Third Rate Romance

Now begins the “gotcha” phase of Vermont’s relationship with Entergy.

Once upon a time, the energy giant was making nice with our green mountain state in order to win the fair hand of Vermont Yankee (LLC), which Entergy still expected to be a cash cow for years to come.

Entergy lawyers pinky-swore and spit on their hands, promising that we could trust them.

So it came to pass that Vermont went to bed with Prince Charming, but awoke with Frankenstein.

The honeymoon was already over when we learned about the tritium leaks and the pipes that “were not there.”

In light of mounting new evidence that neither Entergy nor the aging facility were reliable, the state asked them nicely to cease operations.  

They responded by dragging Vermont through costly litigation. This was apparently only in order to prove that they could , because shortly thereafter, the company chose to abandon VY due to their own economic considerations.

Meanwhile the vagaries of Wall Street and uncertain times for energy pricing had conspired to severely limit growth of the decommissioning “dowry,” for which both parties once held such high hopes.

And that is when things began to take a turn into “War of the Roses” territory.

Again, just because they could do so, rather than rehabilitating the property for other use in a timely manner, Entergy opted to push decommissioning up to sixty-years down the road, under a program known as SAFSTOR, which Vermonters might sardonically refer to as ‘SAPSTOR,’ as in “what saps we were for believing these guys.”  

At the same time, in order to reduce the cost of maintaining their beggar’s bargain of an investment,  Entergy also petitioned the always accommodating Nuclear Regulatory Commission to let them raid the dwindling decommissioning fund to cover the expense of maintaining spent fuel on the premises.  

This was never part of the original decommissioning fund vision. Together with the added cost due to inflation and unforeseen complications attendant on delaying decommissioning for decades, this effectively makes it less and less likely that there will be sufficient funds available to complete decommissioning even within the sixty year time frame.

“By the way,”  Entergy essentially said to the NRC, ” If you don’t free us of the obligation to maintain a system for emergency notification to surrounding communities, we’ll just pay for that out of the decommissioning fund, too.”

The gloves are off and its bare-knuckle blackmail time.

On February 11, just days after a strontium-90 leak had been discovered on the grounds of the idle reactor, portending even greater cost to clean-up the site, Entergy VP Mike Twomey was asked by the legislature what would happen if the decommissioning investment fund couldn’t finally cover the cost of decommissioning within the prescribed sixty years.

His reply had a decidely pugnacious ring to it:

Twomey first said he doubted such an outcome, but added, “There would probably be quite a bit of litigation about that…”

Digging the hole even deeper, he added:

“We are not going to pin down today the answer to a hypothetical question when we don’t even know what the facts are on something that might happen 60 years from now”

and suggested that the company might even seek to recover some of the decommissioning cost from VY’s previous owners, Vermont Yankee Nuclear Power Corporation, aka: the ratepayers of Vermont.

Though Twomey later repeated that he thought it would never come to that, his remark had already earned him the sobriquet, “So Sue Me Twomey” from industry safety advocate, Arnie Gundersen.  

Breaking up really is hard to do.

Entergy is not contesting custody of its runaway “daughters,” Tritium and Stronium-90.  If we find them later, they’ll be all ours.

As always, I must disclose that I work in a non-technical capacity for the good folks at Fairewinds Energy Education, but the opinions I express on GMD are my own alone and do not necessarily reflect the views of Fairewinds.

About Sue Prent

Artist/Writer/Activist living in St. Albans, Vermont with my husband since 1983. I was born in Chicago; moved to Montreal in 1969; lived there and in Berlin, W. Germany until we finally settled in St. Albans.

3 thoughts on “Third Rate Romance

  1. The bride was hardly virginal at the time of the marriage.  A bit of the back story …

    VY did have old owners and it looked quite possible back then (late 1990s) that the plant would have driven some of them (at least some of the VT owners) into bankruptcy. Remember: that’s how the now infamous $21 million that CVPS “owed” to ratepayers during the merger originated: the PSB didn’t want to charge their shareholders back then (for the HQ contract??) because doing so risked putting the company into a death spiral, so the Board deferred the payment until a sale or merger.  It’s also part of why GMP sold itself to Gaz Metro when it did.

    Suffice it to say that things were sufficiently desperate that, before they sold VY to Entergy, the old owners tried to give it to Amergen.  The PSB nixed that outrageous deal.  

    One of the things prompting these sales was the fact that decommissioning loomed, and the Fund, then as now, was inadequate. Although SAFSTOR was an NRC option back then too, I don’t think anyone was considering using it at VY, at least not for very long.  And no one dreamt of using SAFSTOR as a means to meet the financial obligation until Entergy came along.  Credit where credit is due: that was a pretty brilliant piece of financial sleight of hand.  (As we’ve learned over the last decade plus, illusion is something Entergy does EXCEEDINGLY well.)

    In fairness, Entergy put SAFSTOR right into the MOU which was at the heart of the sale, so it’s hard to argue now that it was some kind of big secret they were holding back from us. To make a long story short, Vermont has known since before Entergy bought the plant that they planned to put zero dollars of their own into decommissioning, and would use SAFSTOR, if necessary, to ensure that.  (There was very little “if” about that either, at least by the time I started looking into this stuff closely again around 2007 or so)

    On the other hand, it’s equally clear that part of the reason the old owners sold was to get out from under the financial burden of decommissioning.  Entergy can sue away, but it’s pretty difficult to see how they’d ever get a court to go along with them, especially since VYNPC will have folded up whatever remaining tents it has (if any) and long since faded away into the sunset.  Since the RSA ended when the plant closed in December, I can’t think of any reason why VYNPC would remain a legal entity going forward.

    The real problem, as some of us have warned about for years, is that the likelihood of the Decommissioning fund growing twice as fast as the cost of decommissioning is very small indeed. (Presently, it has about 1/2 the funds it needs to do the job, according to Entergy’s figures, which is right in the same neighborhood (with higher numbers on both sides) that it was in when Entergy bought the plant.) As a practical matter, I’d personally put the odds at zero, but analyses vary. (As far as I know, only Entergy analysts think (or more precisely, are willing to testify) that the fund WILL grown enough; others probably put the number somewhere in between.)

    A couple of parting points.  

    Entergy has done everything it could to make the legal ownership of the plant obscure.  I’ve read several transcripts of testimony, both before legislative committees and before the PSB in which Entergy officials are asked exactly who they were working for.  The testimony goes on for pages and pages, and at the end, the inevitable response is: “Hunh? I have no idea what you just said, but let’s move on.”

    THAT, my friends, is precisely the idea.  So when the fund does prove to be insufficient and it comes time for litigation, who you gonna sue?  Ha ha!  That’s for YOU to figure out.  Talk about bastard stepkids!

    It’s a nasty mess, all right, but it was thoroughly predictable (and predicted) all along.

    Second parting shot.  The irony in all this — and in much of the US nuclear world in general — is that a whole lot of this and a variety of other financial issues owe their beginnings to the fact that all of the US nukes were built under a highly regulated scheme with cost plus financing.  

    In the old days, decommissioning was regulated by FERC as part of the plant’s regular rate cases.  VYNPC submitted its decommissioning estimate to FERC, which allowed it to charge its owners (all regulated utilities) their proportionate shares.  These, in turn, were passed through to the utility ratepayers and could not be challenged or modified by state regulators (federal preemption).  As was explained to me by a VY VP for finance at the time, decommissioning wasn’t just a contract, it was a FERC rate and was totally enforceable by FERC.  (Had there been a shortfall, the contract language specified that VY’s owners – the utilities – would have been on the hook).

    Put differently, that meant that decommissioning funds were totally isolated from the price of power in electricity markets and customers buying VY power had no choice BUT to pay their share. Had the old regime been in place, the Fund would have grown, because ratepayers would have been contributing to it until such time as it appeared to be sufficient to do the job.

    When Entergy bought the plant, it moved from this kind of strict regulation to being “regulated” by the markets as a “merchant generator.” That change had 2 unforeseen consequences.

    Because 10 year contracts were part of the sale deal, the financial implications of SELLING power at market rates didn’t actually hit VY until 2012, and that’s what brought it down.  If the plant were still regulated as it used to be back when, it would almost certainly still be operating.

    But also, for the same reason, Entergy could NOT collect money for decommissioning from ratepayers any more, at least not directly as before. The company would have had to put money into the fund voluntarily: either from its profits on revenues, or from shareholder equity.  Either way, Entergy made it clear from the beginning it wasn’t going to do that.  

    As a result, electricity consumers bought power for the last 15 years without having to pay a dime for decommissioning.  It was “free.”  Remember that the next time you get a “free” offer.  Sometimes, they’re VERY expensive.

    So here we are.

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