Electricity Rates Decrease, Thanks to Vermont Yankee: Harold Bailey Guest Post

The Electricity Rate Decrease Shows the Ongoing Value of Vermont Yankee
Guest post by Harold L. Bailey

Vermonters  do not often receive good news about energy costs, so the 2.46 percent decrease in Green Mountain Power rates scheduled to begin Oct. 1 is a welcome relief. The savings largely come from Vermont Yankee’s $17.8 million "revenue sharing" payment, the outcome of a deal struck with the State of Vermont several years ago.

This huge payout tells me two things: first, Vermont Yankee has once again proven itself to be a stellar corporate citizen that keeps its commitments. Second, Vermont stands to benefit from still more payments by Vermont Yankee - notably millions in cash for economic development. In addition to the $2 million of economic development funds already allocated for 2014, Vermont Yankee is scheduled to provide $2 million each year for 2015, 2016, 2017, and 2018. These payments are contingent upon Entergy and the state both fulfilling in good faith the conditions of the Master Settlement Agreement governing the closing of the plant.

In particular, Vermont Yankee will need a state Certificate of Public Good to store more spent fuel in dry casks. Let's hope our state officials appreciate the benefits, to everyone, of a smooth decommissioning of Vermont Yankee.

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Harold L. Bailey was the representative for Hyde Park and Wolcott in the Vermont Legislature in 2002-2004. He lives in Hyde Park, Vermont.  In the past week, this letter-to-the-editor has been printed in several newspapers in Vermont.

A Year Ago: The Announcement Considered

Fountain of Time Sculpture, Chicago
Photo from Wikipedia

Looking Backward

On August 27, 2013, Entergy announced that Vermont Yankee would close at the end of its 2014 fuel cycle, basically, at the end of this year.

Two days after the announcement, I wrote a blog post Questions I Frequently Ask Myself about Vermont Yankee Closure.  A few months later, in January, Entergy announced who would be laid off after fuel was offloaded (early 2015) and who would remain on for perhaps another year of decommissioning.  I wrote a blog post about that, also: Paint It Black.

Time Stays, We Go

A large, beautiful and depressing sculpture stands near the University of Chicago: The Fountain Of Time,  by Lorado Taft.  A hundred people pass before Father Time, who stands unmoved by the procession.   The sculpture is based on a poem with the repeated lines:

Time goes, you say?- ah no! 
Alas, Time stays,- we go!

With that in mind, exactly what has gone on during this year?

Agreements Happened

After a fair number of insults being levied at Entergy,  Entergy and state agencies reached an agreement that if Entergy paid certain amounts of money (about $40 million) and said they would move fuel into dry casks expeditiously and so forth...the state would stand WITH Entergy before the Public Service Board. The state would ask the Board to give Entergy a Certificate of Public Good (CPG) to operate through the end of this year.

And so, with millions of dollars riding on the signatures,  Entergy and the state agencies signed the agreement in December 2013. With this agreement, the state would argue FOR Entergy in front of the Public Service Board.

However, the agreement would be null and void if the Public Service Board didn't adopt it by late March.  And so March came, and the Public Service Board issued the CPG through the end of the year, The Board also made several snarky and unnecessary statements, claiming that if Entergy had wanted a 20-year CPG, it  probably would not have received one.

(By the way, agreements happened but love didn't.   People at the plant told me that Governor Shumlin has never visited the plant after the closing was announced. He never even visited Vernon.)

Money Happened

Entergy tax money happened: Entergy delivered its various taxes, Clean Energy Development fund money, and so forth right on  the schedule from the agreement.  The majority of the money went to state agencies, but $2 million dollars (for this year) was earmarked for economic development of Windham County. I really need to write a blog post about that $2 million.  The agency in charge of the funds has noted that guidelines have been released (as of August 1) but there is still confusion about the process for awarding the grants and loans.

Furthermore, some people say that there aren't enough really good proposals for the money.  Other people say: "Yeah, what did you expect? There's been all types of incentive programs for this area of Vermont for a long time...if there were good ideas, we probably would have heard them already."

When I write a blog post about this, it's going to be a long one!

Entergy Profits and Revenue Sharing happened:  Over $17 million dollars.  That's the check that Entergy wrote to Vermont utilities as "revenue sharing" according to the agreement under which it purchased the plant in 2002.  My April blog post on this: Green Mountain Power Receives $17 Million in Revenue sharing

Well, that was April and this is September.  Green Mountain Power (Gaz Metro) had the money, but it had to have a rate case before Public Service Board before it could do anything with the money. So it has had its rate hearing. Gaz Metro will be lowering people's electric bills with the money.  But not all at once, for Pete's sake. That would be terrible!  If electric bills were lowered for only one year and then popped up again, they would have to admit that the reason for the decrease was Vermont Yankee money! So Gaz Metro isn't  going to do that.

Electric bills will be lowered for about three years, just a little bit each year.  This will keep people from noticing (probably) the effect on their pocketbooks from Vermont Yankee's closing.  Some of the recent newspaper stories mention the Entergy money, some just trumpet the rate decrease, without mentioning Entergy.

Looking Forward

I have a number of friends at the plant, and to me, the real news is that they are announcing their new gigs on Facebook.  They are going to other Entergy plants ("See you there soon!" they write each other.)  They are going to non-Entergy plants ("It's going to be a great change, we LOVE the area!" they write each other.)

Vermont will stagger forward, with local non-profits fighting over the Entergy money.  Most young Vermont Yankee workers are moving on.

Forward is the future.  Vermont is the past.

$17 Million Vermont Yankee Check to Utility--Use It Well: Guest post by Reg Wilcox

Reg Wilcox

The Check

Green Mountain Power (GMP), the state’s largest electric utility, announced last month that it will receive a $17.8 million benefit from Vermont Yankee nuclear power plant. This big check was just the latest multi-million dollar benefit paid to Vermonters by Vermont Yankee and its owner, Entergy.

When GMP and other companies sold Vermont Yankee to Entergy in 2002, Entergy agreed to share proceeds with the previous owners from any power sales above 6.1 cents per kilowatt-hour. The $17.8 million is GMP’s share of revenue generated by Vermont Yankee power sales from March 2012 - 2013. For Vermont consumers, it's a fleeting bright spot in the cloudy outlook of climbing regional power prices.

GMP Payments to Ratepayers: The History

GMP has said the $17.8 million will go directly back to ratepayers. However, we were told this once before when money from the GMP-Central Vermont Public Service utility merger was spent on state energy programs instead of being returned to ratepayers as promised. There has been plenty of talk in the Legislature this year about new rules and laws to protect the interests of John Q. Ratepayer. Here is a perfect opportunity to "walk the talk."

Given the state’s history with not fulfilling energy promises, we have cause to be concerned. The very agreement that created this most recent revenue windfall for ratepayers was predicated on Entergy receiving a timely Public Service Board decision on the continued operation of Vermont Yankee past March, 2012. That guarantee was consciously withdrawn by the 2010 Vermont Senate vote. Entergy has met its obligations to the tune of $30 million in clean energy funding, a 10 year contract that delivered below-market power to Vermont utilities, revenue sharing, and millions for Windham County economic development, while the state has moved the goalposts time and time again.

The Sources For Vermont Power

Vermonters are still waiting for the State of Vermont to deliver on its promise to deliver low-cost, low carbon power. During the protracted dispute between Vermont Yankee and the State of Vermont, the plant’s many supporters repeatedly maintained that the only viable replacement for its power would be more expensive and increase carbon emissions. This is exactly what has happened as a result of Vermont’s decision to stop buying power from Vermont Yankee. According to grid operator ISO-New England, the average market price of electricity in March, 2014 was 11.25 cents per kilowatt hour, almost three times the four cent 2002-2012 contract rate. Even if a new contract would have cost marginally more, it is plain for all to see that we're paying more now for dirtier power.

The latest solution is a recent plan announced by the New England governors to acquire more electricity and natural gas from Canada and surrounding states. How much will this plan cost Vermonters? Who will pay? And how does more natural gas reduce our “carbon footprint?” And if this plan fails we will remain hamstrung by inadequate access to hydro and other traditional forms of power, having placed too much faith in the as-yet unproven promise of solar and wind generation. It is plain to see that state energy policies have left Vermonters without any good options.

Vermont Should Keep Its Promises

For years, many Vermont leaders took every opportunity to criticize Vermont Yankee, while pitching an alternative, bright new energy future that was short on specifics. As we wave goodbye to Vermont Yankee, it’s now time for the state to restore our confidence in its energy policy. It can start by not hijacking the $17.8 million dollar Vermont Yankee benefit from GMP customers, and by keeping its promises to deliver low-carbon, affordable, reliable electricity.

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Reg Wilcox, BSEE Norwich, MSEE Clarkson, is a retired IBM Senior Program Manager. Reg grew up on a dairy farm in Cambridge, worked out of state for ten years after graduate school, and returned to his home town when he began his career with IBM in 1978.   In 1802, Reg’s ancestors, Nathan and Rachel Wilcox, were the first European settlers of the Town of Morgan, Vermont.

This post has also appeared as an op-ed in the Rutland Herald (behind a paywall).

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Update: May 31, 2014

Governor Shumlin announces proposed rate decrease in Vermont.  Press release link below:
http://vtdigger.org/2014/05/30/gov-shumlin-announces-agreement-proposed-rate-decrease/

A quote from the press release, but with emphasis added by blogger:

“At a time when other states in our region are seeing double digit increases in power costs, Vermonters are going to see rates go down this year,” Gov. Shumlin said. “This rate decrease is great news for Vermont. The agreement provides stability and predictability for one of our most valued employers, and helps ensure that Vermont maintains a thriving center of innovation and technology well into the future. This is further evidence that the merger of Green Mountain Power and Central Vermont Public Service is already delivering cost savings and putting money in Vermonter’s pockets.”

Green Mountain Power receives $17 Million in Revenue Sharing from Vermont Yankee

Vermont Yankee

A deal is a deal, so Green Mountain Power gets the money

In 2010, Howard Shaffer and I debated two nuclear opponents on the subject of whether Vermont Yankee should keep operating.  One of the opponents was a very accomplished debater. He stuck to his talking point. He constantly re-iterated: A deal is a deal.  In his view, Vermont Yankee had a "deal" to operate for 40 years, end of story.

He was wrong. The actual Vermont Yankee deal means that Entergy will send a $17 million dollar check to Green Mountain Power. This is revenue sharing for the plant's operation past 2012. Operation past 2012 and revenue sharing were part of the state's agreement with Vermont Yankee.

The Vermont Yankee deal was signed in the Memorandum of Understanding by which Entergy bought the plant in 2002.  This agreement included financial arrangements for Vermont Yankee if it operated after 2012.

The Revenue Sharing Agreement

According to the Memorandum, if Vermont Yankee sold power at prices greater that $61 MWh (6.1 cents per kWh) after 2012, then Entergy had to split the "excess" payments with the utilities from whom Entergy had bought the plant. This revenue sharing was planned to last for ten years, through 2022. The price of 6.1 cents per kWh is sometimes called the "strike price."  It is the price at which the revenue sharing part of the deal kicks in.

Despite all the heartache, lawsuits, local utilities proudly saying they buy no power from Vermont Yankee, local utilities refusing to buy power from Vermont Yankee--Entergy is sticking to its part of the deal. Last year, the price on the grid rose, the revenue sharing kicked in, and Entergy is sharing revenue.

Last week, Entergy wrote a letter to Green Mountain Power saying that Entergy would pay almost $18 million dollars in revenue sharing to the utilities. This  sum was for revenue sharing for March 2013 through March 2014.  Terri Hallenbeck of Burlington Free Press broke the story: VY has parting present for GMP: $17M

What Will Happen to the Money?

According to the Green Mountain Power spokesperson Dorothy Schnure:“It’s great news for our customers...All the money we are entitled to will go to ratepayers.”

Some of us (like me) don't believe Schnure.  Seventeen million dollars is a sizable amount of money for a company with annual revenues of $240 million. More importantly, Green Mountain Power doesn't have a good track record about sharing windfall money.

Last time Green Mountain Power had a windfall, it was supposed to repay ratepayers for a loan.  Specifically, Green Mountain Power was supposed to refund $21 million dollars to ratepayers in the case of a utility merger.  Instead, Green Mountain Power kept the $21 million as a revolving fund. People can borrow from the fund for weatherization projects.

The AARP objected, saying that Green Mountain Power had broken its agreement, and that seniors in Vermont could use some actual money (not loans) in order to offset higher energy expenses.  The AARP was right, but the AARP lost .  A quote from the Vermont Digger article on the AARP appeal:  (Schnure) said, however, that the (Public Service Board, PSB) board had already gone to great lengths in its opinion to explain fully its reasons for denying AARP’s request that money go directly to ratepayers.

I doubt that the ratepayers will get Entergy's $17 million from Green Mountain Power, either. I think the utility will probably find some other way to use the money themselves, or have Efficiency Vermont use it. Green Mountain Power probably won't give it back to ratepayers, who would just spend it in dribs and drabs on whatever the ratepayers want to spend it on! How silly! (Okay, I know, sarcasm alert.)

But that is just my opinion. I'm a blogger. I have opinions.  Onwards to some facts.

Two  facts

First: the Revenue Sharing Agreement was worth something to the state of Vermont. The opponents of Vermont Yankee often claimed that grid prices would remain low for many years, and the revenue sharing agreement was worthless to Vermont.

They were wrong.  I doubt if they will apologize.

Second: This is the end or  close to the end for such payments. There may be another payment to Vermont utilities if local grid prices remain high between now and the end of the year.  But after that payment, there will be no more of these windfalls from Entergy to Vermont utilities.  As Hallenbeck described this payment: it was a "parting present" from VY to Green Mountain Power.

We can thank Entergy for the gift.  We can thank Entergy for living up to their obligations, once again.

We can thank Governor Shumlin and his supporters for the fact that this is a "parting" gift. (If we want to thank them, which I don't.)

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End notes:

"A deal is a deal" statements at the debate. See Howard Shaffer's December 2010 article at ANS Nuclear Cafe: Vermont's Nuclear Debate, Continued. 

Green Mountain Power will get most of this money, but some smaller utilities may also receive checks. The Department of Public Service will do the calculations, as described in the Hallenbeck article.

Obsessive readers of my blog may remember that Hallenbeck is the reporter who asked Governor Shumlin why he thought his memory of discussions about decommissioning was more important than what the state signed about decommissioning in the Memorandum of Understanding. In reply, Shumlin asked her if she was "working for Entergy today." You can hear the exchange in my 2011 blog post: In Vermont, Our Word is Our Bond, So We Don't Honor Contracts.

Green Mountain Power is a wholly-owned subsidiary of Gaz Metro of Canada.