Entergy Uses Decommissioning Fund: State Officials Are Very Upset

Entergy Keeps Its Promises

In terms of decommissioning, Entergy has kept every one of its promises to the state of Vermont, and even gone beyond its promises.  Here's a list:

1) PSDAR: Entergy said it would finish its PSDAR (Post Shutdown Decommissioning Activity Report) by the end of 2014, although the NRC allows two years (till December 2016) for the report.  Entergy completed and released the PSDAR on December 19, 2014.
2) Fund Payment: Entergy signed an agreement with the state for the last few months of the plant's operation. This agreement required Entergy to send various payments ($2 million for Windham Country economic activity, for example) to the state.  All such payments have been made promptly.
3) Spent Fuel Management Loan: Entergy took out a $143 million dollar loan for spent fuel management, because the state wanted the fuel removed from the fuel pool very promptly.  Strictly speaking, decommissioning funds are not supposed to be used for spent fuel management.  The federal government is legally required to manage the spent fuel.

(Short pause here.  Time to let people get off the ground after the laughing fit. No, this post is not about Harry Reid. Are you standing up now? Onwards.)

Senator Harry Reid
 image from his website

Obtaining spent-fuel management funds from the federal government can be slow.  The company has to sue the federal government, win the lawsuit, and finally obtain the money. Entergy said it would remove spent fuel from the fuel pool very promptly.The state wanted the spent fuel out of the fuel pool ASAP or sooner than ASAP.  Entergy doesn't need to comply with "ASAP" but it is doing so.

Amazingly, Entergy has arranged to borrow $143 million dollars for spent fuel management and moving the spent fuel into dry casks. This borrowed money will be repaid after Entergy sues the federal government.  Note that taking out this loan was not in any agreement that Entergy signed with the state.   Entergy decided to do this to speed up the process.  It is possible that Entergy (with NRC permission) might have been able to borrow this money from the decommissioning fund itself.   Of course, that would have depleted the fund and slowed the decommissioning.

Entergy needs some reimbursement

Entergy has done lots of planning, written reports, taken the fuel out of the reactor, arranged loans.  All activities concerned with decommissioning the plant.  So it requested permission from the NRC to obtain $18 million from the decommissioning fund.  The NRC is in charge of the fund, and of decommissioning, and of ensuring that fund moneys are properly expended.

The state objected.  No, really, it did!  Vermont wants decommissioning very quickly but Vermont believes it has approval rights to determine exactly what the decommissioning funds are used for. In short: Vermont thinks the NRC needs state permission to release decommissioning funds. 

(Short pause here. Vermont has challenged the NRC's authority over nuclear power plants before.  On this subject, how many lawsuits has Vermont won?)

The state is upset!

DPS Commissioner
Chris Recchia

The first thing that I noticed about the state's attitude toward the withdrawal was a Vermont Digger article by John Herrick: Entergy Makes First Withdrawal from Decommissioning Fund.  In this article, Vermont Department of Public Service Commissioner Chris Recchia is quoted: “I am probably more OK with the actual withdrawal than I am with the process….I don’t get to see it in advance.”

Indeed, the attorney general of Vermont and others in state government wrote the NRC to object to this withdrawal. Their letter claimed that the state has the right to review expenditures of decommissioning funds, and the funds should not be released, pending state review of the request.

The state letter is posted in the Document Library of Entergy's VY Decommissioning website. The Document Library is a great boon to anyone who wants to follow this process.

Though the state letter is quite long, the main basis of the letter seems to be the  Memorandum of Understanding under which Entergy purchased the plant in 2002.  A great deal of that memorandum is about decommissioning funds.  The agreement states that, AFTER decommissioning is complete, Entergy must share 50% of whatever decommissioning funds are left over with the state. However, in the recent PSDAR, Entergy does not claim that there will be enough decommissioning funds available until the near the end of sixty years of SAFSTOR.  The funds will grow, and full decommissioning will commence close to 2070, when the funds have grown enough to support it.

In other words, concern with sharing excess funds with the state is a bit early and a bit theoretical!  However, the Memorandum agreement that excess funds "will be shared" seems to have given the state the idea that the state has authority over how the funds are disbursed.

But the state doesn't have authority. Yes, the state does have some limited say over how the funds are disbursed. If you look at item 7 in the Memorandum, the state must approve IF the funds are used for anything other than "qualified expenses."  There is no reason to believe that Entergy's first request to NRC was for not-qualified expenses.

My Conclusion: The Bank of Entergy is Still Closed

Attorney General William Sorrell

Once again, the state is over-reaching.  The state hasn't figured out yet that harassing Entergy with letters to the NRC and so forth will do no good.  The decommissioning funds are the only funds available now for Vermont Yankee (except for the loan, of course). The NRC determines if the decommissioning funds are being used correctly.

To me, this whole thing has unpleasant echoes of the time when the Vermont legislature tried to shut Vermont Yankee. They held a legislative vote  that was basically all about safety. Entergy sued the state, and the legislature reacted swiftly to the lawsuit.  They passed a law that Entergy had to pay the State's expenses in defending against Entergy's lawsuit.

Of course, that law was illegal and nobody in the Attorney General's office would even try to enforce it.  I wrote a blog post about this: Attorney General of Vermont Acknowledges "Shaky Concept" in Charging Entergy for Vermont's Expenses  The Attorney General acknowledged that the the law was unenforceable.  The Bank of Entergy was closed to the state.

It's time for the state to acknowledge that that Bank of Entergy is still closed. I hope they acknowledge this before taxpayers (like me) once again fund a hopeless exercise in which Vermont attempts to change the role of the federal government and the NRC.

These state-sponsored exercises are expensive.

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.

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.

The Agreement between Vermont Yankee and Some State Agencies

The Agreement

The Department of Public Service (PSD), the Agency of Natural Resources, and the Vermont Department of Health signed a Memorandum of Understanding (MOU) with Entergy on December 23.

The link is below (13 page pdf).

http://publicservice.vermont.gov/sites/psd/files/Announcements/VY_Settlement/VY_Settlement_Agreement_131223.pdf

The Missing Link

Christopher Recchia
Commissioner
Dept of Public Service

Understanding this agreement and commenting upon it will take some time. Right now, however, I want to point out that one important agency has not signed off on this yet--the Public Service Board.  For this agreement to take effect, the Public Service Board must grant Vermont Yankee a Certificate of Public Good (CPG) in accordance with the provisions of this agreement.

 The agreement gives the Public Service Board a deadline of March 31, 2014 for granting this certificate.

Section 2 of the agreement below:


Entergy VY and PSD shall jointly recommend to and shall support before the Board the issuance of CPG(s) effective as of March2l,2012, for: (1) operation of the VY Station through December 31,2014, and (2) storage of SNF derived from such operation, as requested by the second amended petition filed by Entergy VY in Board Docket No. 7862 on August 27,2013. Entergy VY and PSD will submit a Memorandum of Understanding ("MOU") to the Board, in the form attached as Exhibit A, in connection with those filings.

In the event that by March 31 ,2014, the Board has not granted Entergy VY a CPG that: (i) approves operation of the VY Station until December 31, 2014, and the storage of SNF derived from such operation; and (ii) approves the Parties' jointly filed MOU substantially in its entirety and contains conditions that do not materially alter, add to, or reject what is provided for by the MOU, each Party agrees that this Agreement may terminate, if such Party so determines in its sole discretion and provides written notice within ten (10) days of Board issuance of its order, whereupon each Party shall be placed in the position thatit occupied before entering into this Agreement, except that the obligations of paragraph 3(a) through (c) and the actions taken thereunder are final and shall not be affected by any termination.


Sections 3 a, b and c....this is an agreement that both sides (state and Entergy) promise not to appeal the court of appeals ruling in the major federal lawsuit. I blogged about this issue in The Second Lingering Lawsuit: The Attorney Fees.  I said that the state was unlikely to bring an appeal, since they had lost on the pre-emption issue in two courts.

Not Over Till It's Over

The day after the agreement was signed, I was interviewed by Pat Bradley of WAMC: Vermont and Entergy Reach Agreement on Future of Vermont Yankee Operations.

Here's my quote from that interview.

Public Service Board members Coen, Volz and Burke
See note below

Ethan Allen Institute Energy Education Project Director Meredith Angwin has worked in the power industry and pens the blog Yes Vermont Yankee. She notes that the Public Service Board, which has a case involving the plant, was not involved and expects some controversy to continue.   “What they really kind-of announced is that the Department of Public Service would advocate for this agreement before the Public Service Board. And the Department of Public Service carries a lot of weight. The Public Service Board still has to rule, but the intervenors will have plenty of time in front of the Public Service Board to say ‘no, no that’s a terrible idea, that’s a terrible idea.”

In other words, it's not over till it's over.

Note:  Coen has left the Public Service Board and been replaced by Margaret Cheney. Here's the new page with the new picture.    However, at the time of the Cheney appointment, I got the impression that Coen would continue to serve on any open dockets and Cheney would take over new dockets.  It is not clear to me which group of board members will be seated on the bench for this docket.  I will let you know when I find out.

Looking Back Toward Decommissioning

Picture of Dry Casks at Maine Yankee
From 3Yankees website

Let me start with a fact:

Entergy can use SAFSTOR or Prompt Decommissioning, their choice.  With either type of decommissioning, the current workers lose their jobs.

Meanwhile---Current Posturing about SAFSTOR

Currently, a great deal of posturing is being published about decommissioning Vermont Yankee.

Here's an example.

The Windham Regional Commission published a position paper in The Commons newspaper: What's in our best interests when VY closes?  The author, Chris Campany, answers his own question in the paper's subheading: "Now more than ever, our region needs to attach conditions to Entergy’s CPG."

A quote from this article above:

"We asked that whether or not a Certificate of Public Good is granted, the Public Service Board consider the following.....Require the prompt and complete decommissioning and site restoration of the VY station after shutdown (whenever that occurs) and prohibit the use of SAFSTOR."

This request is pretty much nonsense on the face of it.  As Tim McQuiston wrote in Vermont Business Magazine: Vermont Yankee, the Decommissioning Dilemma:

"The new battle will be over SAFSTOR, or Entergy's plan to postpone dismantling the plant right away, and take up to 60 years to do so. Furthermore, since this is a federal issue, the state may have little to say about it."  (emphasis added by blogger)

McQuiston also noted that Vermont might have achieved prompt dismantling  of Vermont Yankee if they had bargained for it as part of a new 20-year Certificate of Public Good. But they didn't.

 In my own opinion, once Entergy announced it was closing Vermont Yankee, Vermont lost almost all its bargaining power with Entergy.  "We're going to shut you down three months sooner than you planned to shut down anyway" is not a very credible threat.  Entergy has little to lose in its bargains with the state, once it decided to shut down the plant.

Looking Back at My Blog Posts about Decommissioning

I have three blog posts about decommissioning, and I will reference and summarize them here.

Entergy can use SAFSTOR or Prompt Decommissioning, their choice.  With either type of decommissioning, the current workers lose their jobs.

1) SAFSTOR is in the contract, whether Governor Shumlin likes it or not

The first post is In Vermont, Our Word is Our Bond, so We Don't Honor Contracts.  In this post, you can see Governor Shumlin accuse reporter Terri Hallenbeck of "working for Entergy." This is his answer when Hallenbeck reminds him that the state signed a purchase agreement, and the purchase agreement allows Entergy to use Safstor.

Here's the link to the purchase agreement itself, the Memorandum of Understanding.   The use of SAFSTOR is explicitly allowed in item 9, page 5 of this document, which is a total of eight pages long (plus some signature pages).

2) SAFSTOR and Prompt Decommissioning are both jobs cliffs. They do not protect current workers.

In Decommissioning, Facts Versus Fantasy, I show that 80% of the workers are gone within one year with SAFSTOR.  With prompt decommissioning,  50% are gone in one year, 80% in two years.  Both methods are a jobs cliff.

Most decommissioning work is done by teams of contractors. Wayne Norton, who was president of the Three Yankees during decommissioning, wrote the following in a paper he presented to industry.

Another advantage to early and aggressive downsizing is that it opens up opportunities to bring in workers with skill sets that are more suited to a decommissioning environment. Also, if these workers are contractors, they tend to be more accustomed to completing a given scope of work and moving on to another job.

3) There's no local jobs bonus.  Long-distance truckers and waste disposal sites get most of the money.

In my post, There is no Jobs Bonus.  Decommissioning Helps Long-Haul Truckers and Destroys Communities,  I try to follow-the-decommissioning money very closely.  Let's just say I don't like what I see.

Only Someone Like Our Governor Could Love Decommissioning

I will undoubtedly be posting more on this in the future, but I thought I would start with a summary of my older posts on this subject.

Decommissioning is a miserable situation for the workers and the local people.  It's the kind of situation that only our current governor could love.

Thoughts on Money: Revenue Sharing and Decommissioning Costs

My op-ed about Vermont Yankee economics appeared in the Valley News this Sunday.  In that article, I discussed the state position in the appeals court hearing in New York last month. The state tried to make the case that Vermont Yankee had a negative economic effect on Vermont and its utilities.  Nothing could be further from the truth. Vermont Yankee is an economic asset to the state.  Also, if grid prices rise, the revenue-sharing part of the Memorandum of Understanding could send more than half a billion dollars from Vermont Yankee to state utilities.   

My "half a billion dollars" number comes from a quote from the attorney for the state, who apparently thinks  that if Vermont Yankee shared money with Vermont utilities, that would be a Bad Thing.

In the past few days, several local people told me that they had never heard of the revenue share arrangement before I wrote about it in the op-ed. They had no idea that Vermont Yankee might be paying a $500 million dollar bonus to local utilities. 

Yesterday, I received an email from a local man who is basically in favor of Vermont Yankee. He asked if perhaps the revenue share money could be added to the decommissioning fund?  I wrote him a long response answering his question.   I decided to share my email here, with a few changes.


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Hi and thanks for the email!  Actually, revenue sharing is one issue, and decommissioning is a separate issue.

Revenue Share: 

The purchase agreement for the plant (Memorandum of Understanding between Entergy, former owners, and the State Department of Public Service)  requires ten years of revenue sharing. This contractual obligation kicks in after 2012 and when the grid price is above 6.1 cents.  This revenue share money goes to the utilities.Vermont Yankee gives this money to the utilities, and the plant cannot use it for anything at the plant, including decommissioning.

Decommissioning:

Decommissioning is a separate issue and a somewhat complicated one.  Three interlocking points.

1) The NRC supervises decommissioning funds and makes sure they are adequate. 

When the stock market dropped around 2010, NRC required many plants (including VY) to add tens of millions of dollars to their decommissioning funds, because NRC judged that the funds had fallen below the required level.  NRC does, indeed, watch these things.

2) What is "adequate"?  Greenfields?

NRC requires that the decommissioned site be radiologically safe and ready for another industrial facility.  Many opponents want to raise the cost of decommissioning (Conservation Law Foundation has a branch, Conservation Law Foundation Ventures, that actually does decommissioning legal work, for money.) Opponents want to raise the costs, both for their own gain and to harass nuclear plants.  

For example, for Vermont Yankee, opponents are pressing the idea that the site should be "greenfield" with ALL underground concrete structures removed, switchyards removed...basically, a cow pasture.  This would cost Yankee tons of money, estimated at more than $40 million dollars. "Greenfield" or "not-greenfield" is not something the NRC cares about, one way or the other.  The NRC criteria require that a dismantled industrial site should be safe, and it should be ready for another industrial facility, not a cow pasture.  If a state wants a cow pasture, that is between the state and the power plant.  

In the Vermont legislature, nuclear opponents are trying to pass a bill to require Vermont Yankee to instantly add  "greenfield" money to a  decommissioning fund. 

Conservation Law Foundation Ventures...gaining money from legal work about decommissioning for a nuclear plant and helping with site planning and popular acceptance for a gas-fired plant. They definitely stand to gain, monetarily, if Vermont Yankee is closed.  My words in italics are not precisely their words.  I suggest your read their boasts for yourself.

http://www.clfventures.org/our-results/facility-owners/

Indian Point, from Wikipedia

3) What is "adequate"? SafStor?

 Both the Vermont Yankee Memorandum of Understanding and the general  NRC rules allow the plant to be mothballed (SafStor) for up to 60 years before full decommissioning is complete.  This allows the plant to be less radiologically hot when decommissioned. It also allows the decommissioning fund to grow through accumulated interest while the costs of decommissioning (in constant dollars at least) actually sink, because the plant is less hot.  

The opponents constantly say they "won't allow SafStor" but actually, they can't stop it.  If Vermont Yankee chooses to decommission using SafStor, they have both federal and state permission.  At the federal level, SafStor is in their license and part of NRC policy.  At the state level, it's in the Memorandum of Understanding.

Many plants have used SafStor, but usually only for a few years.  However, sometimes (for example Indian Point) a small plant was built, retired, and two bigger plants were built next to it.  In that case, the small plant (Indian Point 1) may well be in SafeStor for more than 40 years, because decommissioning the small one might interfere with the other plants' operation.

http://en.wikipedia.org/wiki/Indian_Point_Energy_Center

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Ah, Valentines Day!

My husband is off singing love songs to other women.  Yes, it's the annual Barbershop Singing Valentines Fundraiser! So I am sitting around writing overly-long emails.

Here's an example...not his group.

Have a lovely day my friend!

Best,
Meredith

Cold Weather Winners and Losers on the Vermont Grid

It's cold outside and it is going to stay cold.

It's not unseasonably cold: last night dipped to about fifteen below. On the other hand, the planting guides tell me that I should only buy trees and bushes that are hardy to thirty below.  So it's not that cold, by regional standards.

Still, it is cold.  Partially because of space heaters and so forth in these northern climes, the electricity  price on the ISO-NE grid is soaring.  The usual wholesale price on the New England grid is between $30 and $70 MWh (3 and 7 cents per kWh).  As you can see from the screen capture I took this morning from the front page of the ISO-NE website, the grid is now running more like  $200 MWh, or 20 cents per kWh.

Who wins and who loses (on the grid), when the temperature dips like this?

Losers:

I would call Hydro Quebec a possible loser at this point. They are selling record amounts of power, as described in this article Hydro Quebec expects to break record for 2nd day in a row.   They are asking people to conserve and reduce consumption.

So, if they are selling so much electricity, why do I call them a loser?  Because they are not exporting as much electricity, and export to the U S is where they make money.  According to a tweet yesterday from Platt's (which I have not been able to verify, but Platt's news service is pretty good):

Hydro-Quebec is seeking voluntary demand cuts during peak hours Wednesday, Thursday; Weds exports to US fall to 800 MW from 1,400-1,500 MW

The lack of HQ power is probably one of the reasons that  the grid price in New England is soaring.

The Vermont contracts with HydroQuebec (HQ) supposedly smooth most of this type of spike in grid prices. Vermont doesn't have to pay top dollar to HQ when grid prices rise suddenly.  Still, HQ expects to make much of its profits from export. If you read the introductions to their annual reports, you can see them apologizing if they don't make enough money on exports.

HQ is exporting about half the usual amount of power right now. So they aren't making as much money as they would like to make. That's why I said HQ is a loser in this situation.

Yes. I know.  I can hear you all reminding me.  HQ did close the Gentilly 2 nuclear station earlier this month,  claiming they had excess power.  Oh well.  To quote Kurt Vonnegut: "So it goes."

Winners: 

Every merchant generator (including Vermont Yankee) is a winner.  Look at those prices compared to their costs.  Wowee!

Losers Again: 

 Most transmission and distribution utilities are losers in this situation   They are paying a lot for power on the grid, but they can't change their price-to-consumers to reflect this.  Months later, in front of their state regulatory boards, the utilities may get some kind of rate increase. For right now, I think they are hurting. They are in the position of losing money on every kWh sold, and trying to make it up on volume.

The more a generator depends on short-term contracts (not committed power) the worse off they are, in terms of the gap between cost of power and what they can charge the end-user for power.  Green Mountain Power boasted that they are able to get good short-term deals on the grid because they don't have too much committed power. That strategy might not look as good today as it does on some other days.

Winners Again:

However, the Vermont utilities are doing well due to the Vermont Yankee Revenue Sharing Agreement.   This agreement requires the plant to pay Vermont utilities half of the amount over 6.1 cents that they receive for power.  So if VY were receiving 18.1 cents/ kWh for power right now, the utilities are getting one half of the difference between 18.1 cents and 6.1 cents.  The difference is 12 cents, and the utilities are getting 6 cents every time VY sells a kWh.

Revenue sharing is a "heads-you-win, tails-I-lose" agreement for VY.  If the price on the grid is low, VY just has to sell the power cheaply.  If the price is high, VY does not get the full benefit: the utilities share the money.

However, it is the agreement that Entergy made when they bought the plant, and they are holding to it.

Irony Time

Kurt Vonnegut

If you listen to the last few minutes of the Federal Appeals Court hearing, you can hear the lawyer for the state say that these Vermont Yankee payments to utilities is a reason that the state needs to close the plant.  The hearing is embedded in my blog post State Claims Economic Reason for Closing Plant,

If Kurt Vonnegut were alive today, he could write something scathingly funny about the Vermont administration's attitude toward Vermont Yankee.  Unfortunately, I do not have his skills as a satirist.

Update

This post has inspired posts on important related topics at other blogs.

At Canadian Energy Issues, Steve Aplin writes: Money down the drain, possibly forever: Hydro Quebec pines for Gentilly 2's revenue generating potential

At Neutron Economy, Steve Skutnik looks at natural gas.  Production price is not the only issue. Pipeline capacity is also crucial, and ultimately, limiting. Where's the real bottleneck for natural gas? Distribution.

Entergy and Vermont Part 1: Act 160

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. This is the first of a series of posts.

Act 160: Looking Around

One of the important points in the Entergy lawsuit is the claim that the State of Vermont changed the Memorandum of Understanding (MOU) by passing Act 160. Entergy signed the MOU when it bought Vermont Yankee in 2002. In the MOU, Entergy agreed that it would require a Certificate of Public Good (CPG) from the Public Service Board to continue operating the plant past 2012.

In 2006, the legislature enacted Act 160, saying the Public Service Board could not grant a CPG without legislative approval. This Act was a material change to an already-signed contract. Act 160 took the authorization of continued operation from the hands of the Public Service Board, and gave it to the legislature.

Act 160: Looking Backward

Snarky anonymous emails to this blog, statements by staff of the New England Coalition, statements by long-term opponents of Vermont Yankee in the legislature--the opponents claim the same thing: "Entergy supported Act 160! How can they fight it now?"

Well, Entergy didn't support Act 160. They didn't fight it actively, but they didn't support it.

I have looked high and low for Entergy comments at that time, and all I come up with is relatively mild negative comments, like this one from Brian Cosgrove:

Entergy officials also complained that the bill would be redundant when paired with last year’s action.

“That just seems excessive,” said spokesman Brian Cosgrove. “I think the Legislature already has a major role in license extension. There’s no way Vermont Yankee can continue to operate beyond 2012 without the Legislature’s approval for dry cask storage"

This is a quote from an Associated Press article by Ross Sneyd, printed in the March 15, 2006 Brattleboro Reformer, entitled “Lawmakers seek final say on VY relicensing."(see note below)

Entergy did not support Act 160. I suppose Entergy might have fought it, if they had possessed a crystal ball to the future. They apparently did not fight it. On the other hand, they did not support it. Anybody who says Entergy supported Act 160 is either mis-informed or has some evidence that I could not find.

------

Note: The newspaper record from 2006 about Act 160 is not available on-line. I obtained some pdfs of old newspapers from the library. If you think Entergy supported Act 160, please send me your evidence. If you want to research the issue, you can go to your local library and look for microfilms of newspapers from around March 15, 2006. If you can find any statement by an Entergy spokesperson supporting Act 160, please send me a copy of the article. Thank you.

John William Waterhouse The Crystal Ball, from Wikimedia

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.

In Vermont, Our Word is Our Bond, So We Don't Honor Contracts

The Memorandum of Understanding

I began blogging on January 1, 2010. With my first substantive post, on January 3, 2010, I began discussing and linking to the Memorandum of Understanding (MOU). The MOU is a key document in the story of Vermont Yankee. Only nine pages long, the MOU describes the terms of purchase when Entergy bought Vermont Yankee in 2002. It includes the cost of power, the decommissioning fund, decommissioning options, and other issues about the purchase. The MOU was signed by Entergy (the buyer), utility representatives (the sellers), and the State of Vermont, in the person of the Commissioner of the Department of Public Service. As far as I can tell, it is as binding as any other document the state has ever signed.

Shumlin doesn't like it. The MOU includes the option to use SAFSTOR (delayed decommissioning) for the plant. Well, fine, Shumlin doesn't have to like it. However, Shumlin goes further: he repudiates it as a binding document because "Here in Vermont, Your Word is Your Bond." He doesn't feel the SAFSTOR option was discussed enough in committee. Therefore, in his opinion, the contract does not have to be honored. In Shumlin's opinion, SAFSTOR was a matter of Entergy "sneaking" some words in among "thousands of pages" of documents.

In the video clip above, you can hear Shumlin answer Terri Hallenbeck, a veteran reporter for the Burlington Free Press. Shumlin said that SAFSTOR wasn't discussed enough in the committee. At around 2 minutes and 40 seconds into the video above, Hallenbeck asks Shumlin why the discussions in the committee rooms would matter more than the document the state signed. Shumlin's answer: "You working for Entergy today?"

There is almost nothing I can do to comment on such an outrageous statement. A reporter's question means she is working for Entergy. If you question me, you are against me!

Okay. So Shumlin is being outrageous. He is in a world of his own. If a person asks a question, and the question indicates that reality doesn't always fit Shumlin's plans---that person is in league with his enemies.

Nineteen Eighty Four

What makes this interchange so Orwellian ("War is Peace" from 1984) is Shumlin's constant use of the phrase "In Vermont, Our Word Is Our Bond" while he explains that the contract is not something he plans to honor. A contract isn't a contract, a contract is whatever Shumlin thought the contract was.

"Our Word Is Our Bond." I find this far more frightening than if Shumlin said: "Yeah, it's in the contract, but Vermont is going to do its best to break that thing down. I don't like it, and Vermont has lawyers on staff. We'll bust it." That would at least acknowledge the existence and validity of a signed contract.

War is Peace. Signed contracts are the work of sneaky people from Louisiana. Vermonters don't have to honor such things, because in Vermont, Your Word Is Your Bond. War is Peace.

Acknowledgements:

I need to thank two excellent reporters for the information in this post. First, Anne Galloway of Vermont Digger who posted the YouTube above in her article on Shumlin's press conference. Terri Hallenbeck of Burlington Free Press for her incisive follow-up blog post which includes links to the history of other power plants in New England that have had delayed decommissioning. I also want to thank Howard Shaffer, whose short comment on the Hallenbeck article gave me the crucial idea for this post. I believe that the other reporter whose voice you hear on the video is John Dillon of VPR.

The Big Brother Image from Wikimedia commons is not exactly right for this post, but I can't find a DoubleThink Image. I can't even imagine what a DoubleThink image would look like. Or perhaps the video is the illustration?

Variable Pricing and Vermont Yankee: Another Reason the Hydro-Québec Deal Shows Legislative Desperation

Variable Pricing and Vermont Yankee

Recently, I published a post called A Bad Deal with Hydro-Québec. This post was later featured on the Energy Collective, where it had many readers and some interesting comments.

DaveL made several comments, and I would like to answer one of them in this blog. He asked (paraphrase): "Why are you attacking the HQ deal because it is a variable price contract? After all, variable price contracts save the ratepayers money when the price of electricity goes down, which is more than a fixed rate contract will do."

Here's an expanded and edited version of my response.

The Legislators of Vermont Hated Variable Pricing

DaveL: I need to put my remarks about variable pricing for HQ power in context. The Memorandum of Understanding (MOU) for Vermont power purchases after 2012 with Entergy was signed in 2002. It says that for ten years after 2012:

• Entergy will sell at the market AND
• If the market goes above 6.1 cents, Entergy will split the extra money with the utilities.

The MOU agreement with Entergy was a variable price contract with revenue sharing. If the market was below 6.1 cents, Entergy would just sell at the low market price. If electricity prices went up, there were estimates from the DPS (Department of Public Service) and others of Entergy returning tens to hundreds of millions of dollars to the utilities over the length of the contract. This money could have improved transmission lines, implemented the smart grid, or been returned to ratepayers in the form of lower prices.

The Senators and Representatives in Montpelier said this agreement, though signed, was totally unacceptable. That lousy Entergy wasn't giving Vermont a fixed price! Those Entergy scumbuckets were trying to get away with just stonewalling them! The newspapers were full of statements such as: "Negotiations stall as Entergy refuses to name price."

The Legislature was trying to pressure Entergy into changing the MOU. However, a contract is a contract, and it takes agreement from both sides to change it. Entergy preferred the MOU, and the MOU was a good deal for Vermont. If the price was electricity was low, that is the price Vermont utilities would pay Entergy. If the price went up, Vermont utilities got partially re-imbursed.

However, the legislators wanted a fixed price. Entergy has now given them a fixed price, and they don't like that, either.

Comic Relief

In one of the legislative committee meetings I attended in Montpelier, one of the legislators asked a utility consultant: "Why can't Entergy give us a fixed price AND keep the revenue sharing agreement?" The consultant had to explain that: "You can sell a kWh at market price and share the revenue, or you can sell it at a fixed price. You can't do both. A revenue-share on a fixed price is just a lower fixed price."

This question was a wake-up call for me about the level of knowledge of some of our legislators. In fairness to this legislator, VY currently has a fixed price agreement for most of its power, and a sort-of revenue sharing agreement for the power involved in a recent plant uprate. However, the legislator's follow-up questions did not show any knowledge of the uprate power contract. It was clear she thought 1) a low price fixed-cost power agreement is good, and 2) revenue sharing is good, so why can't we have both?

Capitulation to Hydro-Québec

Despite this hatred of variable-priced contracts, the legislators of Vermont were willing to buy market-price power from HQ. By doing this, they support HQ profits and HQ jobs while letting Vermont people hit the unemployment lines. These are Vermont people whose company offered a better deal for Vermont than HQ did.

The Memorandum of Understanding (MOU) is a much better deal for Vermont than the HQ contract. The MOU is public, it includes revenue sharing if the price rises, it's transparent, it's cheaper power, if only because of transmission costs at the same ISO price. End of story.

Instead, the Legislature chose to roll over and play dead for Hydro-Québec. Let's face it. The Legislature was desperate, as I noted in my blog post about the HQ contract.

As my Canadian friend said: Don't you guys realize that we only want your money?

Addendum: Some interesting links

I recommend Guy Page's op-ed in the Burlington Free Press about the future of Vermont Yankee and the consequences if it closes.

I was a participant in the latest Atomic Show podcast, led by Rod Adams of Atomic Insights blog.