Friday, February 22, 2013

Vermont Yankee is Refueling and I Sort of Told You So

Carla Heath holds sign about Vermont Yankee's future
March 2012 rally for Vermont Yankee, at the plant gates
Vermont Yankee will refuel this spring.  An article Wednesday in the Burlington Free Press was headlined: Vermont Yankee plans refueling with eye on 20 more years.  This article by Terri Hallenbeck includes the following quote from Vermont Yankee spokesman Rob Williams:

“We’re proceeding business as usual and making upgrades where necessary,” Williams said. “As we plan this outage our assumption is we’re operating until 2032."

A more complete list of planned upgrades can be found in the Vermont Business Magazine article by Timothy McQuiston: Vermont Yankee Will Refuel This Spring.  According to that article: Among the operations planned for the outage to keep the plant up-to-date are: replacing and refurbishing some components; general preventative maintenance; replacing a large transformer; overhauling one of the three feed-water pumps; and replacing a recirculation-pump motor.

So why am I saying "I sort of told you so"?  These articles were posted on February 20, and this blog post is February 22.  I am just catching up with the news, right?

Not completely.  The background for this story always includes a recent financial analysis report by UBS.  The report claims that Vermont Yankee is uneconomical and may well be closed by Entergy.  Andrew Stein at Vermont Digger reports on this analysis. An earlier article by Stein provides a link directly to the UBS report.

I was interviewed about the UBS report last week.  I felt its conclusions were umm...overstated. In other words, I am not surprised that Vermont Yankee is refueling instead of closing down.

To some extent, I told you so. I told you last week.

Is Vermont Yankee Uneconomical?

Last week, Pat Bradley of WAMC interviewed three people about the UBS report.  I was one of the interviewees.  Bradley does a great job of summarizing the arguments in about three minutes.

As you might guess, I was the only interviewee who said Vermont Yankee was probably not going to close.  This was not just Meredith-being-optimistic. My reason was that natural gas prices set the price on the grid, and natural gas prices are high in the Northeast. So grid prices are higher here than other places.  Therefore,  merchant nuclear plants in this area can probably make money, especially since gas prices are very likely to rise in the future.

 You can listen to three people (including me) interviewed by Bradley at this link: Financial Firm Predicts Closure of Vermont Yankee.    About a day later,  Matt Wald of the New York Times wrote an article about gas and electricity prices: In New England, a Natural Gas Trap. His article confirmed what I said on the radio about gas and electricity prices in this region.  I also suggest reading Jim Hopf's ANS Nuclear Cafe post on Potential nuclear plant closures and what could be done to stop them.  The early section on natural gas prices is most relevant to Vermont Yankee.

In my opinion, the UBS report assumes natural gas prices are going to stay low for a long time.  There are many reasons to think the opposite.  I think:

  • natural gas prices will be highest in the Northeast (due to pipeline constraints)
  • prices will rise all over the country (as the gas glut diminishes over time).  

This means grid prices will be higher in the Northeast and merchant nuclear plants in this area will be in a good situation in the near future.

I think Entergy probably came to a conclusion similar to mine.

Vermont Yankee is refueling.

1 comment:

Howard Shaffer said...

Great post.

In the 1950's the New England utilities decided to get into the nuclear power business becasue........New England is at the end of every pipeline.