The Proposed Entergy Settlement is Good for Vermont

The Proposed Settlement

The state of Vermont and Entergy Corporation have been battling each other for years, but the two parties reached an agreement in December about the future of Vermont Yankee. Entergy has owned and operated the 42-year-old nuclear plant in Vernon since 2002. When Entergy announced plans to close the plant by December 2014, the state, which has passed laws aimed at preventing the plant from operating, seemed surprised. It also lost some negotiating leverage. Even so, the settlement, which the Vermont Public Service Board must still approve, is a good deal for Vermont — better than I thought possible. Let’s take a look its four main points: the Certificate of Public Good; pending lawsuits; payments; and decommissioning.

The Certificate of Public Good: In 2012, the Nuclear Regulatory Commission renewed Vermont Yankee’s federal license for 20-year-period, through 2032. However, to keep operating for that period, the plant also needed state approval, specifically a Certificate of Public Good from the Public Service Board. The Shumlin administration vigorously opposed granting such a certificate, and used the state approval process to try to force the plant to shut down when its original license expired. Now that Entergy has amended its petition to operate only through the end of this year, not through 2032, the state will be on Entergy’s side before the Public Service Board.

Lawsuits: The main federal lawsuit hinged on whether Vermont interfered in the federal regulation of nuclear safety. In both district court and in appeals court, Entergy won its case, arguing that the Legislature attempted to regulate nuclear safety when the state Senate voted in 2010 to deny the plant a certificate of public good. Nuclear safety, like airline safety and drug safety, is regulated at the federal level. Though Entergy won its case, both Vermont and Entergy conceivably had grounds to appeal to the U.S. Supreme Court. Now, according to the agreement, neither side will appeal. I suspect both sides breathed a sigh of relief.

The agreement also settled another lawsuit about a new “generation tax.” The state had raised the generation tax on Vermont Yankee to $12 million a year. This is a tax paid by Entergy for every kilowatt-hour that the plant generates. However, the higher tax rate applied only to power plants that were built after 1965 and were larger than 200 megawatts! Of course, there’s only one such plant in the state, and Entergy quite reasonably felt targeted. In the agreement, Entergy agreed to drop this suit and to pay the $12 million for 2014.

Payments: Entergy agreed to pay more than the new generation tax. In 2015, the plant won’t be generating any power, so Entergy won’t be required to pay the generation tax. However, Entergy agreed to pay the state $5 million in 2015, to help the state as it deals with the loss tax revenue Vermont Yankee generated. Entergy also agreed to other relatively short-term payments: a payment of $5 million to the Clean Energy Development Fund, and a further payment of $2 million a year for five years to help Windham County adapt to the plant closing.

In his address on the state budget, Gov. Peter Shumlin mentioned “one-time payments” from Entergy as part of his plan to close the state’s budget gap.

The state appears to have won the financial negotiations. However, the plant closing means that $60 million a year in payroll will disappear from the local economy. These payments hardly begin to close that gap for Vermont and neighboring states. As I have said before, it would have been far better if the plant remained open. Some people say that decommissioning will be a similar boost to the local economy, but it won’t be. Not in the next few years at least.

Decommissioning: This has been, and remains, the most difficult and contentious part of the agreement. When Entergy bought the plant in 2002, the agreement it signed with the state allows Entergy to use a delayed decommissioning plan called SAFSTOR, approved by the NRC. With
SAFSTOR, decommissioning can take up to 60 years but it could also be completed sooner. The state wanted to decommission the plant sooner, much sooner  —  immediately, as a matter of fact.

However, in the course of the negotiations, I suspect the state learned some facts about decommissioning. Decommissioning cannot start for six or more years after the plant is closed. After the plant is shut down, the last fuel from the reactor is placed in a spent-fuel pool. This fuel must cool in the pool for five years before it can be removed and put into dry-cask storage. In plants such as Vermont Yankee, the fuel pool is in the same building as the reactor.

You can’t begin tearing down the building while the fuel pool is still in use. So there has to be at least a five-year delay between plant closing and the beginning of major decommissioning work. Therefore, there will be a gap of several years in the economic activity around the plant. In the agreement, Entergy agreed to move the fuel from the pool in a timely fashion. In the press conference about the recent agreement, Shumlin said that all fuel bundles should probably be moved into dry cask storage within about seven years.

Maine Yankee dry cask storage

Other major decommissioning work can begin after the fuel is moved to dry casks. The decommissioning fund is around $580 million now, and decommissioning is estimated to cost between $600 million and $1 billion. Entergy agreed to start full decommissioning when the fund is large enough to to pay for the job. (Federal rules for SAFSTOR stipulate that owners can wait up to 60 years to complete decommissioning, no matter how big the fund.) Entergy also agreed to put $25 million into a separate fund for “greenfielding” the site. Greenfielding generally involves excavating, grading and seeding.

The Next Steps

Of course, not everyone is happy with the agreement. Opponents loudly insist that decommissioning must start immediately (it can’t), and others worry that it will take years for Entergy to have enough funds to start decommissioning. The definition of “greenfielding” is also contentious.

Even so, the agreement is a major step forward in what has been a hard battle between Vermont Yankee and the state. Both are arguing in favor of this agreement before the Public Service Board. That’s quite an unexpected development. Either side could withdraw from this agreement if the Public Service Board does not approve it by March 31, however. The board is now considering this plan, and the public comment period is still open. At the PSB website, you can read docket 7862 and write your comments. I encourage you to do so.

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Here is a direct link to the comment form on this docket.

http://psb.vermont.gov/docketsandprojects/public-comment?docket=7862

When reading docket 7862, you will note that there are two major document filings: the Memorandum of Understanding and the Settlement Agreement.  The Settlement Agreement is the agreement between Entergy and the state agencies, while the Memorandum of Understanding is the part of the Settlement Agreement that lies within the jurisdiction of the Public Service Board. The Board will rule on the Memorandum, but the Settlement Agreement was filed for informational purposes.


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The article above is an op-ed that I wrote (plus a short end section on links).

The op-ed has been published in the Valley News, True North Reports, and Vermont Digger.  It may also be published other places in Vermont. 

Radio Days: Podcast from Massachusetts and on the air in Vermont

On Tuesday Morning, Richard Schmidt and I debated Vermont Yankee's future against Michael J. Daley and Jeff Napolitano.  The debate was on WHMP radio, broadcasting from Northampton, Massachusetts.

Today, the podcast of the debate is on-line.  Also, there's a nice photo gallery of the debate.  I will write about this debate more in the future, but right now, I wanted to put up the links and thank WHMP for hosting it.

I can't write more now because I am going to be on the radio again later this morning, this time broadcasting from Waterbury, Vermont. From 11 a..m. to 12 noon, I will be on WDEV(AM 550, FM 96.1).  I will be on the Rob Roper Common Sense Radio Show.  This show is sponsored by the Ethan Allen Institute, which also sponsors the Energy Education Project that I direct.  Rob Roper is also the editor and force behind the web site True North Reports, which is always worth reading.  

There is No Jobs Bonus. Decommissioning Helps Long-Haul Truckers But It Destroys Local Communities.

Decommissioning Plans, Made by Nuclear Opponents

A recent post described the new taxes that Governor Shumlin's administration wants to place on Vermont Yankee. There are two taxes, actually: one on fuel rods, and one to increase the decommissioning fund. Meanwhile, at ANS Nuclear Cafe, Howard Shaffer wrote about opponent tactics. Opponents plan to form new "affinity groups" with the same people as members, but new names for the groups. Decommissioning is a major focus of these groups.

It's also a major way for the opponent groups to salve their conscience about throwing hundreds of people out of work. "Decommissioning will be a jobs bonus!"

No. It won't.

Will Decommissioning Funnel a Billion Dollars into the Vermont Economy?

In an early March press conference, Governor Peter Shumlin called decommissioning Vermont Yankee “a huge jobs issue for us.” He wanted immediate decommissioning of the plant because it would “fuel $1 billion” into the Windham County economy over the next ten years.

The jobs Shumlin is describing are not jobs held by the current workers. As reported in an article in True North Reports and updated in this blog, more than 80% of the plant employees would be laid off within two years of plant closure, whether or not the plant is put into SafStor. There are 650 employees at the plant now: in two years, less than 100 employees would remain.

Though plant people would be laid off, contract labor would be brought in for decommissioning. What kind of payroll would the contractors bring to the area, compared to the payroll of the plant when it is operating?

The Contractors Come to Town

People who have lived through a local plant decommissioning say that the effect of contractors is not noticeable in the town. Bob Blagden, a selectman in Wiscasset Maine while Maine Yankee was decommissioned, said the “contractors must have picked up some people, but it wasn’t noticeable.” A long-time resident of the town, who did not want his name used, said “They may have hired some people, but this was nothing in comparison with what we lost.”

Are these people correct? Or is Shumlin correct in thinking decommissioning is a jobs bonanza?

The residents of Wiscasset are correct. It took some research to figure this out, but a best estimate is that the total salaries for contractors in the area would be about $20 million a year, while the plant has a payroll of $65 million a year. Decommissioning is a job cliff, not a job bonanza.

What is a Billion Dollars?

Before reviewing the question “would decommissioning fuel a billion dollars?” for Windham County, we have to ask what “fueling a billion dollars” means. Is this money straight payroll, or does it count “multipliers”?

The “multiplier” effect is the well-known economic calculation of how many other jobs are based on a group of steady jobs. For example, two economic studies of Vermont Yankee started with the fact that there are 650 employees at Vermont Yankee, and a yearly payroll of around $65 million An IBEW study in 2008 calculated that Vermont Yankee provided 900 “multiplier effect” jobs in the state, while a separate report prepared for the Vermont legislature in 2010 claimed Vermont provided about 700 multiplier-effect jobs. Both estimated a multiplier effect of at least two times the plant payroll.

Being conservative, we could estimate that Vermont Yankee adds a total of $100 million a year to the local economy (less than a times-two multiplier effect). At that rate, VY “fuels” one billion dollars to the local economy in ten years, and in twenty years (till 2032) it would fuel two billion dollars.

In comparison, how much money would the contract labor of a decommissioning project add to the local economy?

Decommissioning the Yankee Plants

The total expenditure for decommissioning Yankee Rowe, Connecticut Yankee, and Maine Yankee was $750 million, $500 million, and $850 million, respectively. (Data from a paper on “Lessons Learned from Decommissioning” by Wayne Norton, president of Yankee Atomic.). The projects took varying amounts of time, from 7 to 15 years, but let us assume they all took ten years, in parallel with the Shumlin time estimate. At that rate, expenditure rates on decommissioning were between $50 and $85 million a year, numbers similar to that of the Vermont Yankee payroll.

However, comparing total costs of decommissioning to payroll costs of an operating plant is an apples-to-oranges comparison. Most significantly, decommissioning a nuclear plant includes major expenditures outside of the plant locality.

Decommissioning a nuclear plant requires millions of pounds of slightly radioactive waste to be hauled to low-level waste disposal sites in the West. Maine Yankee shipped 460 million pounds of waste, and Connecticut Yankee shipped 350 million pounds. Container manufacturers, long-haul truck drivers, and waste disposal sites are the recipients of waste-disposal money, not the people in the towns near the plant.

How much money stays in the towns near the plant and how much goes to hauling and waste disposal sites? We can start by looking at the probable payroll (not total cost) of decommissioning.

The Zion Explanation

I could not ascertain the local payroll versus haulage costs for the decommissioning the Yankee plants. These numbers are proprietary to the companies that did the work, and I hit a dead end trying to find out. However, there's a current decommissioning project in Illinois. The company doing that project, EnergySolutions, was very helpful to me.

EnergySolutions is beginning to decommission the Zion Nuclear plant in Illinois. EnergySolutions has a Zion website partially devoted to showing that Zion decommissioning will bring economic benefits to the region. The accompanying pie chart is on that website. The EnergySolutions public outreach officer for the Zion project, Larry Booth, was also kind enough to send me the economic report on which the chart is based "The Economic Impacts of Decommissioning the Zion Nuclear Power Station." (The report is not on the web.)

On the pie chart, we can see that the salaries for the ten-year decommissioning process at Zion add up to $215 million dollars.

In more detail, page 14 of the Zion economic report has a chart of personnel. That chart is at the top of this blog post. Double-click to enlarge.

At its height, in years 2 through 5, there will be around 300 people on-site decommissioning the Zion plant. That is about half the number of people working at Vermont Yankee currently. The six other years, the staffing is much lower, down to five people in year 10. Clearly, decommissioning is not a ten-year jobs bonus for the site.

Much of the Zion economic project report is devoted to explaining the multiplier effects of the project. This is called “output” on the pie chart. In the report’s careful reasoning, $200 million in on-site salaries generates $600 million in other economic outputs over ten years. However, using that multiplier, $1.3. billion in salaries at Vermont Yankee ($65 million per year for twenty years) would add $3.9. billion in other economic benefits, for a total economic impact of $5.3 billion dollars over the next twenty years of operation.

Apples to Apples Comparison

The solid facts are that Vermont Yankee has a payroll of $65 million per year, and decommissioning Zion will be a payroll of $20 million a year. Decommissioning the Yankee plants probably had a similar payroll, since the people in town saw little economic benefit from the presence of the contractors. As one well-connected man from Maine said: “I didn’t know anyone who got a job there.”

By careful assessment of multipliers, the total economic benefit of any project can look excellent. However, comparing apples to apples (on-site salaries to on-site salaries) decommissioning a nuclear plant is not a jobs bonanza compared to continued operation of the plant.

The Jobs Cliff

Closing Vermont Yankee will push the current plant workers off a jobs cliff, as described in a previous article. It will push the local economy off a cliff also, despite the presence of contract laborers. The contract labor force can be expected to have only about a third of the payroll of the operating plant.

Shumlin says that decommissioning is a “huge jobs issue.” It is, indeed, a huge issue. Decommissioning will be a huge job loss for southern Vermont. The one clear financial beneficiary from decommissioning Vermont Yankee will be low-level waste disposal sites in the West, and long-haul truck drivers. Decommissioning will be a financial loss for southern Vermont. It will destroy the local communities and the local job base.

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A version of this blog post was published at True North Reports. I am grateful to Rob Roper for permission to republish it here.

Taxing Fuel Rods: The Vermont Legislature Plans Another Law Which Will End Up in Court

The Vermont legislature is facing the fact that the Clean Energy Development Fund will cease to be funded when Vermont Yankee stops paying into it in March. This fund has paid part of the costs of many a solar panel and wind turbine. For the Vermont legislature, watching this funding go away is painful! Replacing this tax with another tax on Entergy is an important goal of the legislature, even mentioned by Governor Shumlin in a press conference that was mostly about recovering from Hurricane Irene.

So, the legislature coming up with another way to make Vermont Yankee pay into the clean energy fund. House bill H479 plans to tax spent fuel. The legislature must think these fuel rods are very valuable, because t they plan to raise tens of millions of dollars a year taxing them!

As usual in Vermont, this is almost certainly going to end up in court. The proposed bill H479 talks about nuclear plants in Vermont (plural). But there is only one plant. A tax aimed at only one company is usually illegal. However, as I pointed out in my post about the "Entergy must pay Vermont's Costs in the Lawsuit law, the Vermont legislature passes bills are illegal, unconstitutional, and can't be enforced. These bills make the faithful feel good. "We're doing something, even if it won't actually work."

The bill has two parts: a tax on fuel rods (amount unclear, perhaps $15 million a year) and a state-required decommissioning fund. The state-required fund ("post-closure funding tax") would require contributions of $25 million a year.

Howard Shaffer has an excellent post on this bill, which was published at True North Reports yesterday. His post: H479 Analysis: The Power to Tax is the Power to Destroy. Here's a quote from Howard:

Opponents have already circulated a petition to towns and cities within 20 miles of the plant, requesting support for a tri-state Decommissioning Oversight Committee. They intend to meddle, as they have elsewhere in New England. Their “contribution” consists of trying to get ridiculously low levels of radioactive contamination as cleanup standards. This has resulted in hauling off multiple truckloads of demolished concrete that pass granite boulders along the road that are more radioactive than the cargo.

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Image of dry cask storage from NRC student information area.

Update on the Lawsuit

Yesterday morning, Entergy filed for an injunction in federal court. Entergy asked that the state be enjoined against shutting down Vermont Yankee while lawsuits and appeals were pending. This was a predictable move in many lawsuits. Without an injunction against taking action, one side wins without a trial. You can imagine: "The renters sued me, so I will kick them out right now!" That sort of thing.

Update: Terri Hallenbeck of the Burlington Free Press has a well-written story about the filing, with more details.

According to a April 6 article by Bob Audette in the Brattleboro Reformer (the article is behind a paywall now) a report by Jefferies, an investment advisory company, predicted the plant would run beyond the March 2012 cut-off date. A quote from the report: "We believe it is presumptuous to assume that the plant will be shut down or that Entergy would lose the lawsuit."

Also yesterday, Governor Peter Shumlin gave a press conference. True North Reports has an excellent blog post about his press conference. In the conference, Shumlin repeated his claim that Entergy supported Act 160. Further, he claims that he himself had never discussed the safety of the plant, just the reliability. In the well-edited True North video that heads this post, most of the video time is given to Shumlin's answers at that conference.