Tuesday, November 14, 2017

BATNA vs BATNA vs WATTA in Vermont

Students at International Negotiation Tournament
University of Toronto vs. University of Tromso
Hostage Negotiations

In deciding on issues about Vermont Yankee decommissioning, I hope that the state of Vermont will not be overly influenced by the agendas of anti-nuclear groups. I hope so, but I worry.

For example, the Keene Sentinel wrote a recent editorial urging people to be reasonable about getting Vermont Yankee decommissioned. Among other things, the Sentinel encourages the state to not require a "residential quality" cleanup of the site.  However, the title of the editorial perturbed me:  Hostage negotiations: State regulators need to be strict but reasonable, in VY decommissioning fight. 

Decommissioning "fight"? "Hostage negotiations"? Really?

The editorial itself includes more "hostage" terminology. "At the same time, it’s been disappointing to see how quick NorthStar has been to try to hold the state hostage over the issue. The company certainly has the right to negotiate for the best deal it can get, within safety standards. But NorthStar CEO Scott State has reportedly said he’ll pull out of the deal if the firm doesn’t get its way on the “residential quality” issue —" 

Then I realized ---this is simply a matter of BATNAs.  Not hostages, but BATNAs. (More about BATNAs later.)

At some deep level, the state realizes that it doesn't have much of a BATNA, and this makes it angry.

Now I have to back up and explain what I am talking about. I'll start with the "fight," and on to the BATNAs.

The Fight

Entergy wants to sell Vermont Yankee to a consortium of businesses headed by NorthStar. These companies have expertise in decommissioning, and plan to decommission Vermont Yankee in ten years or so, which would be better for most people than the Entergy plan of letting the plant be in SAFSTOR for sixty years.

However, Entergy and NorthStar need a Certificate of Public Good  from the state in order for Entergy to sell the plant to NorthStar. And the state considers this request to be a "fight."

In general, the state usually wants two things when Entergy needs a certificate of public good.  Money and power, or rather, money and control.

Money: In return for a Certificate of Public Good (CPG), the state usually wants to get some money for projects that the state wants to do. This is standard in Vermont, and perhaps elsewhere.  I consider this sort of request to be a "tribute" payment, and I wrote about this in a post in ANS Nuclear Cafe in 2013: Millions for education. but not one cent for tribute. For example, in the past, Vermont has granted Entergy a CPG after Entergy promised to give money to a fund to help clean up Lake Champlain. You must understand that Lake Champlain is in the northwest portion of Vermont, and Vermont Yankee is in the southeast corner.  They are in different watersheds, too. Entergy funded part of the Lake Champlain cleanup, because the state "asked it" to do so, not because Entergy operations had affected Lake Champlain.

Nowadays, however, Vermont Yankee is shut down. The plant has only one source of money: the decommissioning fund.  The NRC will not allow Entergy to use that fund for random projects, such as cleaning up Lake Champlain. Therefore, the state's ability to get money is limited.

Control:  The state wants control of the Vermont Yankee decommissioning. Control issues include:

  • According to whose rules does the clean-up proceed? 
  • Clean-up the site to "residential standards" or industrial standards?  
  • How deep does NorthStar need to excavate the site?  
  • Can NorthStar rubbilize the existing buildings on site and use them for fill, or must NorthStar haul the building rubble away and buy other rubble for fill
  • Will NorthStar get the site ready for another industry that can provide jobs, or should the area be untouched and fallow, to allow the "earth to heal" for two hundred years? 

The State may take a more or less extreme position on these matters, but there wouldn't be a "fight" if the State were just trying to work out a safe, effective site restoration.

So, now we have the state in one corner, and Entergy/NorthStar in the other corner.  We understand the fight.  But what are those BATNAs?


The BATNA concept was introduced in the groundbreaking book on negotiations: Getting to Yes.   Most managers are aware of the concept.

Classic decision tree
A BATNA is the "Best Alternative to Negotiated Agreement" and the negotiator with the strongest BATNA usually "wins" the negotiation.  The negotiator with the strongest BATNA gets a result closer to what he wanted, while the negotiator with the weaker BATNA obtains fewer of his goals.

So what are the BATNAs here?  What are the state's "alternatives?"  What are NorthStar's "alternatives?"

It would seem that the state and NorthStar have each other over a barrel. If the state doesn't give NorthStar a certificate of public good for the sale, NorthStar can't do the project.  If NorthStar considers the state requirements to be too onerous, it can walk away from the project, and the state will be left with a plant that will most probably be in SAFSTOR for decades.  Assuming that both parties want a successful project, which one has the better BATNA?

Well, NorthStar does. NorthStar has the better BATNA.

The NorthStar and Vermont BATNAs

This job would be good for NorthStar, but if the state requirements would cause the company to lose money on the job, it can walk away and bid on a different project instead.  There are plenty of fish in the sea, and plenty of cleanup projects on land. Tens of other possible projects are NorthStar's BATNA.

Meanwhile, the state has only this one power plant, which it wants to see decommissioned promptly.  If the state (or Entergy) had a reasonable chance of seeing several other qualified groups line up to bid on the decommissioning, the state would have a strong BATNA. NorthStar would be just one choice out of many. But the state doesn't have such a BATNA.  There are few companies qualified to do a major decommissioning, and I don't see any of them lining up to work in Vermont. They are mostly busy, and mostly working in other states that don't have the same anti-nuclear (and anti-business) bias.

The state has a weak BATNA.  As a matter of fact, I can't really define it beyond "learn to love SAFSTOR." No matter how thoughtfully and delicately NorthStar mentions its strong BATNA, the state is going to feel "held hostage." The iron laws of negotiation are holding the state hostage. I'm sure it is not comfortable.


If you noticed, my discussion of the negotiations had the assumption that both the state and NorthStar would want a speedy and effective decommissioning at Vermont Yankee.  I am not going to mince words here.  There's a set of third parties in this negotiation--the anti-nuclear groups. They have their own agenda. Unfortunately, my experience is that the State of Vermont bows to any pressure exerted by an anti-nuclear group.

The anti-nuclear groups do not want a quick clean-up. As described in a recent commentary in Vermont Digger, one of the opponent groups is eager to see  a very long process. As Amelia Shea writes:
"...the question (is) of how best to protect the residents, the land and the water long into the future from the harbingers of birth defects, cancer and genetic illness. New England Coalition is advocating for intensified environmental stewardship of the site and to let the land lie fallow after the cleanup in order to achieve that goal...."
In other articles, nuclear opponents have suggested that the land lie fallow for 200 years, to "heal" from having the Vermont Yankee plant in place. This "healing" is not measurable: the opponents don't define a criteria for "healed-land".

So the nuclear opponents actually have their own agenda, and their own BATNA. Their BATNA is to encourage WATTA.  Worst Alternative To Technical Accuracy.

For the opponents, the plant spending decades in SAFSTOR is no big deal. They see SAFSTOR as just the beginning  of a several-century process of "healing." The state doesn't have a good BATNA to begin with.  If Vermont bows to the nuclear opponents and their agenda, Vermont may well end up with the plant in SAFSTOR followed by WATTA.


This glass is half full 
The glass is also refillable
I am a natural optimist.  I think hard-working people can make situations work out to a be a win-win, or at least, not a lose-lose.

So I hope Vermont will not end up with WATTA, but rather, Vermont  will work out an acceptable agreement with NorthStar. I hope that Vermont Yankee will be effectively and rapidly decommissioned.

I am an optimist.

Unfortunately, in Vermont, it is easy for an optimist to get disappointed.


Howard Shaffer said...

Great post. The antis seem to be operating out of FEAR that has turned to anger, that may have turned to hatred.

Residential standard makes no sense. 200 years? what is the technical justification?

Boganboy said...

I'd argue that the anti-nukes would also lose something to fuss about if the plant was decommissioned. If they can make the locals poorer by preventing redevelopment of the site, they can blame Entergy for not redeveloping the site. I'd expect candlelight vigils with prayers to Holy Mother Gaia to exorcise the dread demons of radioactivity.

Obviously I believe it's virtually certain that North Star's bid will fail.