greenidge predicted accurately.  Reader comments invited!

Speaking of comments, you might enjoy the comments stream on the original ANS post, including  comments from me and more from Greenidge.