Citing Economics, Entergy To Close Vermont Yankee By End of 2014

Aug 27, 2013

Vermont Yankee will close by the end of next year, ending years of litigation over the plant’s future.

But Yankee says financial pressure not lawsuits or legislative mandates are forcing the shutdown.

Gov. Peter Shumlin said he got the call from Entergy Tuesday morning, shortly before the news release went out announcing the company’s decision to shutter Vermont’s only nuclear plant.

Shumlin, an ardent opponent of Entergy and Vermont Yankee, said he now wants to forge a new relationship with the Louisiana based corporation. The governor said his thoughts now are with the plant’s 650 workers.

“Those employees have done an extraordinary job running the plant. They’re dedicated, they’re smart, they’re capable, and we’re going to work with them to find a great jobs future,” he said.

In Vernon, William Mohl, Entergy’s president of nuclear operations, said the news brought tears from some long-time employees. Mohl blamed the closure on the energy market, not the ongoing legal battle with the state.

“This decision was based on the economics of the plant.  Not operational performance.  Not litigation risk, nor political pressure,” he said. “Simply put, the plant costs exceed the plant revenue and this asset is not financially viable.”

The Yankee plant went on line in 1972. It’s is the same General Electric boiling water design as the reactors in Fukushima, Japan that were disabled and damaged by an earthquake and tsunami in 2011. In the wake of Fukushima, Entergy was facing expensive modifications required to improve safety.

Arnie Gundersen, a nuclear engineer and Yankee critic, said the upgrades could cost Entergy hundreds of millions of dollars over the next few years.

“The problem is Fukushima modifications are coming due, that’s close to $100 million, plus the leaky condenser, that’s another $100 million. So it just made no economic sense,” he said.

The debate over the future of the Vermont Yankee nuclear plant went from the Legislature to a federal appeals court. Entergy successfully challenged two state laws that would have forced the plant to close. The courts agreed with Entergy that federal law trumped the state laws – and that lawmakers were improperly motivated by safety when they considered closing the plant.

But financial experts said that in the end low natural gas prices doomed Vermont Yankee.

Julien Dumoulien-Smith is an energy analyst with UBS financial services. He said competition from power plants fired by abundant, cheap natural gas cut deeply into Entergy’s margins. And he said the problems facing Vermont Yankee also plague other, older reactors.

“This is likely a bellwether as far as it goes for the nuclear industry. In some sense this is the first or perhaps the second of a large wave of potential nuclear plant retirements in the country,” he said.

The news stunned people in southern Vermont, who’ve long seen the plant as a stable source of both taxes and high-paying jobs.

Laura Sibilia is director  of  economic development for the Brattleboro Development Credit Corporation. She said Yankee’s shutdown is a serious financial setback, especially since the region is still recovering from the devastation inflicted by Tropical Storm Irene two years ago.

“It’s a little like: ‘Hooo! enough with the body blows please!’ Good news is I think we have proven ourselves worthy to coming up to big challenges like this,” she said. 

Vernon Representative Michael Hebert is a Yankee supporter. He said the state now needs to help the economy recover in southern Vermont.

“The governor in the past has spoken about that so now he'll have to step up to the plate and come up with some sort of economic incentives for the area,” he said.

Although the plant will close by the end of next year, its legacy will live on at the Vernon site on the banks of the Connecticut River. Entergy has 60 years to decommission the plant under a plan approved by the Nuclear Regulatory Commission. The time will allow the company to accumulate money in a fund set up to pay for dismantling and cleaning up the site.

But there’s no national repository for long-term storage of nuclear waste, so still unresolved are what will happen with the tons of spent fuel rods now stored in Vermont in huge steel and concrete casks.

Gov. Shumlin said he wants to speed up the decommissioning timetable so the plant’s site can be used for industry or for another power station.

“The sooner that we can return that to a green field, so we can use the extraordinary resources – the transmission – to help power our green energy future, the better off for Vermont in terms of jobs,” he said.

The decommissioning issue may lead to another fight between Entergy and the state. Vermont wants more money to clean up the site, and lawmakers in past have considered trying to raise that through taxes on Vermont Yankee.