Right after the election, Entergy announced Vermont Yankee was on the market. The local response was completely predictable: "Nobody in their right mind would buy that plant!" I disagree. I think someone will buy it.I need to point out that I have no insider information on this. I only know what I read in the paper.
Myth One: Nobody will offer for that old rustbucket.
In the eighties and early 90s, it became clear that a company that owned only one nuclear plant could not run it well. Some nuclear plants in this situation were closed (Rancho Seco, Trojan). Most nuclear plants were purchased by big companies. Today, a company owns more than one nuclear plant, or it owns no nuclear plants at all.
In other words, the only companies that might offer for Vermont Yankee are companies that already own nuclear plants. These companies know how to judge a nuclear plant, and they know that Vermont Yankee is a good one:
- Green rating from NRC
- Recent power runs of more than 500 days each
- Good relationships with the on-site union
- Industry-wide award for innovative inspection equipment
- Caught and repaired its tritium leak much faster than many other plants which had similar leaks.
Myth Two: Vermont Yankee doesn't have a license to operate past 2012, so nobody will want it.
A buyer can make a contingent offer. We made a contingent offer on a house at one point. Buying our new house was contingent on selling our old house for a certain sum by a certain date. Such offers are very common in all sorts of contracts. Our house offer was accepted, and the next phase of the purchase was called clearing the contingencies. Then we closed on the house. We owned it.
You can do this with a power plant, too. "We offer you this much, contingent on having license renewal approved."
Can the new utility clear the contingencies? Or will it be an offer with no closure? Nobody can completely predict the outcome of contingent offers, or they wouldn't need to be contingent. But I think the purchasing utility will sweeten the deal for the legislature and clear the contingencies. Perhaps the new utility will supply more money for the Clean Energy Development Fund. Perhaps it will make a one-time tax payment or cut a really good deal for a power purchase agreement.
In any case, there will be a new set of money on the table, and Vermont has a $112 million budget shortfall next year. I think a new utility can finalize the deal. However, nobody really knows about a contingent deal until it is near closing. That's why I headed this post "Will Entergy get an offer" rather than "Will Entergy sell the plant." I feel confident Entergy will get an offer.
Myth Three: The shortfall in the Decommissioning Fund means nobody will buy the plant
The decommissioning fund contains about $350 million, and decommissioning is estimated to cost about $800 million. This isn't actually a killer. If the plant operates for another 20 years, it will be easy to fill the fund completely with money from electricity sales.
Some opponents take the position that the customers buying nuclear electricity should not have to pay for decommissioning. They believe that decommissioning money needs to fall like a golden rain from heaven, or be some sort of charge against Entergy stock in the future. That is a very unrealistic view of finance. Luckily, neither golden rain nor charges against stock will be necessary. Nuclear power plants can provide the cheapest power on the market and still put a few mills per kWh away for decommissioning.
I don't know how the deal will be structured, but I know it is possible.The status of the decommissioning fund will not deter a buyer who plans to operate the plant for another twenty years.
In short, I predict that Entergy will receive an offer on Vermont Yankee.
