Those words come, not from a hardcore antinuclear activist, not from an environmentalist, nor from someone at the Public Service Board… no, they come from our amigos at UBS Investment Research, which has issued another report on Entergy’s financial outlook.
The key line from its new report:
We continue to believe Entergy is likely to decommission at least one of its units, such as Vermont Yankee, in 2013.
As with UBS’ earlier report, this one focuses on a negative cash-flow outlook for Entergy covering the next five years. As that January report noted, retiring one or both of Entergy’s smallest nukes (VY and NY Fitzpatrick) “would likely drive positive FCF [free cash flow] revisions.” Smaller reactors are problematic because, says UBS, “the company needs to gain scale in its nuclear business.”
A little problem, as noted previously: when you close a plant, the clock starts ticking on the highly expensive decommissioning process. UBS notes that shareholders are concerned about this underfunded liability, and that management “attempted to allay these concerns, citing the ability to use SAFSTOR configurations at its plants to allow funds to accrue for up to 50 years… with a further 10-years for full decommissioning.”
In other words, “Hey, don’t worry — we can kick this can down the road for a couple or three generations!” Which is spectacularly unreassuring, when coming from a cash-poor company saddled with elderly plants in a sector that’s battling very tough competition from natural gas now, and from expansion of renewables in the future. Is there any reason to be confident that Entergy will still be in business and making enough money to fund decommissioning in sixty years’ time?
But wait, there’s more:
According to UBS, management says that “decommissioning funds can be tapped up to 3% for planning purposes ahead of retirement, and 20% following the filing of a Post Shutdown Decommissioning Activities Report (PSDAR) with the NRC.”
Oh yay. The already inadequate decommissioning fund can be further drained by 23% through perfectly legal pilfering. That’ll help the short-term cash flow.
We’ve previously wondered why, if VY is such a drag on its finances, Entergy is fighting so hard to keep it open. Here’s a hint from UBS:
We see the greatest risk in decommissioning related to concerns by states such as Vermont over the protracted use of SAFSTOR periods to accrue adequate decommissioning funding.
Which would seem to indicate that this entire fight over license extension is nothing more than a curtain-raiser for the real fight: safely decommissioning VY and disposing of its radwaste.
UBS does offer one little point of light for Entergy: “…the NRC is likely to prove an ardent advocate of SAFSTOR.”
Yeah, good. I guess we can look forward to the Ghost of Vermont Yankee sitting empty — but SAF, cough — until the year 2083.