Entergy document cites drastic fall in value of Vermont Yankee nuclear power plant, raising questions about its viability

Vermont Yankee on the banks of the Connecticut River

Vermont Yankee on the banks of the Connecticut River

Thursday marked the one-year anniversary that Vermont Yankee’s initial 40-year operating license expired, and the aging nuclear plant finds itself on rough financial footing.

In a November 2012 filing with the U.S. Securities and Exchange Commission, Entergy Corp. informed investors that in March of last year the company estimated that the fair value of its Vermont Yankee plant had dropped to $162 million — three times less than the carrying value at the time of $517.5 million.

The fair value is “based on the price that Entergy would expect to receive in a hypothetical sale of the Vermont Yankee plant,” the filing says. The cash flow projections “depend on pending legal and state regulatory matters, as well as projections of future revenues and expenses.”

The news of Vermont Yankee’s devaluation was brought to light almost a year later. The Rutland Herald’s Susan Smallheer spotlighted the issue on Thursday — a day after the federal Nuclear Regulatory Commission (NRC) asked Entergy for additional information on its finances.

“The NRC staff requires further information to insure that the licensee is meeting NRC requirements for financial qualifications,” wrote Richard Guzman, NRC project manager, roughly a year after his agency renewed Vermont Yankee’s federal operating license.

NRC spokesman Neil Sheehan said the financial qualifications place a precedent on safety.

“We want to make sure the owners of nuclear power plants have the financial wherewithal to properly and safely operate a plant as well as decommission it when the time comes,” he said.

Does Vermont Yankee currently have the “financial wherewithal” to operate safely?

“We don’t know that at this point,” he said. “Typically, we do these kinds of financial reviews when there’s a license transfer … but we also keep our eye out for other developments that could affect a plant’s financial qualifications, and the SEC filing raised some questions about where the financial picture stands for Vermont Yankee.”

The NRC is not sure how long it took Entergy to officially notify investors of the plant’s fair value, as the estimation reportedly came in March, and it wasn’t reported until November. The agency is investigating this discrepancy, Sheehan said.

Entergy would not comment on the matter other than to say it would respond to the NRC within the allotted 45-day time frame.

NRC’s letter was sent out two days after a coalition of anti-nuclear activists petitioned the NRC to enforce federal regulations. The group filed a petition on Tuesday morning that accused Entergy of no longer meeting the financial qualifications to legally operate Vermont Yankee and the NY Fitzpatrick plants.

“Entergy’s financial problems must not become nuclear safety problems,” Tim Judson, president of Citizens’ Awareness Network and one of the petition’s authors, said in a public statement. “Unfortunately, that may already be happening, and the NRC must act now. Entergy is in this business to make a profit, and the pressure on the company to cut costs, delay maintenance, and drive these plants to the edge is just too great.”

On Wednesday, Gov. Peter Shumlin fielded questions from reporters about the plant. He was hesitant to talk about it, as the state is tied up in litigations with Entergy in front of the Vermont Supreme Court, the Vermont Public Service Board and the U.S. Court of Appeals.

The governor did, however, address the plant’s financial status, suggesting the economic pressures may result in the plant’s closure.

“It’s one of the smallest generating nuclear plants in America… and it’s a tough business to be in right now because of natural gas prices,” Shumlin said. “I just continue to hope that the economics will work in our favor. If not, I hope that the second circuit (court of appeals) and the Public Service Board will work in our favor. It’s well past time to shut down that aging … nuclear power plant.”

The NRC’s inquiry into Vermont Yankee’s finances comes one month after the Swiss financial services firm UBS Securities downgraded Entergy’s stock from “neutral” to “sell.”

UBS released a report earlier this year that suggested Entergy could improve its financial outlook if it closed Vermont Yankee.


Andrew Stein

Comments

  1. The incredible irony of this write down is that it is a non cash charge which will most likely result in a substantial tax reduction which will produce cash to fund the law suits against Vermont.

    The Governor picked a tough fight.

  2. timothy price :

    “….$162 million — three times less than the carrying value at the time of $517.5″ Sort of like saying that it is 1/3 less.. but not so clear.

    Went to a presentation in Norwich on the Fukushima disaster presently unfolding in Japan. The media isn’t telling us anything about what the people there are experiencing. Complete media blackout. Those suffering from not being able to eat local foods, or drink local water.. cannot even heat their home any longer with their wood because the ash concentrates the radiation to extremes.

    The Japanese think that the most foolish thing about the design of this particular Fukushima/Yankee plant is the stored nuclear fuel in the upper section. That is what has destroyed a major portion of Japan, so far, and it is just getting started with no end in sight.

    The priority of all New Englanders, not just Vermont, New Hampshire, and Massachusetts, must be to get the spent fuel away from the plant as soon as possible. That way, if there is an accident or natural event that damages the plant, the tons of nuclear fuel that has not business being there, will not be spread across the region via the Connecticut River and the winds.

    Vermonters could use the National Guard to shut it down now. The plant is trespassing on Vermont. Stand your ground says that we can protect ourselves from those who trespass, especially if they threaten us, our homes, and have been given ample warning to leave. Do it.

    • Kathy Nelson :

      Timothy says “Vermonters could use the National Guard to shut it(VY) down now”. Well, if you want the military involved in booting trespassers then by all means lets use them to drive out illegal trespassers from other countries supposedly invited here by Vermont farmers; lets use them to drive out bullying Canadians who threaten our natural resources with their filthy tar sands; let’s use them to drive out bullying industrial wind developers who tear up mountain ridges so they can collect taypayer provided subsidies. When you start making statements like this Timothy you only invited the rule of fascism into the arena. Be careful what you wish for.

      • ALEX BARNHAM :

        The people of Vermont have the power to rally and get things done if they only would realize the dangers. Most people are so busy being entertained (playing) that they fail to responsibly invest themselves in the real issues. It is very difficult to get people to put down their toys and do something. The good people of Japan also could have changed the way things were done if they had only known not to put a nuclear reactor of that sort right next to the ocean for the convenience of cooling the system. They could have had heat for their homes from the reactors if the owners were a little more community minded.

  3. ALEX BARNHAM :

    Vermont Yankee is unsustainable and the temptation to keep it running is beyond belief.

  4. timothy price :

    Corrections:

    “Sort of like saying that it is 1/3 less.. but not so clear.”

    Oops… it is 1/3 of the carrying value. My mistake.

  5. Jim Barrett :

    It is not economic pressures which will close VTY, it is political and shumlin and his comrades can claim another victory. You voted for these people and now enjoy extremely high electrical rates if it closes! We have some of the highest electricity rates in the country with VTY, wait until you see what is coming and Shumlin and his left wing friends are laughing at how stupid we are to sit back and take it.

    • Bob Stannard :

      By now Mr. Barrett must know by now that Vermont’s utilities ceased buying power one year ago. And we should all be grateful that they did, because had they continued doing business with Entergy our rates would be even higher than they are now.

      VY’s power was more expensive. VY is now an economic liability to its parent corporation; Entergy, and is an environmental liability to Vermont. Even UBS knows there is no upside to this aged, non-profitable plant, as they are asking why it’s still operating.

      Now, it’s time for the stockholders to ask the same questions.

  6. John Greenberg :

    Mr. Barrett:

    VT ratepayers do not buy power from VY, since our utilities have contracts with other suppliers. Closing the plant will have no impact on Vermont rates.

  7. Sally Shaw :

    The Fukushima disaster contaminated 1/10th of the entire Japanese land area, that is, 14,591 square miles were contaminated. That is 1.5 times the entire land area of Vermont (around 9,620 square miles). 160,000 people were displaced from their homes, some forever, (and who would WANT to return to a semi-contaminated ghost town that was once a beautiful, vibrant agricultural village just like those surrounding ENVY?) What an insane technology, especially when it is not needed, easily replaced, too expensive, obsolete, run by congenital liars, creates indisposable, persistent carcinogens and thermally pollutes an American Heritage River and “Blue-way.” Time to clean it up and close the book on this terrible experiment and Faustian technology. If Entergy goes bankrupt (which may be their game plan to get out of clean-up duty–clearly that was their hope with “SpinCo”), who will be left holding the bag?

  8. Mike Kerin :

    To shore up my assertion that the NRC is NOT doing their job.
    http://fairewinds.org/content/nrc-plays-keep-away

    http://sanonofresafety.org/2012/03/07/congress-told-nrc-stop-enforcing-regulations-or-well-cut-your-budget/

    Now if you edit my post out I’ll never come to this site again. Why did you eliminate my first post?

    • ALEX BARNHAM :

      EXCELLENT POST…it sure looks a lot like planned sabotage. How should we say?…planned? Purposeful? Here’s another idea that may be true.
      Thorium is highly abundant and easily attainable. It runs on a low pressure system, so much safer than present day high pressure Nuclear reactors. It’s also nearly 100% efficient. Here are some figures from Kirk Sorenson’s Google presentation:

      6600 tonnes of thorium (500 quads) is equal to one of the following in the list below:

      – 5.3 billion tonnes of coal (128 quads)

      – 31.1 billion barrels of oil (180 quads)

      – 2.92 trillion m3 of natural gas (105 quads)

      – 65,000 tonnes of uranium ore (24 quads)

      more figures.

      6 kg of thorium metal in a liquid-fluoride reactor has the energy equivalent (66,000 MW*hr electrical*) of:

      – 230 train cars (25,000 MT) of bituminous coal or,

      – 600 train cars (66,000 MT) of brown coal or,

      – 440 million cubic feet of natural gas (15% of a 125,000 cubic meter LNG tanker),

      – or, 300 kg of enriched (3%) uranium in a pressurized water reactor.

  9. Rob Simoneau :

    So let me see if I got this strait. Entergy management
    is running Vermont Yankee that had/has serious design flaws (2 GE engineers quit during construction); was run at 20 % beyond it’s design capacity (only plant in the world to do this); that would not be relicened under today standards; to produce electricy that is not used/needed in the region; is continuously contaiminating the environment; with no clear plan for long term nuclear waste storage tied to appropriate life-cycle cost projections; which will fail from an unknown mode of failure because nobody has ever done this before to make a group of rich investors in Mississippi richer. Did I get everything?!

    • John Greenberg :

      Rob:
      Not quite.

      1) There were actually 3 GE engineers: Minor, Bridenbaugh, and Hubbard.

      2) VY’s power uprate is far from unique. There have been 139 of them in the US. http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/power-uprates.html

      3) Entergy’s headquarters is in New Orleans. Its investors may live anywhere, since it is publicly owned.

      • Rob Simoneau :

        Hello John,

        Thank you for the corrections. No I strongly disagree, Vermont Yankee uprate is very unique. The average uprate was about 5.3% until a few years ago… now applications from a low of 1.6 to high of about 15% are currently under review by the NRC. There is only one other plant run at 20% beyond its design capacity, it is the Driscoll reactor, a much younger plant. Vermont Yankee is the only nuclear power plant in the world run 20% over its design capacity after it past its 40 year design window. Nobody on this planet can predict what types of failures will happen under these conditions but for sure Vermont Yankee will fail and soon. You may recall Vermont Yankee eventually stopped running at 20% over design capacity due to excessive vibrations.

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