By Bruce Parker / July 8, 2015 / Vermont Watchdog
“We got a 20-year contract with NextEra, which is not very typical,” David Hallquist, CEO of Vermont Electric Cooperative, said of his company’s move to stock up on low-cost nuclear generation.
“The generators who are going to be around a long time, such as a nuclear plant, are going to sell long-term contracts. And with the volatility of the forward capacity market … we expect upward pressure (on prices) to continue,” he said.
Hallquist said his company filed a petition with the Public Service Board the last week of June to get approval of the long-range contract with NextEra, a Florida-based energy company that operates a nuclear power plant in Seabrook, New Hampshire. The nuclear plant is attracting business as officials in the Green Mountain State work to decommission Vermont Yankee, a nuclear plant that formerly supplied 70 percent of all electricity generated in Vermont.
Vermont Electric Cooperative, the state’s largest locally-owned electric utility, seeks up to 10 megawatts of capacity from the Seabrook nuclear plant. Hallquist says locking in a long-term rate on nuclear capacity makes sense due to nuclear power’s affordability relative to other power sources.
“Capacity in New England used to be fairly inexpensive relative to today — and that was just two years ago that it was relatively inexpensive. The capacity charge was just $3 a megawatt-month back two years ago. Today it’s $10 a megawatt-month,” he said.
To keep the lights on and prevent blackouts, electric utilities purchase both energy and capacity. Energy, measured in megawatt hours, is the electricity currently being consumed. Capacity, in contrast, is stable backup power that utilities use to manage peak loads that draw upon the grid. The amount of capacity utilities need is determined by ISO standards set by 13 independent system operators across the country. Those operators monitor grid use and provide oversight to keep the grid stable.
Since Vermont Yankee closed in 2013 — in part due to hot pressure from Gov. Peter Shumlin and the state’s renewables-minded Legislature — utility companies in the Green Mountain State have scrambled to find reliable sources for their forward-capacity needs. According to Hallquist, wind and solar power are useless as sources of capacity.
“The problem is when you’re doing capacity you’ve got to make sure it’s there when you need it. So solar and wind, because it’s an intermittent resource, you can’t purchase it as a capacity tool. You can only purchase (it for) energy,” he said. “ISO New England has to make sure the generation is available when the load is there, and you can’t necessarily count on solar and wind for capacity, because it’s weather dependent.”
|NEW HAMPSHIRE STRONG: Vermont utility companies are planning to purchase nuclear power capacity from New Hampshire’s Seabrook Station Nuclear Plant due to the plant’s stable generation and highly affordable rates.
Halquist’s company isn’t the only utility stocking up on next-door nuclear. In January, Green Mountain Power petitioned the Public Service Board for a 16-year, 150-megawatt contract purchase of nuclear from Seabrook.
“What we have filed for is a purchase that is mostly capacity and a little bit energy. We need that to help with our capacity obligations,” Dorothy Schnure, spokesperson for Green Mountain Power, told Vermont Watchdog.
Schnure said the company’s nuclear request underwent Public Service Board hearings in early June and now awaits approval.
“We went out to bid because we needed more capacity to help stabilize prices, and this was the lowest of the bids,” she said.
“Vermont at its peak uses about 1,100 megawatts of electricity. So you have to have enough generation, or capacity, available to satisfy that peak.”
Green Mountain Power uses nuclear generation for energy use as well as capacity, which is why its petition includes both. According to Schnure, the company hoped to reduce the nuclear energy in its portfolio but now intends to increase it.
“Originally, it was set to decrease to 50 (megawatts) and then decrease again to 40 megawatts. (As) part of this recent filing we slow the energy ramp down. Instead of going from 60 to 50 to 40, it goes from 60 to 50 to 55. So, going out into the future, we get a little bit more energy from Seabrook than we originally were getting in the original contract,“ she said.
In 2013, Entergy announced it was closing Vermont Yankee due to financial considerations. The Nuclear Regulatory Commission extended the plant’s operating license 20 years starting in 2011, and in 2012 Entergy won a court battle preventing the Vermont Legislature from shutting down its operations, which lawmakers attempted in 2010.
At the plant’s scheduled closing last December, Shumlin said he “long advocated for the closing of this plant.”
“I believe the ceasing of operations … after nearly 43 years represents a positive step for our state and our energy future. (T)hanks to investments in renewable energy such as solar, Vermont’s energy future is on a different, more sustainable path that is creating jobs, reducing energy costs for Vermonters and slowing climate change,” Shumlin said in a statement.
But Guy Page, communications director for the Vermont Energy Partnership, a coalition that advocates for clean, low-cost electricity solutions, said recent nuclear purchases tell a different story.
“There is a very sad irony to this situation. The source of power that had been demonized by Vermont’s energy leaders is now being embraced because it’s a decent, clean, low-cost solution to their energy problem,” he said.
“While it’s true it’s a good deal and it’s low carbon, Vermont is not getting the jobs. Vermont is not getting the tax revenue. Vermont is not getting the incredible donor benefit of having a large generous employer in their backyard.”
Page said Vermont Yankee, in addition to offering clean low-cost power, provided Winham County with good-paying jobs, money and volunteers for homeless shelters, and public safety emergency responders.
“That free infrastructure that was there because of the generosity of these people, they won’t be getting that from Seabrook.”
Page claims the situation in Vermont compares with Germany, which closed nuclear plants after the Fukushima disaster in Japan, but had to install coal plants to make up for the lost electricity generation.
“We’ve lost Vermont Yankee, and who knows what else we’re going to lose. What they’re saying is let’s double down on natural gas, let’s build more pipelines, let’s build more renewables,” Page said. “No one in power is talking about, gosh, maybe we ought to keep our existing nuke plants around. … It’s so easy to say no and wave a flag and feel good. But what are you going to do in its place?”
Contact Bruce Parker at email@example.com
Bruce Parker is a reporter for Watchdog.org. Contact him at firstname.lastname@example.org and follow him on Twitter @WatchdogVT
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© 2015 Franklin Center for Government & Public Integrity
This article originally appeared at Vermont Watchdog Org on July 8, 2015, and is used with permission.
Guy Page of Vermont Energy Partnership is quoted near the end of this post. Page is a frequent guest blogger at this blog. David Hallquist, CEO of Vermont Electric Co-Op, is quoted near the beginning of this post. Mr. Hallquist has published a guest post on this blog.
Meredith Angwin sends her appreciation to Bruce Parker, Guy Page and David Hallquist for their appearance on this blog.