Sunday, June 1, 2014

Employee Buyout Unlikely: Private Communications

Rod Adams and the Employee Buy Out

In March, Rod Adams visited Vermont and toured Vermont Yankee. He was impressed by the excellent condition of the power plant. He also thought about Vermont's heritage of employee-ownership, dairy cooperatives and so forth.  Rod began to think that the employees could buy Vermont Yankee, and run it as a "B" corporation that has social goals.  Such a corporation is not required to maximize profits.

Rod didn't just "think."  He contacted people and made inquiries. He posted about this idea, and so did I.  We were hopeful about it.  (I list references at the end of this post.)

My Phone Rings: Private Communications

Information for my blog comes from reading articles in the press or attending meetings (such as Public Service Board meetings). I rarely get a phone call.  In this day and age, a phone call means "I want to tell you something, and I don't want to leave a digital trail. Don't quote me directly. This is background stuff only."

After Rod's posts, I got phone calls from all over the place: local people and nuclear supporters from other parts of the country.

When I came to summarize this "off the record" information, I realized what I heard was pretty much in the public record anyhow.  Or I heard people's opinions, things that they wanted to share with me without a record.

Oh well. They needed to call.  I needed to learn in the way that I needed to learn.  So here's what I learned.

Employee Buy Out is Close to Impossible

Here are some of the reasons that an employee buyout is close to impossible.

Employees would not benefit that much.

Most employees would not participate in a buy-out.  Most employees are focused on making their own choices between:
  • getting the retention bonuses that Entergy has put in place versus 
  • starting anew somewhere else.  
Most employees have very little interest in investing money and time in something that is uncertain and would not protect their families.

The new owners couldn't get licenses

In general, both the NRC and state agencies insist that nuclear plant owners have solid assets and a solid track record. A co-operative company formed by employees would not meet NRC criteria for a license or PSB criteria for a Certificate of Public Good.  This would be true even if the company was backed by a wealthy private investor.

Political and Fiscal Opposition

The current Vermont administration has been very set against continuing operation of Vermont Yankee.  They have expressed this by testifying against the plant in front of the Public Service Board, calling the plant "Entergy Louisiana" at every turn, and taxing it outrageously.

Lake Champlain
The "taxing it" part is the one that would be impossible to fight.  The state assessed a $12 million dollar "generation tax" on Vermont Yankee.  This tax only applies to plants that were "built after 1965 and are greater that 200 MW."  That is a very targeted tax, and there is no particular reason that the legislature can't increase it to $18 million or more, whenever they decide to do so.  The way the law is written, nobody but Vermont Yankee will be hurt by such an increase.

(Ummm, a completely unscientific survey conducted by Meredith Angwin reveals that most plants of this size pay a generation tax of less than $5 million dollars. Hey, as long as I am talking about "private communications," I may as well throw that one in, though tax records are public in general.)

There have been many other taxes, also, including a tax to clean up Lake Champlain (on the other side of the state from the plant) and to support Clean Energy projects. And there are other taxes. The state requires Entergy to pay the Red Cross for shelters in case of an evacuation: Entergy must pay the Red Cross a total of $700,000 over a period of four years.

It is nearly impossible for a business to fight taxes at this level. There is no reason to believe that employee ownership would lead to any less state taxes.  Vermont Yankee would still be a nuclear plant and they would be employees of a nuclear plant.  They would be worse: they would be owners of a nuclear plant.  The taxes would stay.


I conclude that an employee buyout of Vermont Yankee is close to impossible.

I am sorry to conclude that there will be no employee buy-out, but I thought I had better make this statement explicit on my blog.



Rod Adams

What a Waste---Vermont Yankee is in beautiful condition (March 28)

Vermont Yankee: Clean Kilowatt Cow That Deserves Saving  (May 1)

Save Vermont Yankee. If not you, who? If not now, when? (May 6)

Meredith Angwin

Saving Vermont Yankee: Rod Adams Moves Forward (May 7)

Employee Ownership (May 8)

Posts about Taxes:

Millions for education but not one cent for tribute (Meredith Angwin at ANS Nuclear Cafe, December 2013)

Vermont Yankee asked to pay $200,000 in 2014  Terri Hallenbeck at Burlington Free Press on how Vermont Yankee must continue to pay Red Cross for shelters. (Article undated, apparently early 2014)


Robert said...

One subject that could be a story on your blog is: Why does the government and (some) of the people in Vermont hate, hate, hate the facility so much? None of this would be such a problem if not for the hate of 1000 suns (pun with solar energy). There does not seem to be as much hate in other parts of the country. I believe even San Onofre would be running if not for its mechanical problems. Where did all that hate come from and why Vermont?

Meredith Angwin said...


You are correct. Though there are nuclear opponents everywhere, they tend to be especially loud and powerful in Vermont.

I agree that this should be a blog post, but meanwhile, here are two reasons:

1) Vermont is very small. 600K people total. So a small group, especially a group with a lot of people from Massachusetts, can be a big influence in Vermont.

2) Most of the country has two major political parties. Vermont has three. We have a party called the "Progressive Democrats." They have more extreme views than "regular" Democrats, and they are universally and uncompromisingly against nuclear energy.

The problem is that with a multitude of political parties, you basically need a coalition to have a government. To join the coalition, a more-radical group can insist on having the more-centrist group follow a radical agenda.

To get down to brass tacks on this, the one time Shumlin lost a state-wide election, it was because the Progressives had run someone against him. This split the liberal vote, and Shumlin lost. But Shumlin learned his lesson. Nowadays, in my opinion, if the Progressives say: "Jump!" Shumlin answers: "How high?"

Defeating nuclear energy is an important goal of the Progressive Democrats, as it is with the Green Party in Germany.

Sigh. Maybe I should have written a blog post...

I'll just sum it up by saying: Good question, Robert!

Raymond Shadis said...

Hi Meredith,

You have an interesting take on the effect of a three party (or even multi-party) field. Are you saying that Progressives formed a coalition with the Democrats before the election? I was an invited speaker at the Progressive convention and I didn't see it. Post election, the Democrats held a substantial majority and so could dispense with coalition building. If I were cynical about Governor Shumlin's anti-VY (continued-operation) posture, I would wonder if substantial campaign contributions didn't reinforce his determination. It is all part of the political game. I met with Shumlin's predecessor Jim Douglass to talf about Entergy's extended power uprate of VY and he danced a different dance with friends of VY paying the pipers. I do not doubt though that his integrity was intact, as in my opinion was Shumlin's. The Vermont lake (Champlain as you call it) restoration fund (tax) was created, BTW, on Governor Jim's watch. He also signed the VY bills thrown out by the Federal Courts.
Just a few words about the now defunct VY employee coop nuke proposal. Aside from state and federal regulatory hurdles, I do believe that upon closer examination you will find that no amount of employee enthusiasm can overcome what Vermont Yankee Nuclear Power Corporation found in 1998-1999: a 600 MWe Nuke Boiler just doesn't cut it in a competitive market. Ross Barkhurst and the VYNPC crew were surprisingly good at what they did and they did their best, but they didn't dare , for fear of accelerating wear and tear, try for a 4 or 5 % power uprate, as recommended by the VT PSD. VYNPC also added into the viability equation a rotten condenser and rotten cooling towers, and major cable separation issues. Mind you, they were also operating with very little thermal exchange margin.
VYNPC decided to sell the plant to - Anybody!
Amergen (PECO) bid $12 million then $19 or $20 in a scavenger operation. El Paso gas took a sniff and passed (pun). Then Entergy waded in with $198 million in 2001-2002 and just a hint of due diligence and bought a market place loser. Entergy displayed peak entry-level hubris on the theme of "We are bigger therefore smarter and stronger".
Well, they had the NRC chastise them for repeated cable separation issues, a transformer caught fire, reactor nozzles cracked, steam dryer cracks showed up, condenser leaking occurred repeatedly, cooling tower collapse, buried piping leaking, piping corrosion leak-throughs, turbine rotor wearing, control and instrumentation failures, design failures, and (under the velvet-fist-in-the iron-glove Entergy's quality assurance program)a whole series of employee and management-employee-contractor communication screw-ups.
In 2002, the Vermont Public Service Board opined that Entergy would likely do a better job of running VY than VYNPC.
Were they wrong?
Doesn't really matter on the local level now, does it?
Entergy has plainly stated that their decision to close VY was unswayed by any consideration save profitability. On that I am willing to take the at their word.
Sane people will realize that as far as VY is concerned, we are all on the same side now, we want the best possible decommissioning outcome for the environment and the affected public. Let's work together toward that.

Raymond Shadis
New England Coalition

Meredith Angwin said...


After Entergy said it would close VY, I announced that I would no longer publish anti-Vermont Yankee comments on this blog.

Yet I just published your rant about what a lousy broken-down plant it is. Along with your fart joke, carefully pointed out in case we didn't get it.

I won't break my rule again. I don't know why I published your comment, except that I was so surprised that you wrote at all.

No. We aren't on the same side now.

We never have been.


P.S. Governor Douglas has only one s at the end of his name.

Anonymous said...

I'm not on your side, either. You and your kind ruined me and my family's financial security by taking away my livelihood. We will likely lose our home, I will lose my life savings, and my children will never go to college because of what you have done. If destroying people's lives gives you pleasure, if taking away the dreams of children in their most formative years makes you happy, then I can only wish God's worst curses upon you. And you can take your decommissioning and shove it.