The Second Lingering Lawsuit: The Attorney Fees

Attorney's Fees: The Second Lingering Lawsuit

Barrister

What it is: Will the state of Vermont have to pay Entergy's legal fees in the major recent lawsuit?

History:  The state of Vermont passed laws by which the state legislature could shut down Vermont Yankee.  Then the legislature spent a lot of time and energy discussing nuclear safety, which is an area that is regulated only at the federal level. A federal judge reviewed the record, and decided in Vermont Yankee's favor: the state was indeed, attempting to pre-empt a federal prerogative.  The judge also ruled that the state of Vermont also had to pay Entergy's legal fees.  

The state appealed this ruling, and the appeals court also ruled in Vermont Yankee's favor, on the same basis of pre-emption.  However, the appeals court ruled that Vermont did not have to pay Vermont Yankee's legal fees.  So the ruling on nuclear safety was the same in both courts, but the ruling on legal fees was different.  The legal fees at issue are over $4 million dollars.

What happened recently:  Entergy filed a brief claiming that it had other bases on which to claim the legal fees: you can see the brief here at Entergy Fees Memo, filed October 31. The state filed a brief the same day claiming that Entergy should not be allowed to appeal to other reasons to claim the legal fees: you can see that brief at State Fees Memo. 

What is next:  It's not really clear.

About the legal fees:  the state and Entergy are keeping their options open, I believe.  However, they haven't actually started an appeal process. An appeal would be a filing to the United States Supreme Court, and I see no such filing.

Pre-emption is a separate issue, and it was the main issue of state versus federal jurisdiction on nuclear safety. At this point, two courts have ruled against the state on this major issue. The state can appeal those rulings to the Supreme Court.  However, with such a consensus from the lower courts, and the plant shutting down, such a state appeal seems a fantastic waste of taxpayer money. (I am not claiming the state won't press this appeal, you understand.  I just think it isn't very likely.)

Notes: Yesterday I blogged about another lingering lawsuit: the generation tax.  I plan a sporadic series of such blogs to keep up with the legal issues. 

Preemption: Why The State Won't Appeal the Vermont Yankee Ruling

The Crystal Ball

Appeals Court Confirms that States Cannot Regulate Nuclear Safety

Recently, the Appeals Court ruled that the state of Vermont was trying to regulate nuclear safety. By federal law, nuclear safety is regulated at the federal level: therefore, regulating it at any other level is preempted by the  Constitution.  The Constitution says that when there is a conflict, Federal laws overrule state laws (Supremacy clause).

In this blog post, I give some of my reasons for believing that the state of Vermont will not appeal the Appellate Court ruling. I think Vermont will not appeal, and the case will not go to the Supreme Court.

Okay. Deep breath here. Every now and again, I look into my crystal ball while sticking my neck out.  It's a complicated maneuver, but hey--I blog. I make predictions.

Unlike the well-dressed lady in the painting, I usually need to give some reasons for my predictions.  If I gave all my reasons, this would be a terribly long blog post.  This post is only about my preemption reasons.  But first, an overview.

Five reasons the state won't appeal 

I am not a lawyer.  The appeals court ruling is written quite clearly, and I have reviewed it carefully. Within the ruling, I can reference five different parts of the ruling that convince me that the state will not appeal it. My reasons fall into two groups:

• Preemption: the first group  (three parts of the ruling) is about preemption,
• Money: the second group  (two parts of the ruling) is about money.  These reasons are NOT covered in this blog post, though I touch on one of them at the end.  I will write another blog post about this subject.

In this post, I am blogging about the preemption sections of the ruling. Here's a link to the ruling itself, for reference.

Preemption As Described in the Appeal Ruling


1) Vermont was Legislating on Nuclear Safety

It is a federal mandate to regulate nuclear safety through the NRC.  Both the district and the appeals court ruled that the Vermont legislature was trying to rule on nuclear safety, and preempting this federal mandate.

The appeals court more than upheld the district court ruling, it augmented it with more examples. For example, on page 10 of the appeals court ruling, it quotes a Vermont law in which the Vermont legislature required a certain arrangement of fuel bundles in the fuel pool.

On page 35 of the ruling, the court states explicitly that it agrees with the "district courts' careful analysis of the legislative intent."  On that same page, it notes the "remarkable consistency with which both state legislators and regulators expressed concern about radiological safety and expressed a desire to evade federal preemption."

The original ruling did not include the fuel-pool-arrangement quote,  or several other safety-related quotes that are included in the appeals court ruling.  Since the appeals court ruling confirms and extends the circuit court reasoning on legislating nuclear safety, this ruling means it would not be reasonable for the state to appeal on those grounds.  There's no judicial controversy here, so no rationale for an appeal.

2) The Footnote: Federal Rights Stay with the Federal Government

The right to rule on nuclear safety belongs to the federal government: nuclear safety is preempted to be a federal responsibility.  Neither Vermont nor Entergy can waive their rights about this preemption, because the power of the preemption does not rest with them.  Agreements in which Vermont and Entergy agree that Entergy shall "waive its rights" of federal preemption are meaningless:  the federal government has certain regulatory rights, no matter what agreements Entergy or Vermont sign.

In the Appellate ruling, the judges describe how the Vermont legislature attempted to put radiological safety issues into Memorandums of Understanding (MOUs) with Entergy instead of into the laws passed by the legislature. In these MOUs, Entergy supposedly "waived its rights" to preemption challenges.  This MOU strategy was Vermont's deliberate legal maneuver to avoid preemption challenges in the future.  On page 41 and 42 of the Appeals Court ruling includes several quotes from legislators explaining their "put it in the MOU" strategy.

And then, there's that footnote.

While not explicitly ruling on this "they waved preemption" strategy, the court wrote the following footnote (page 42 of the ruling):

33 We cite this provision of the 2005 MOU not for the purpose of ruling on whether a party may validly waive the right to bring a preemption challenge, but only to demonstrate the impermissible intent on the part of the Vermont Legislature. But see Olympic Pipe Line Co. v. City of Seattle, 437 F.3d 872, 883 (9th Cir. 2006) (“Preemption is a power of the federal government, not an individual right of a third party that the party can ‘waive.’ [The plaintiff] could not, therefore, waive a right that it did not possess.”

Blogger note...footnotes are important. Several of the early Vermont Law School blogs on the case were ALL about the footnotes!  In this situation,  I translate the footnote above as:

"Yeah, we could rule based on this one, too,  if we had time. ("But see" this other case....) We could rule on the fact that only the federal government can "waive" preemption, because only the federal government HAS it.  But this court has plenty of other evidence of the illegal intents of the Vermont legislature, so we don't really need to go there in order to make a solid ruling.  But still, there it is...preemption is a power of the federal government, not the right of a third party.  Just sayin'. "

In this case, the appeals court is mentioning an area which the circuit court didn't even cover--that is--the inability of a third party (Entergy, the state) to "waive" the federal prerogative of preemption. In my view, when appeals court brought up this issue, they made it harder for the state to appeal the ruling.  The footnote says: "Vermont, your actions have loaded another legal gun and aimed it at yourself.  We aren't bothering to fire it yet, but we just want you to know it is there..."

3) A separate ruling confirms the fact that states cannot rule on nuclear safety. 

The appeal was heard by three judges: Susan L. Carney, Christopher F. Droney, and Paul G. Gardephe.  Judge Carney agreed with the ruling, but she wrote a separate opinion because she agreed with it on different grounds. Carney's nine-page ruling starts after page 53 (the end of the combined ruling) in the decision.

Basically, she concurs that the Atomic Energy Act was meant to prevent state legislatures from regulating nuclear safety.  She quotes the majority ruling that "the State legislative record before us is 'replete with references to radiological safety.' " She further notes that "no reader of this record can fairly claim that the statutes at issue were not "grounded in safety concerns."

But then she begs to differ.  She basically claims that the Supreme Court case (Pacific Gas, 1984) which is referenced throughout the rulings goes too far in its requirements that states avoid regulating nuclear safety.  As I read her ruling, she would prefer if states could consider nuclear safety along with other concerns in their deliberations about a power plant.

However, in the last two sentences, she acknowledges that "there is no avoiding the Supreme Court’s teachings in Pacific Gas. The statutes before us are preempted, and I therefore must concur. "

In my opinion, this separate concurrence means that this ruling is completely correct in terms of existing precedent.  In other words, the state should only appeal this ruling IF the state thinks the Supreme Court will overturn the Pacific Gas decision.

That's a pretty high bar.

Okay. While I think "Pacific Gas has to be overturned for Vermont to win" is a reason that Vermont won't appeal, I admit that it is the weakest of my set of preemption reasons.  Vermont is a state of about 600,000 people.  In other words, it doesn't really have a tax base to support mounting precedent-setting challenges at the Supreme Court level.   But it could decide to do this anyway.  As I said, it is the weakest of my reasons that the state won't appeal.

The Three Reasons Vermont Won't Appeal on Preemption Grounds  

1) Three opinions (District opinion and two opinions at the Appellate level) concur that the legislative record shows that Vermont was trying to legislate nuclear safety.  All three opinions agree that safety regulation is reserved to the federal government.

2) There's a whole separate legal argument that could be mustered about the Vermont legislature trying to hide the preempted concerns in "waivers" in Memorandums of Understanding.  The Supremacy Clause of the Constitution cannot be abrogated by third party "waivers." This legal comment was made by the judges in a mere footnote to the case.  In my opinion, that footnote was a warning to the state that they were on shaky ground in this case, eight ways from Sunday.

3) Even a judge who would have liked to rule for the state (as I read it) admitted that existing Supreme Court precedents meant she must rule against them. (Carney's separate opinion.)  If Vermont takes the case to the Supreme Court, it would not be arguing about the legislative intent any more (that is settled, see above) but about changing a major precedent. That's a harder argument to make.

Another Reason Vermont Won't Appeal

Follow the money.

This appellate ruling reversed a different section of the district court ruling--the section that was the basis for Vermont having to pay Entergy's legal fees.  The Vermont Attorney General is quite reasonably counting this as a win: By appealing Murtha's decision, I saved the state around five million dollars!

The preemption question is solid in all the courts, but the legal-fees part has gone back and forth. In other words, since the courts have already disagreed on the issue about legal fees, in a further appeal, the state risks the court reversing itself on this and making the state pay Entergy's legal fees.

I think the state will take the money, declare victory, and go home.

However, the financial implications of the ruling have to be a blog post for another day.

Vermont Yankee Wins in Appeals Court

We have great news about Vermont Yankee: the appeals court ruled in their favor!

The fight has shifted to the Vermont Public Service Board. Your input to the Vermont Public Service Board is still needed and valuable.

The Appeals Court Ruling

On Wednesday, the federal appeals court in New York ruled in favor of Vermont Yankee.  They basically upheld Judge Murtha's decision that the Vermont legislature had attempted to shut down Vermont Yankee on illegal grounds.  The legislature was trying to regulate on the basis of nuclear safety, which is regulated by the NRC.

You can read a good summary of the case by Dave Gram of AP. To quote the first sentence of his article: "Vermont's attempts to close its lone nuclear power plant were deceptive and misleading, a federal appeals court ruled..." Andrew Stein at Vermont Digger also has a good article.  In addition, here's a link to the actual appeals court ruling.

My summary of the state's case against Vermont Yankee was written shortly after the appeals court hearing in January.  The state claimed that they wanted to shut down Vermont Yankee due to economics, not safety.

Economics? Really?  In appeals court, Vermont claimed it had a reason to shut down a plant for too low a price, and for sharing revenue with the Vermont utilities.  In other words, the legislature claimed to want to shut the plant down because it is an economic asset.

The appeals court judges noted the legislature's real reasons for trying to shut it down. They were trying to regulate nuclear safety.

Yes, they were regulating safety

The appeals court ruling includes a long history of court cases about Vermont Yankee. Here's an example.

Go to page 10 of the appeals court document to see a quote from a Vermont law passed in 2005 (Act 74). In this law, the state legislature requires Entergy to "configure the spent fuel pool so that high-decay heat assemblies are surrounded by low-decay heat assemblies."  (Sarcasm alert)  Gee, Entergy would NEVER have thought of doing that, without this legislation!  (End sarcasm alert.)

On to the Public Service Board

Governor Shumlin is not happy with the ruling, and he issued a press release including the following statement: While I disagree with the result the Second Circuit reached..., the process does not end today. Importantly, the Vermont Public Service Board's role in reviewing Entergy's request for a state Certificate of Public Good ...will continue.

In other words, the Public Service Board must still issue a Certificate of Public Good in order for Vermont Yankee to keep operating.  Shumlin clearly hopes they will not issue the certificate.

Cheryl Hanna

Pat Bradley of WAMC interviewed several people about this ruling, including me.  (I encourage you to listen to this four-minute segment.)

• I wondered whether the board will look at the economics of Vermont Yankee, or whether it will listen to the anti-Vermont Yankee charge being led by the Shumlin appointees at the state Department of Public Service. 
• Cheryl Hanna of Vermont Law School said the appeal court decision was no surprise. (Hanna had written an article predicting this outcome, right after the hearings in January.) She also said that whoever wins at the Public Service Board, the other side will almost undoubtedly appeal the decision to the Vermont courts.

 Still Time to Comment

I believe you can still comment to the Public Service Board, through the end of the month.  Here's a link to the docket:
http://psb.vermont.gov/docketsandprojects/public-comment?docket=7862

And here's a link to a recent post with some background material for comments.

Long, thoughtful comments are always very welcome, but one or two sentences in support of the plant are very helpful.  You can write a great letter, or you can write a short postcard.  Share your own reasons for supporting Vermont Yankee: the plant's community support, economic impact, and positive effects on the environment (compared to fossil fuels).

Law and Facts won this round!  Onwards!

It Was Safety, Safety, Safety. Lawyers can't rescue a weak case

Op-Ed by Meredith Angwin

The state of Vermont was back in federal court in January, again claiming that the Senate vote of 2010 was a legally valid reason for the state to close Vermont Yankee. This was the second attempt by the state to make that case. A year ago, U.S. District Court Judge J. Garvan Murtha ruled for Entergy, Yankee’s owner. For the federal appeals court hearing in January, Vermont Attorney General William Sorrell switched gears a bit: He hired high-priced legal help — Washington, D.C., litigator David Frederick.

Attorney General Sorrell

After the Murtha ruling, some plant opponents claimed that the state had simply been “outlawyered” by Entergy. Sorrell took the reasonable next step of getting a more high-powered attorney for the appeal. However, a good lawyer can get you only so far if the facts aren’t on your side. The state’s real problem is that it has a weak case.

Federal Jurisdiction

Like airplane safety, nuclear safety is regulated by the federal government, not the states. Regulating nuclear and airline safety is a federal mandate partially because of the complexity of the regulated activities and partially to prevent wide variations in the degree of regulation among states.

The Vermont Yankee case hinges on a state Senate vote that denied Vermont Yankee the state-required certificate of public good. Murtha ruled that the Legislature had encroached on the federal mandate to regulate nuclear safety. Murtha based much of his ruling on quotes that referred to plant safety. In Murtha’s view, these quotes from the legislative debate revealed the motive for the senators’ votes.

To prevail in its appeal at the 2nd Circuit Court of Appeals, the state had to address this question: If safety concerns didn’t drive the Senate vote to reject Vermont Yankee’s application for a certificate of public good, what did? Citing a 1983 Supreme Court ruling that recognized the state of California’s right to regulate the economic aspects of a nuclear power plant, Vermont’s lawyer tried to make the case that his client had economic reasons to close the plant. It’s a tough case to make.

Economics and Timing

Graph from the Consensus Report

For starters, the timing of the Senate vote three years ago provides strong evidence that economics was hardly an overriding concern. The Legislature had commissioned a report on the economic impact of Vermont Yankee and of aggressive development of renewable energy sources. This report was to be jointly prepared by two separate economic firms and called the “consensus report.” The study was due to be completed in March 2010. Yet the Senate cast its vote on Vermont Yankee in February. It is also worth noting that the February vote came shortly after a tritium leak was discovered at the plant. Although the tritium posed no threat to public health, it did generate a huge outcry about the safety of plant operations.

It seems clear that the Senate didn’t wait a few weeks for the economic consensus report because their vote wasn’t about economics.

During his arguments before the three-judge panel, Frederick was forced to resort to a fair amount of speculation to make an “economics” case. He claimed that if Entergy were to go bankrupt and if the Nuclear Regulatory Commission didn’t do an adequate job of supervising the decommissioning fund, then the state might face financial liabilities in the future. This degree of hypothesizing about events that “could” happen is unlikely to prove convincing.

Economics Today: Vermont Yankee May Pay Vermont Utilities

In terms of present-day economics, Frederick was on even weaker ground. He said that the paid-off nuclear plant makes it hard for newer plants to be built. That statement implies Vermont has an economic incentive to shut down cost-effective power plants. Entergy’s attorney, Kathleen Sullivan, argued that no Vermont utility is under any obligation to buy Vermont Yankee’s power, whether it is expensive or cheap. She pointed out that different circumstances prevailed in California in 1983 when the Supreme Court allowed a state to regulate the economic aspects of nuclear power. The California plant sold power directly to customers at regulated rates. Vermont Yankee, however, sells its power to the grid. Frederick countered her by saying the utilities still have a “relationship” with Vermont Yankee — one worth $587 million.

Frederick was referring to a revenue-sharing arrangement that was part of the original sales agreement with Entergy. The provision, which kicked in last year, says that if Vermont Yankee sells power for more than 6.1 cents per kilowatt hour, it has to split the revenue above 6.1 cents with Vermont utilities.

That agreement is worth potentially hundreds of millions to the utilities and ratepayers of Vermont. Its value depends on the price at which Vermont Yankee sells its power. I don’t know where Frederick derived such a precise number ($587 million) for the revenue share. However, a half-billion dollar financial relationship will be very helpful for the utilities (and therefore the ratepayers) of Vermont. Utilities could use the money to improve infrastructure or avoid raising rates.

Hundreds of millions of dollars in potential revenue sharing is not a reason to shut the plant down. What, exactly, is the logic here: Shut it down before it shares money with us?

Professor Hanna

A Lawyer's Opinion

Frederick’s statements on revenue sharing went by in a flash, near the end of the hearing. The appeals hearing in New York City was very brief. The court had scheduled 15 minutes for arguments from each side. From opening gavel to “thank you” from the judges, it lasted 37 minutes, moving much like a rapid-fire tennis match. The good news is that it is possible to listen to an audio of the entire hearing in less time than it takes to eat a leisurely dinner. (The audio is available in my Jan. 15 blog post, at Yes Vermont Yankee.) The bad news is that statements that could easily have been refuted by the opposition lawyers or judges were not challenged.

Despite the brevity of the hearing, the judges are expected to take weeks or months to rule on the appeal.

In her recap of the hearing, Vermont Law School professor Cheryl Hanna wrote, “The state should be happy that the bench at least took seriously their argument that Judge Murtha should not have ruled as he did. Whether the gravitas and intellect of Frederick is enough to convince them in the face of overwhelming evidence that the legislature was (not) primarily motivated by safety is harder to call. The state still bears the burden, and the facts and (in my opinion) the law still favor Entergy. If the state loses, it won’t be because it was out-lawyered.”

No, it will be because the state can’t make a credible case that Vermont officials were thinking about economics when they voted to close the plant.


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This op-ed first appeared in the Valley News (my local paper) on February 10 and I put up a blog post with a link.   It was also published at Vermont Digger. It may well appear in other places around the state (I sent to several more newspapers), but I thought is was time to put it on my own blog, too.

Column: Lawyers Can’t Rescue a Weak Case | Valley News

Column: Lawyers Can’t Rescue a Weak Case | Valley News

My op-ed in the Valley News this morning. In appeals court, Vermont lawyers tried to make the case that Vermont has "economic" reasons to shut Vermont Yankee.

Actually, of course, Vermont Yankee is a major economic asset to the state of Vermont. Vermont has no economic reason to close it.

As the title says: "Lawyers can't rescue a weak case."

Court House Update in February

I went to a Superbowl party, and everyone asked me: "What's going on with Vermont Yankee?"

It's very confusing.  As a matter of fact, the whole thing is as confusing as a complex play in a football game.  I wish I had instant-replay and colorful arrows to track the different players.  Anyhow...

There are four court cases, at least two Public Service Board cases, and maybe more.  Here goes.

The Four Court Cases

The first case is the federal appeals case held in New York City last month: 2nd Circuit Court of Appeals.  The state was trying to convince the court that it had economic reasons to shut down Vermont Yankee. The hearing was 30 minutes long and I think that the state's case is fairly weak.  In any event, the judges will rule in a few weeks or a few months or whenever.  You can read about it and listen to the hearing on my blog post:  State Claims Economic Argument for Closing Plant.

The second case is the intervenor case claiming that Vermont Yankee is operating illegally: this case was brought in Vermont Supreme Court. This is the "let's you and him fight" case, where the Public Service Board wrote a strange ambiguous letter that opened the door for such lawsuits.  You can read about it at my earlier Hot Potato blog posts. Or you can watch a succinct 90 second video from WPTZ at my post: The Short Version: Another View of the Vermont Supreme Court Hearing.The hearing is over, and we wait for a ruling from Vermont Supreme Court.

The third case is a new case, brought by Entergy, about the Public Service Board closing a docket. This case is also in Vermont Supreme Court. The Public Service Board had a docket, docket 7440, on the Vermont Yankee Certificate of Public Good, but they decided that docket was compromised by the various lawsuits. So the PSB opened a new docket, docket 7862, subject of my blog post: Docket 7862, Where Are You?  (Docket 7862 is now on the Public Service Board website).

In January, the Public Service Board closed docket 7440.  However, the "you and him fight" letter (see the second case) was on that docket, and closing the docket might have consequences.  I am not a lawyer, and I am puzzled.  However, Entergy reviewed the matter,  and they brought suit in Vermont Supreme Court against the Public Service Board for closing the docket.  An article by Susan Smallheer at the Rutland Herald gives the background of the case. The article ends with the confusing (to me) statement that the PSB thinks that by triggering an appeal by Entergy, the court cases would ultimately be simplified.

I also recommend you to read the Entergy brief, which I have posted at the Energy Education Project website.  It has appendices that give all the relevant statements, dockets, etc.  The Entergy brief is like a history of the case.  When you figure out this whole thing, write a comment or send me an email.  Okay?  Thanks.  I appreciate your help.

The fourth case is about money, specifically the sudden $12 million dollars a year tax that Vermont laid on "plants above 200 MW that started operations after 1965." Entergy claimed this was an unconstitutional levy on a single business.  (I agree!) A federal court recently said they lacked jurisdiction on this and dismissed the case.  I thought I would list it here, because it is an important case, in my opinion. It may be case-closed, or it may be heard in another court.  I don't know, but I think it is important.

The Two Public Service Board Cases

One of the cases is  Docket 7862, the new docket about the Certificate for Public Good. This seems to be going along according to schedule.  Public hearings are over, but public input continues.  You can submit your input through this form.  I hope you will write something about why you think Vermont Yankee should have a certificate of Public Good.

The other docket is about the new diesel generator, as mentioned in my post Black Start, BlackOut and Diesels. Due to a grid operator change in the classification of Vernon Dam, Vermont Yankee needs a new diesel generator, and needs a Certificate of Public Good for that diesel.  There was one hearing on this docket 7964, and it was not reported in the press.

Word of mouth says the hearing was very preliminary and inconclusive.  I bet it was!

• If the PSB grants permission for the diesel, are they also signalling that they plan to grant a Certificate of Public Good for Vermont Yankee?  
• If they don't grant permission, are they interfering with nuclear safety requirements?  

I personally think "inconclusive" will reign on this docket until other issues are resolved.

Football is over

Football is over until next year, but the court cases linger on....Sometimes I wish I wasn't the go-to person for these questions all the time.  It makes it hard to concentrate on the game. Can someone please pass the potato chips?

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.

Post on Federal Hearing at ANS Nuclear Cafe (and more)

Graph from economic report
March 2010

State Turns Economic Facts Upside Down

Yesterday, ANS Nuclear Cafe published my blog post: In Federal Appeals Court, Vermont Presents Backwards Economic Arguments. In this post I go through the Appeals Court hearing, and especially Vermont's claims of why they say they want to shut down Vermont Yankee. With quotes and examples, I show that Vermont's arguments are..well...bogus.

Yes, "bogus" is the word I used in the post, and I think it's the right word.  Though I am fond of the word meretricious, which Google defines as: "Apparently attractive but having in reality no value or integrity: "meretricious souvenirs for the tourist trade".

Let's look at these meretricious arguments.

First Vermont claimed they were interested in economics, not safety, when the Senate took their famous vote.  I point out that they voted in February. They had ordered an economic report on Vermont Yankee, but it was due to be issued a few weeks after their vote.  They voted anyway, not willing to wait for their own economic report on Vermont Yankee, which was issued in March.  Pretty hard to claim the vote was all about economics, under these circumstances!

Second, I quote their lawyer, who basically says that the state wants Vermont Yankee shut down because the paid-off plant makes it hard for new plants to compete.  The state has an interest in keeping electricity prices high?  That's a new one.

Third, in a last-minute salvo, the state lawyer said the revenue sharing agreement with Vermont Yankee is worth $587 million dollars (to Vermont utilities), and that agreement ties the utilities to Vermont Yankee, and that's a bad thing.  Again, a amazing statement.  True. Entergy may have to pay half a billion dollars to Vermont utilities, allowing them to upgrade infrastructure and/or lower rates to their customers.  How is that any evidence that the state should shut the plant down?

I end my ANS post with a quote from Cheryl Hanna of Vermont Law School   Hanna concludes that if the state loses the case (and she thinks it probably will), it is not going to be because the state was "out-lawyered." It will be because the facts and the law are mostly on the side of Entergy.

Please read my post about the hearing. I worked quite hard on it. I am pleased that it was chosen as Best of the Blogs at Nuclear Townhall yesterday.

Guy Page's Guest Post is Now at Energy Collective

Monday, I posted a guest post by Guy Page about the importance of the nuclear plants to the economy of New England.  He based his post on a New England Council report on energy and economics.  I am proud to say that his post has been picked up by The Energy Collective, a prestigious and widely-read blog about energy issues.  It's getting some good comments there, too. I am happy to see an important post on an important topic get more readership!  Energy Policy is Key to Vermont's Future.

Fun with Fuel Pools

XKCD is a scientist, cartoonist, and essayist.  On Tuesdays, he has a feature called "What  If?  Answering your hypothetical questions with physics, every Tuesday"  Yesterday he addressed the question: "What if I took a swim in a typical spent fuel pool?"   Great fun with beach balls!

For the geeky, I also recommend his comics. I love the one about energy density of uranium versus other fuels: Log scales are for quitters who can't find enough paper to make their point properly. 

Three Vermont Yankee Hearings: The Week of Living Lawyerly

The week of January 14, there are three different hearings about Vermont Yankee in three separate courts and on three separate subjects.  It is the Week of Living Lawyerly.

The hearings are in the Federal Appeals Court, the Vermont Supreme Court, and  the Public Service Board. (The Public Service Board hearing concerns the need for a new diesel generator.)

First Hearing: Federal Court

What: Federal Court of Appeals Hearing on State and Entergy Appeals

Where: 2nd Circuit Court of Appeals (in New York City)

When: January 14, Monday

Why: Judge Murtha ruled in favor of Entergy in the main federal case, and the state appealed the ruling. The state mainly challenged the part about pre-empting nuclear safety issues.  Entergy also placed two appeals before the circuit court.  The first appeal was about spent fuel rods, and the second appeal was about the NEC suit in Vermont Supreme Court.  This second appeal is discussed below, in the Supreme Court section. 

What is at stake: In the main issue, whether the Circuit Court will (or will not) uphold the Murtha ruling.  

What is at stake, part two: Whichever way the Circuit Court rules, both sides say they will appeal the Circuit Court ruling to the United States Supreme Court.  

Comments by the Blogger:

The Circuit Court calendar shows that both side have a full fifteen minutes each to present their cases.  This length of time seems to be standard for arguments before this court.  I am not a lawyer, but to me, this means that the written material in the docket is the important material.

In terms of the Entergy appeals,  Murtha granted the first appeal, and has just recently turned down the second appeal (about NEC and the Vermont Supreme Court).  I blogged about the turn-down of the appeal against the NEC case in  Hot Potato Continued.

I have some, but not all, of the docket material for the federal case (and the Public Service Board case) posted at Dockets for Public Service Board and Courts on the Vermont Energy Education Project website.

The State asked for "expedited oral arguments" in this case, with the arguments to be presented "as soon as November."  Entergy asked for more time.  The court granted the State of Vermont request for expedited oral arguments, but the arguments are being heard in January.  (Don't ask me...I have no idea what this implies.  I just thought I would mention it.)
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Vermont Supreme Court

Second Hearing:  Vermont Supreme Court

What:  Hearing on NEC Request to Vermont Supreme Court

Where: Vermont Supreme Court in Montpelier Vermont

When: January 16, Wednesday

What is at stake: A long-time plant opponent, New England Coalition against Nuclear Pollution (NEC) has asked the Vermont Supreme Court to step in and order Vermont Yankee closed. They want the Vermont Supreme Court to issue this order in accordance with a clause in the sale agreement from 2002.  The Public Service Board  and the Department of Public Service have asked the Vermont Supreme Court to deny this request.

What is at stake, part two:  If the Supreme Court were to issue an order to close down Vermont Yankee, everyone expects Vermont Yankee to appeal to federal court.

Comments by the Blogger:

I blogged about this subject extensively in Hot Potato, and Hot Potato Continued. I think that this case is a hot potato that the Public Service Board wants to throw to someone else.

UPDATE: I have put the November 29 Public Service Board statement and the Entergy request for dismissal on a new Vermont Supreme Court filings page at the Energy Education Project site.

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Emergency backup diesel generator
At a sewage treatment plant

Third Hearing: Public Service Board 

What: Hearing on Certificate of Public Good for Station Blackout Diesel Generator Docket #7964

Where: Public Service Board Hearing Room, Bank Building, Montpelier

When: January 17, Thursday

What is at stake: Will Vermont Yankee be allowed to install a new back-up diesel generator?   Vernon Dam will no longer be considered a Black Start facility by ISO-NE. (I blogged about this in Black Start, Black Out and Diesels, Some Clarity) Since the dam will not be maintained as a Black Start facility, the NRC will no longer consider it to be qualified as a Station Blackout back-up facility.  (The dam is still there, of course, and Vermont Yankee still has a direct line to the dam.)  So Vermont Yankee needs a new station black-out back-up facility.  In most cases, this would be a stationary diesel generator.

What is at stake, part two:  In most cases, getting a new back-up diesel for a power plant would be a slam dunk.  However, the Public Service Board is concerned that if it grants a permit for this piece of safety equipment,  Vermont Yankee would continue to operate.

Wait! Whoops!  That was snarky of me.

Of course, I meant to say that the Public Service Board is concerned because

Normally, the Board would not consider a petition from a company that is not in compliance with existing Board orders, unless that company also demonstrated an intent to come  into compliance. Entergy VY has not indicated such an intent here.

That's a quote from the order, and you can read the entire Public Service Board order setting up the diesel-docket here.

It is important to note that "non-compliance with Board orders" basically means...the plant is still operating, after March 21, 2012, while hearings are on-going.  The Board has several dockets about the Certificate of Public Good, and the Board claims that, according to one of the dockets, the plant is not in compliance because a new Certificate of Public Good has not been yet been granted by the Public Service Board.

Comments by the Blogger

No comment.

High Level Waste and Legal Wrangles at Vermont Yankee

High Level Waste is a (legal) Question At Vermont Yankee

Low level waste is a success story, but high level waste is a legal question at Vermont Yankee.  High level waste storage has become a central issue as the federal court case begins the appeals process.

Spent Fuel as Pretext

In the past, the Vermont legislature attempted to shut down Vermont Yankee on several pretexts.  One pretext was that the original Memorandum of Understanding allowed Vermont Yankee to store spent fuel produced while that memorandum was in effect, through March 2012. The legislature claimed that spent fuel produced AFTER March 2012 was a different story.Vermont Yankee had no right to store that fuel.

In January, Judge Murtha ruled that Vermont could not shut down Vermont Yankee over spent fuel storage, because spent fuel is regulated at the federal level. That seemed clear enough, but the Public Service Board (PSB) seemed to take the attitude that Murtha meant the Vermont Legislature couldn't refuse to allow spent fuel storage but surely the PSB could refuse to allow it.

In March, Murtha clarified the situation by ruling again. (Ruling is here).  I quoted the ruling in an earlier blog post, as follows (emphasis added by me):

Therefore, Defendants are enjoined, pending the appeal of the Court’s final judgment and Merits Decision to the Second Circuit, from addressing the storage of spent fuel ... from bringing an enforcement action, or taking other action... to compel Vermont Yankee to shut down because the “cumulative total amount of spent fuel stored at Vermont Yankee” exceeds “the amount derived from the operation of the facility up to, but not beyond, March 21, 2012.”

That seems like that statement was pretty clear.

Expeditious Hearings

Of course, the state doesn't give up so easily. Recently, the state asked for "expedited oral hearings" in the federal appeals process, mainly due to the spent fuel storage issues.  Several days ago, the circuit court judge ruled in their favor about the hearing schedule. There will be expedited oral hearings, because maybe, just maybe, the state actually does rule spent fuel storage, and all that Federal prerogative stuff isn't very important (sarcasm alert).

As noted in the Brattleboro Reformer article, the state... argued that an expedited resolution is necessary to determine what will be done about the storage of spent nuclear fuel produced by the plant.  The judge granted their request for an expedited hearing.  Here's a link to the State argument for expedited hearings, the Entergy response, and the Judge's ruling allowing expedited hearings.  

To me, it seems clear that it is a federal prerogative to regulate spent fuel.  Nevertheless, the issue will  be heard in court once again.  The state will get its hearing in the federal court, with "expedited oral" arguments.

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Note: you can link to many filings in the Federal and Public Service Board dockets at this page at the Energy Education Project website: Dockets for Public Service Board and Courts

Vermont Yankee and the Public Service Board: The Questions

Everyone Appeals the Ruling

After Judge Murtha's ruling on Vermont Yankee, the State decided to appeal to the Circuit Court. Entergy did not appeal the ruling, but instead prepared to go before the Public Service Board (PSB) for a Certificate of Public Good.

Originally, Entergy had wanted the judge to rule that the PSB docket was tainted and Entergy did not have to go to the PSB for the Certificate. However, the judge did not rule that way. Entergy did not appeal the judge's ruling, which was very favorable to Entergy overall.

Perhaps Entergy should have appealed immediately after the ruling, instead of deciding to go before the PSB. Last week, Entergy appealed to Judge Murtha and to the PSB. My article published at True North Reports covers the sequence of events. I encourage you to read The Many Appeals of Vermont Yankee at True North Reports.

Why Vermont Yankee Appealed

There is a hearing on the Entergy docket before the PSB this Friday, March 9. It is described as a "status hearing" on the PSB website. In advance of the hearing, the PSB sent Entergy a list of questions, listed as "memorandum re request for comments on procedural issues" on Feb 22 on the PSB website. You can read the questions here.

My first impression when reading the PSB questions was simple: Did one of the anti-nuclear groups write this memo? The questions didn't look like inquiries from an impartial board. Here are the two main questions.

• Used Fuel: The PSB asks whether Vermont Yankee plans to store more used fuel from continued operation, since after all, used fuel storage is not in the original Memorandum of Understanding, and this subject was not (in the PSB's opinion) pre-empted from state oversight by the ruling. Of course, the judge was very clear that the state cannot regulate radiological safety, but the PSB doesn't seem to quite "get" that.
• Pocket Veto: The state law governing PSB activity says that an existing Certificate must be honored until the PSB rules on a new one. However, the PSB asked whether the plant thinks it can operate after March 21, 2012 without a new Certificate. In other words, while state law says otherwise, the PSB seems to claim that the Memorandum of Understanding for VY gives the PSB a pocket veto of the plant. It's hard to tell whether the PSB is "asking a question" or "making a threat." I bet on threat, and the threat is: if we don't rule in time, you have to shut down, unlike the rules for every other docket before us.

Note: I am not directly linking to the questions on the PSB website because it is hacked or something. That document simply won't open for me! Luckily, I had downloaded the questions from the PSB site a few days ago, when the document DID open, and I put it on my own website for your reading pleasure. I have some key documents, such as the Memorandum of Understanding, the judge's ruling, and the PSB questions on a page called YesVY downloads.

What You Can Do

This is a very active controversy, and I will have to update the situation next week. Meanwhile, if you go to the PSB website, you can see Entergy's requests and all the Intervenor comments.

More important, you can file a public comment on this high-handed set of question through a link on the PSB website. Comments are open until March 7, 2012.

Back to the Public Service Board: Next Steps for Vermont Yankee

The court ruled in favor of Entergy in the recent court case. In consequence, Entergy applied to the Public Service Board for a Certificate of Public Good for Vermont Yankee.

Judge Murtha's ruling in the case is over 100 pages long. At one level, however, it can be summarized as follows:

The State of Vermont tried to alter a contract unilaterally. That is not allowed. The contract still stands. Just as it says in the contract, the Public Service Board will decide on the Certificate of Public good. The Public Service Board cannot consider radiological safety in granting this certificate, because that is the responsibility of the NRC, not the states. Also, the Board can't insist on below-market electric rates for in-state utilities, because that is against the Interstate Commerce Clause of the Constitution.

The Memorandum of Understanding

The contract that determines how Vermont Yankee applies for the Certificate is the Memorandum of Understanding. This is the contract between Entergy, the state and utilities, signed in 2002 when Entergy bought Vermont Yankee. It requires Entergy to obtain a Certificate of Public Good from the Public Service Board (PSB).

However, the fact that Energy actually applied for this certificate will be will be much discussed. During the trial, Entergy claimed that the PSB's neutrality had been seriously affected by the legislature's actions from 2006 to 2011. When the ruling was issued, it was not clear whether Entergy would appeal: the ruling put Entergy in the position of needing a PSB certificate in order to keep the plant operating. So far, Entergy has not appealed the ruling. It now seems that they have put the plant's fate into the hands of the PSB.

Both Entergy and the State have until mid-February to appeal, so it is not clear what happens next. Entergy could conceivably appeal while also applying to the PSB. The State could appeal and also request that the PSB not act until the court case is resolved.

It is all up in the air. As usual.

A Brief Guide to What They Are Saying

For a fuller review of the matter, I recommend these two articles. They are very different, and it is enlightening to read them and compare them.

Dave Gram of Associated Press reports that Entergy asked the PSB for a ruling. However, much of the article consists of a lengthy interview with one of AP's favorite nuclear opponents, Ray Shadis. Shadis worries that the PSB hasn't reviewed nuclear safety factors since Fukushima. Apparently, Shadis ignored the part of the judge's ruling which said that the PSB cannot consider radiological safety considerations. Shadis' comments make up most of the article.

Terri Hallenbeck of Burlington Free Press (BFP) provides a more complete report. She quotes plant opponents. However, she also quotes the Entergy CEO as he wonders whether the state will appeal. In this article, I learned that Entergy has until the end of this week to request legal fee reimbursement from the state. I also learned that PSB guidelines for a certificate do not require that a power plant provide service to Vermont. A very interesting article.

In my opinion, these two articles are an amazing compare-and-contrast, between mediocre reporting (AP) and excellent reporting (BFP). The AP article depends on the usual statements of the usual opponents. The BFP article obtains both sides of the story and includes a timeline about reimbursement.

A Final Note as We Await the State's Decision on Whether to Appeal the Ruling

Will the state appeal? Cheryl Hanna of Vermont Law School describes the bigger picture of federal prerogatives and attempted state pre-emptions. Her short, well-written interview is mostly about food safety, but definitely worth reading. Once there are federal laws regulating a subject, the role of the state is circumscribed. In other words, it is very unlikely that Vermont Attorney General Sorrell could win this case by appealing.