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.