Why You Can't Trust the State of Vermont to Oversee the Decommissioning Fund

Crystal ball

The State Foresees the Future and Provides Insults

The State of Vermont insists that it needs to have oversight of Entergy's Vermont Yankee Decommissioning fund. They have often asked for a "seat at the table" when fund disbursements are planned. The state recently petitioned the NRC, asking the NRC to investigate Entergy's finances, and whether or not Entergy would have sufficient funds to decommission Vermont Yankee.  NRC turned down that petition, but the state is back at it.

On Friday, November 6,  groups within the state government (the Attorney General, the Department of Public Service) along with Green Mountain Power, brought a new petition. This new petition to the NRC attempts to limit usage of the Vermont Yankee Decommissioning Fund.

While the earlier petition pretty much asked for an investigation, this new petition can best be described as insulting.  Here's a quote from the petition, according to VTDigger's State Ramps Up Pressure on NRC to Review Yankee Spending:

"Considered together, Entergy’s actions threaten to undermine the radiological decommissioning work that is the very purpose of the fund,” the document says. “Unless the commission intervenes, Entergy will divert hundreds of millions of dollars from their intended purpose.”

Wow.  "Entergy will divert." Crystal ball time!  Actually, what Entergy will do is that Entergy will follow all the rules and the guidelines of the NRC. But the state doesn't like that. The state could write: "Hey, NRC, we don't like your guidelines and rules." Instead, the state leads off with an insult directed at Entergy. (Vermont Business Magazine also has a lengthy article on this new petition.)

I Review the Past and Hope the State is Foiled

I found this "[Entergy] will divert millions of dollars" funny, because I have a sick sense of humor sometimes.

Let's say I was required to rank Vermont's ability to oversee projects: say I had to rank Vermont's project oversight on a scale from one to ten.  I would give the state a negative-five rating.  Vermont wants to oversee how Entergy spends its funds?  Is this a joke?

You don't have to dig very deep to come up with huge examples of inadequate project oversight by the state of Vermont. I will give a short list, along with one or two links for each example. Each of these situations has a long and well-documented history.  I could be here for two days, inserting links.

Lousy Project Management by the State of Vermont

Vermont Health Connect

This is the big one. The Shumlin administration wanted to bring single-payer to Vermont, and so it didn't sign up with the federal government for an Affordable Care website. Other states obtained and customized the federal website, and got their Affordable Care websites going fairly quickly, and at reasonable cost.  Vermont decided to build its own software, which didn't work and cost over $200 million.  At this point, we are trapped because, after all, who else can maintain this custom software?

Costs go to $200 Million.  VTDigger.
Trapped in Expensive Quicksand.  John McClaughry of Ethan Allen Institute.

Vermont Public Service Board Commissioners
Margaret Cheny, Chairman James Volz, Sarah Hofmann

Vermont Gas Systems Pipeline

This is big, also.  Basically, Vermont Gas Systems (part of Gaz Metro) proposed a pipeline that was supposed to cost $80 million dollars.  Pipeline technology is comparatively straight-forward: this is not a first-of-a-kind project. The estimated costs have now risen to $150 million, to be paid by Vermont ratepayers.  This cost increase would have put the state Public Service Board  (which approved the project) in a bind where they might have to take some action.  Instead, the administration and Gaz Metro did a de facto end run around the Public Service Board, signing a Memorandum of Understanding and getting the Public Service Board off the hook. AARP is very upset about the effect on ratepayers.

AARP accuses Vermont of End Run in MOU with state. VTDigger

Entergy funds for Windham County Development

This is not so big, but somewhat indicative. In its agreement with the state concerning the last months of Vermont Yankee's operation, Entergy promised to send the state $2 million per year, for five years (total $10 million) for Windham County economic development.  The state has received $4 million of these funds, and I believe is due to receive another $2 million sometime in the next two months.

The state is sitting on most of these funds. So far, it has awarded around $800,000. The Governor makes the final decision on all awards. The Governor says he didn't award the money because the proposals just weren't good enough. If I lived in Windham County, I might find this insulting.

Inadequate project management by the state? Or inadequate proposals? Or the state being comfortable by keeping an extra few million in the bank for a while?  Whatever reason the state has for not-releasing those funds, the funds are currently not-growing the economy of Windham County.

State Reboots Application Process for Entergy Money. Times Argus

My request to the NRC: Please don't let the state of Vermont be the project managers  for the decommissioning funds.
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End Note: Project Management and me

I have years of experience and interest in project management. I managed small projects at Acurex, back in the late 70s. In the early 80s, I joined the Electric Power Research Institute (EPRI), where my title was "Project Manager."  At EPRI, first I managed projects in the renewable division, and later in the nuclear division.  I left EPRI to go into business with a friend. The name of the business was Crescent Project Management.  I think it is still going, but my friend and I went our separate ways, business-wise. Then I started Fourth Floor Databases, Inc. As president of that company, I competed for, won, and managed many projects for utilities. I closed the company after eleven years.  Meeting a payroll in a small business is very stressful.

Nevil Shute

More recently, I have been very interested in the author Nevil Shute. He was a working engineer, a business owner, and an author. In September of this year, I gave a talk at the Nevil Shute Society conference in Oxford. All the talks at the Conference are posted here, and here is a direct link to the audio for my talk: Nevil Shute for Project Managers

Entergy Uses Decommissioning Fund: State Officials Are Very Upset

Entergy Keeps Its Promises

In terms of decommissioning, Entergy has kept every one of its promises to the state of Vermont, and even gone beyond its promises.  Here's a list:

1) PSDAR: Entergy said it would finish its PSDAR (Post Shutdown Decommissioning Activity Report) by the end of 2014, although the NRC allows two years (till December 2016) for the report.  Entergy completed and released the PSDAR on December 19, 2014.
2) Fund Payment: Entergy signed an agreement with the state for the last few months of the plant's operation. This agreement required Entergy to send various payments ($2 million for Windham Country economic activity, for example) to the state.  All such payments have been made promptly.
3) Spent Fuel Management Loan: Entergy took out a $143 million dollar loan for spent fuel management, because the state wanted the fuel removed from the fuel pool very promptly.  Strictly speaking, decommissioning funds are not supposed to be used for spent fuel management.  The federal government is legally required to manage the spent fuel.

(Short pause here.  Time to let people get off the ground after the laughing fit. No, this post is not about Harry Reid. Are you standing up now? Onwards.)

Senator Harry Reid
 image from his website

Obtaining spent-fuel management funds from the federal government can be slow.  The company has to sue the federal government, win the lawsuit, and finally obtain the money. Entergy said it would remove spent fuel from the fuel pool very promptly.The state wanted the spent fuel out of the fuel pool ASAP or sooner than ASAP.  Entergy doesn't need to comply with "ASAP" but it is doing so.

Amazingly, Entergy has arranged to borrow $143 million dollars for spent fuel management and moving the spent fuel into dry casks. This borrowed money will be repaid after Entergy sues the federal government.  Note that taking out this loan was not in any agreement that Entergy signed with the state.   Entergy decided to do this to speed up the process.  It is possible that Entergy (with NRC permission) might have been able to borrow this money from the decommissioning fund itself.   Of course, that would have depleted the fund and slowed the decommissioning.

Entergy needs some reimbursement

Entergy has done lots of planning, written reports, taken the fuel out of the reactor, arranged loans.  All activities concerned with decommissioning the plant.  So it requested permission from the NRC to obtain $18 million from the decommissioning fund.  The NRC is in charge of the fund, and of decommissioning, and of ensuring that fund moneys are properly expended.

The state objected.  No, really, it did!  Vermont wants decommissioning very quickly but Vermont believes it has approval rights to determine exactly what the decommissioning funds are used for. In short: Vermont thinks the NRC needs state permission to release decommissioning funds. 

(Short pause here. Vermont has challenged the NRC's authority over nuclear power plants before.  On this subject, how many lawsuits has Vermont won?)

The state is upset!

DPS Commissioner
Chris Recchia

The first thing that I noticed about the state's attitude toward the withdrawal was a Vermont Digger article by John Herrick: Entergy Makes First Withdrawal from Decommissioning Fund.  In this article, Vermont Department of Public Service Commissioner Chris Recchia is quoted: “I am probably more OK with the actual withdrawal than I am with the process….I don’t get to see it in advance.”

Indeed, the attorney general of Vermont and others in state government wrote the NRC to object to this withdrawal. Their letter claimed that the state has the right to review expenditures of decommissioning funds, and the funds should not be released, pending state review of the request.

The state letter is posted in the Document Library of Entergy's VY Decommissioning website. The Document Library is a great boon to anyone who wants to follow this process.

Though the state letter is quite long, the main basis of the letter seems to be the  Memorandum of Understanding under which Entergy purchased the plant in 2002.  A great deal of that memorandum is about decommissioning funds.  The agreement states that, AFTER decommissioning is complete, Entergy must share 50% of whatever decommissioning funds are left over with the state. However, in the recent PSDAR, Entergy does not claim that there will be enough decommissioning funds available until the near the end of sixty years of SAFSTOR.  The funds will grow, and full decommissioning will commence close to 2070, when the funds have grown enough to support it.

In other words, concern with sharing excess funds with the state is a bit early and a bit theoretical!  However, the Memorandum agreement that excess funds "will be shared" seems to have given the state the idea that the state has authority over how the funds are disbursed.

But the state doesn't have authority. Yes, the state does have some limited say over how the funds are disbursed. If you look at item 7 in the Memorandum, the state must approve IF the funds are used for anything other than "qualified expenses."  There is no reason to believe that Entergy's first request to NRC was for not-qualified expenses.

My Conclusion: The Bank of Entergy is Still Closed

Attorney General William Sorrell

Once again, the state is over-reaching.  The state hasn't figured out yet that harassing Entergy with letters to the NRC and so forth will do no good.  The decommissioning funds are the only funds available now for Vermont Yankee (except for the loan, of course). The NRC determines if the decommissioning funds are being used correctly.

To me, this whole thing has unpleasant echoes of the time when the Vermont legislature tried to shut Vermont Yankee. They held a legislative vote  that was basically all about safety. Entergy sued the state, and the legislature reacted swiftly to the lawsuit.  They passed a law that Entergy had to pay the State's expenses in defending against Entergy's lawsuit.

Of course, that law was illegal and nobody in the Attorney General's office would even try to enforce it.  I wrote a blog post about this: Attorney General of Vermont Acknowledges "Shaky Concept" in Charging Entergy for Vermont's Expenses  The Attorney General acknowledged that the the law was unenforceable.  The Bank of Entergy was closed to the state.

It's time for the state to acknowledge that that Bank of Entergy is still closed. I hope they acknowledge this before taxpayers (like me) once again fund a hopeless exercise in which Vermont attempts to change the role of the federal government and the NRC.

These state-sponsored exercises are expensive.