State loses appeal on right to close Vermont Yankee

Three justices from the U.S. Court of Appeals decided Wednesday that the Vermont Legislature is federally preempted from shutting down the Vermont Yankee nuclear plant.

After U.S. District Court Judge J. Garvan Murtha made the same preemption ruling in January 2012, Vermont Attorney General Bill Sorrell appealed to the higher court. In a 56-page decision, the appellate judges upheld the crux of Murtha’s ruling in favor of Entergy Corp., Vermont Yankee’s parent company.

The judges agreed that the Legislature was chiefly motivated by concerns of radiological safety when it created two laws aimed at regulating Vermont Yankee. Safety falls under the purview of the U.S. Nuclear Regulatory Commission — not state legislatures.

The judges did, however, reverse Murtha’s determination that the state had violated the Constitution’s dormant Commerce Clause when it attempted to work out an advantageous power pricing agreement for state entities. This ruling means that Vermonters do not have to foot the bill for Entergy’s legal expenses, which are estimated at more than $5 million.

“It’s a big win for Entergy and a little win for Vermont,” said Cheryl Hanna, a constitutional law professor at Vermont Law School, who has closely followed this case.

Sorrell said his office has 90 days to decide whether to seek a review of the ruling by the U.S. Supreme Court.

“This is clearly a good one for Vermont taxpayers. We saved many millions of dollars for having to pay attorneys fees because we prevailed on the constitutional issue,” Sorrell said. “We didn’t prevail on the validity of the two legislative enactments, so we’re sorry about that.”

Gov. Peter Shumlin said that while he is disappointed the appeals court ruled against the Legislature, he is hopeful that Vermont’s quasi-judicial Public Service Board will deny the 41-year-old plant a new 20-year operating permit, or certificate of public good, this year. Shumlin is a leading proponent of closing the plant, and he voted against its continued operation when he was president pro tempore of the Vermont Senate.

“The Vermont Public Service Board’s role in reviewing Entergy’s request for a state certificate of public good is preserved and will continue,” Shumlin said in a statement. “The decision does not change the simple fact that Entergy has over the years not been a good partner with Vermont, preferring to focus on multiple lawsuits against the State. I remain steadfast in my belief that Entergy’s continued operation of this facility is not in the best interest of Vermont. Our state’s energy future should be charted by Vermonters, and I am committed to increasing Vermont’s reliance on renewable, sustainable, and responsibly managed sources of energy.”

Vermont Yankee spokesman Jim Sinclair said the plant’s leadership is pleased with the decision.

How safety preempted the Legislature’s authority

At the core of the dispute between the state of Vermont and Louisiana-based Entergy are two bills enacted by the Vermont Legislature in 2005 and 2006: Acts 74 and 160.

Act 74, now part of Title 10, required Entergy to first obtain legislative approval before storing spent fuel at the plant’s site in Vernon after March 21, 2012, which is when the plant’s initial state operating permit expired. Yankee is operating under an extension of that permit, as the Public Service Board considers its application for a new permit.

Act 160, which became part of Title 30 of Vermont’s statutes, states that a nuclear plant cannot operate beyond the end of its permit without approval from the Vermont General Assembly.

Entergy sued Vermont in 2011 on the grounds that the state was attempting to preempt federal authority. The Nuclear Regulatory Commission extended Vermont Yankee’s federal operating license for another 20 years, but the Vermont Senate voted against re-permitting the plant. Murtha sided with Entergy, and the plant has continued to operate.

Eight months after hearing oral arguments on the appeal, federal Judges Christopher Droney, Susan Carney and Paul Gardaphe ruled that the Legislature does not have the authority to regulate based on safety. Although neither state law expressly gives the Legislature power over safety, the judges said this was the driving motivation behind the laws.

The Supreme Court decision that teed up this ruling stems from a 1983 lawsuit between the state of California and Pacific Gas and Electric Co. The U.S. Supreme Court held that California was not preempted by the Atomic Energy Act and could impose a suspension on the licensing of nuclear plants within its boundaries for economic reasons.

Vermont’s attorneys grabbed from language in that case to argue that the court should not dip into the legislative record and should consider the laws at face value. But the appellate justices drew from a range of other cases that used legislative history, and they said it was necessary in this case.

The judges looked back at Murtha’s findings, where he concluded that the legislative record included “references, almost too numerous to count, (which) reveal legislators’ radiological safety motivations and reflect their wish to empower the Legislature to address their constituents’ fear of radiological risk.”

The judges pulled from the record an example when Washington County Sen. Ann Cummings, then chair of Finance, was told that regulating based on safety was preempted.

“OK, let’s find another word for safety,” she said.

The judges decided that legislators worked around the language of the Pacific Gas case for the purpose of regulating the plant on grounds outside of their power.

“These are not merely isolated comments by a few legislators, but rather a part of a consistent effort by those responsible for drafting and passing Act 160 to obfuscate the record through the use of misleading statements that they thought would pass muster under Pacific Gas,” Judge Droney wrote.

In a separate opinion, Judge Carney wrote she was reluctant to rule against Vermont on the two laws.

“I concur, reluctantly, in the majority’s detailed and carefully reasoned opinion striking down Vermont Acts 74 and 160,” she wrote. “My reluctance stems not from any flaw in the majority’s analysis, but rather from my concern that Congress, in enacting the Atomic Energy Act … did not intend the result we reach.”

The Atomic Energy Act gives the NRC the power to regulate radiological safety. In the end, it was the case the state used in an attempt to excuse the legislative record that led to its poor result. The Pacific Gas decision expressly prohibited California from creating laws “grounded in safety concerns.”

“No reader of this record can fairly claim that the statutes at issue were not ‘grounded in safety concerns,’” Carney wrote. “I write separately to emphasize that it is principally the judicial phrase ‘grounded in safety concerns,” and not the Court’s holdings or the text of the Atomic Energy Act, that compels us to strike down Vermont’s statutes.”

This article was updated at 5:36 p.m.


Follow Andrew on Twitter @andrewcstein

Comments

  1. Bill Gardyne :

    Big surprise there……

  2. So the state of Vermont is subordinate to the whims of the federal government? I’m still waiting for the outcry from all the right wing Vermonters who hate how the federal government interferes in our affairs…

    Hmm, silence on this issue from the Republicans? How strange…

    While I think the Democrats are often weak and lacking in vision, the reason the Republicans are becoming an extinct species is not because of your stances, but because your platform is inconsistent and arbitrary.

    • keith stern :

      So who on staff in the Vermont state government is an expert on nuclear energy? I’ll take the opinions of highly qualified engineers and scientist than an elected governor and AG who are less brilliant than they think they are.

      • Rob Simoneau :

        Dear Mr. Keith Stern, Please read the research literature, there are no experts, none, on aging nuclear power plants. The reports state this. They – do – not – know – what – will -happen, how, where or when aging plants will fail!!!!! As far as a nuclear plant that is being run beyond its designed life-cycle, again nobody knows, and operated beyond its design limits, you are on your own. There are no qualified engineers and scientists.

    • bob thomas :

      Too bad your politics and opinions are not the law. Give ti up Vermont, the world does not revolve around you and the socialist views you may have.

  3. Hattie Nestel :

    Bummer on top of bummer!
    Direct action is our only recourse.
    Hattie Nestel

  4. Diane Butler :

    Our country has become some strange new land that I didn’t know growing up. Nukes, fracking, GMO foods, environmental destruction – it’s all interrelated and leaving a future wasteland for our grandchildren. Industry has hijacked regulation and shifted expense and liability to the taxpayers – for generations to come. It’s a real shame, but it should be a crime…

  5. Cheryl Twarog :

    This is great news for Vermont Yankee and their families. The courts have once again confirmed our belief that the state has acted illegally in its dealings with Vermont Yankee.

    • Rob Simoneau :

      Cheryl, Our legislators are elected to serve the people not corporations, well at least not until recently. The Vermont legislature acted to protect the best interests of Vermonters and neighboring states. Their act was deemed “illegal” by the federal courts based on the Atomic Energy Act which was drafted out of fear during the cold war and the misguided assumption of sticking an atomic bomb to a turbine was a good and economical way to generate electricity. Their decision to try to close Vermont Yankee by any standard is ethical. Again your silly a.. laws do not apply to VY or any nuclear reactor only the laws of science which are being grossly and dangerously violated.

  6. Jason Farrell :

    “My reluctance stems not from any flaw in the majority’s analysis, but rather from my concern that Congress, in enacting the Atomic Energy Act … did not intend the result we reach.”

    Your Honor, with all due respect, I have seen nothing to dissuade me from the belief that the result this court reached was, in fact, what Congress intended with the enactment of the Atomic Energy Act.

  7. Townsend Peters :

    The decision voids the requirement that VY obtain legislative approval for continued operation.

    However, it leaves intact the requirement for VY to get approval from the Public Service Board and arguably strengthens the PSB’s authority by removing a limit that Judge Murtha had placed on the scope of the PSB proceeding.

    The PSB will now be free to fully evaluate the economic benefits and costs to Vermont of Vermont Yankee’s continuing operation.

    With no contract to sell power to Vermont utilities, employee layoffs, a cash-strapped owner, and a creaky plant that could shut down any time, Vermont Yankee’s benefits to the state don’t look as rosy as they used to.

    • Annette Smith :

      And a Public Service Board that does what the Governor wants…

      • Bob Stannard :

        I’m sorry, Annette, but that’s about the dumbest thing I’ve ever heard you say. The PSB is a quasi-judicial board. It’s current members were appointed by Gov. Jim Douglas. The Chair was reappointed by Gov. Shumlin. They act in accordance with the law. I don’t always agree with them and at times have taken issue with their rulings, but at no time, ever, have I thought that they were doing any administration’s bidding.

        The problem that you have is that the PSB doesn’t do what you want.

    • Peter,
      “The PSB will now be free to fully evaluate the economic benefits and costs to Vermont of Vermont Yankee’s continuing operation.”

      That would include reducing CO2 emissions of about:

      620 MW x 8760 x 0.92 x 1000 lb/MWh x 1 metric ton/2204.6 lb = 2,266,490 metric tons/yr.

      Vermont emits about 8.1 million metric tons/

      • Townsend Peters :

        Post – Since VT has no contract with VY, the plant does not affect VT’s emissions.

        Also, you are not including the emissions from mining and milling and transportation of uranium fuel for the plant, or the emissions from energy expended for disposal of the waste. On a life cycle basis, renewable energy beats nuclear for reducing GHG emissions.

        • Kathy Nelson :

          Mr. Peters, Some items for you to consider:
          VT utilities are not currently buying power from VY but when a price is announced I have no doubt there will be bidders. And GMP is buying nuclear power from Seabrook in NH. Do you think it’s okay for VT ratepayers to be paying another state for what is readily available here?
          VT has outlawed fracking in this state because of its environmental hazards. VT, however, has not made it unlawful to buy fracked gas from other states and transport it to VT.
          VT allows the selling of renewable energy credits to out of state polluters. Therefore any so-called renewables, like wind, solar and hydro are contributing to continued pollution in our neighboring states.
          Your comment mentions the emissions from uranium processing for nuclear. Do you assume that the stork delivered wind turbines,solar panels and the concrete for hydropower dams? The processing requirements to build wind turbine components far out weigh to processing of uranium. And don’t forget the environmental damage caused by wind turbine installation, especially on mountain ridgelines. Ridgeline wind development results in the loss of the forests which are a natural carbon sink and the purifiers of water. Solar panels require chemical processes to produce and just because most of them are made in China (like wind turbine components) doesn’t mean they aren’t producers of pollution that affects the whole world.
          Oh, and a federal court has just ruled that President Obama broke the law when he halted the permit processing for the Yucca Mt. nuclear disposal site in Nevada.
          And in case you didn’t know, new types of reactors (like the thorium reactor) are being developed that don’t use uranium at all.
          Our sun is a nuclear engine and with one big flare it could kill us all. Do you suggest we fight to decommission the sun? The responsible use of nuclear energy is part of a future that allows humans to have electrical power and to have the opportunity to protect unspoiled wilderness as well.

          • John Greenberg :

            Kathy Nelson writes: “VT utilities are not currently buying power from VY but when a price is announced I have no doubt there will be bidders.” The price was announced in over 3 years ago by Entergy’s Jay Thayer after 2 years of negotiations with Vermont utilities had failed. That, in a nutshell, is WHY Vermont is no longer buying power from VY.

            “And GMP is buying nuclear power from Seabrook in NH. Do you think it’s okay for VT ratepayers to be paying another state for what is readily available here?” GMP negotiated the contract with Seabrook after its negotiations with Entergy failed. The contract calls for a price that is considerably lower than Entergy offered, does not require GMP to relinquish its right to revenue sharing, and does not require it buy power during the lowest demand portions of the day.

            So to rephrase Ms. Nelson’s question, is it okay for GMP to save Vermonters millions of dollars by purchasing power from NH instead of allowing Entergy to extort them from Vermonters because they happen to own a plant located in Vermont?

            As to Ms. Nelson’s claims about the comparisons between nuclear plants and wind turbines, I’ve previously answered them here: http://vtdigger.org/2013/08/13/nrc-agrees-to-look-at-finances-at-vermont-yankee-2-other-entergy-plants/#comments, so I won’t repeat myself.

            Finally, the sun’s energy is produced by fusion, a totally different physical process from fission, used in nuclear reactors.

    • Dennis Pearson :

      I don’t understand this rationale. The plant is providing Vermont with good paying jobs, taxes, and community investment. Maybe a little less now than in the boom times, but still! The power generated by the plant is sold at a bargain price to consumers with little carbon impact to the atmosphere. How could an unbiased politically unmotivated PSB come to the decision that the plant is not within the best interests of Vermont and its people? Is it really credible that Entergy, a US Fortune 500, would not be on the hook for full decommissioning of the site to federal standards?

      • Bob Stannard :

        The power is not sold at bargain prices. If it was our utilities would be buying it today. They’re not.

        VY is a merchant plant and an LLC. Entergy has gone to great lengths to distance itself, legally, from this plant. We have never closed a merchant plant before, but you can rest assured that whether we close it or it closes on its own, because it’s no longer economically viable that Entergy will be back in court. But this time it will be to fight against its obligation to decommission the plant.

        If there was ever a reason to say “NO” to this plant now it’s because of future liability to taxpayers. Look at the pattern. Entergy agreed with the laws overturned by the courts, because it benefitted financially. When things went south (because of their lying) they sued Vermont over laws that they supported and benefitted from.

        You don’t honestly believe that Entergy is going to sit back and pay for decommissioning of this plant. They’ve never been asked to put a dime in the existing decommissioning fund that they inherited (and show on their bottom line, for without this the plant would really not be economically viable).

        If decommissioning comes up short, and by all estimations it’s going to be off by a factor of at least 2, there won’t be ratepayers to pick up the tab. Who does that leave? Entergy or taxpayers. Who do you think wins that contest?

        Entergy has proven to be about as sleazy a corporation out there. They should be removed from Vermont like a deer tick under your skin.

  8. Peter Liston :

    Regardless, it won’t be long before Vermnont Yankee closes. Their business is crumbling.

    • Frank Seawright :

      Crumbling?
      What I fear the most.

  9. Stan Hopson :

    Overreaching Government SMACK DOWN

    Love it.

    • Jason Farrell :

      “Overreaching Government SMACK DOWN”

      … by an overreaching Government.

      The irony is that the SMACK DOWN you purport to “love” is the direct result of judicial branch decisions that find support for legislation developed by our federal government for the promotion and benefit of a single industry. The courts have held that this legislation (the Atomic Energy Act), enacted by our federal government nearly sixty years ago, in essence, permits our federal government to continue to pick the winners and losers in the energy sector, but state governments aren’t permitted to do so because the legislation codified that “safety” is a concept that only big brother, big government can comprehend.

      I understand there will be those who object to Vermont’s political climate, but cheering a federal government overreach such as this over a state’s right to determine its own energy future via local control, via elected officials, seems an odd way of expressing a political point.

  10. Charles Smith :

    Does anyone see the twisted irony here?

    In the case of VY, Shumlin has gambled (and lost) millions in a failed effort to enable critical decisions for Vermonters on a more local basis.

    With industrial wind, Shumlin has aggressively shunned and undermined local decision making.

    In trying to reconcile the dichotomy, a careful analysis of Shumlin’s own deposition testimony taken prior to the Murtha decision reveals that there is much more to the irony than we might yet realize.

    • Jason Farrell :

      I see the twisted irony.

      I have a vote, and along with that an opportunity to persuade members of my community to use our votes for, or against, our elected representatives as we see fit. In a state the size of Vermont, that’s a very powerful tool of accountability for those who seek our votes every two years.

      In this case, Governor Shumlin never attempted to deceive the electorate with regard to his stance against the continued operation of Entergy Louisiana’s nuclear power plant during either of his campaigns for governor. Therefore, Governor Shumlin’s continued pursuit of the shutdown of this plant may well be the proper act in light of his campaign promise and the will of the majority of Vermonters who overwhelmingly supported his re-election. Should there be significant dissatisfaction with his decision to pursue this case to the degree that he has, or with how he’s handled other energy issues during his tenure, there will be an opportunity for those who disagree with our governor to make their case in the upcoming election that will be held next fall.

      The “twisted irony” here is Vermonters are nearly powerless to effect a change that a majority of citizens seek with regard to continuance of nuclear power within the borders of our state because unelected judges continue to find that a congress, nearly sixty years ago, created legislation that preempts our state’s right to self-determination of our own energy future.

      While you believe you’ve discovered a “twisted irony”, I believe you’ve demonstrated an incongruous juxtaposition.

  11. Arthur Coates :

    Those in favor of Vermont Yankee should go to the people of Japan or Chernobyl and tell them not to worry about nuclear power plant safety – They’re perfectly safe; cockroaches show no ill effects whatsoever. Oh, but wait; we’re human and tend to find exposure to radionuclides both carcinogenic and mutagenic. OK, not safe; deadly!

  12. Stan Hopson :

    Remember that 8.0 earthquake in Brattleboro? No one else does either.

    • John Greenberg :

      1) “Remember that 8.0 earthquake in Brattleboro?” I’m perfectly happy to grant Mr. Hopson that the odds of a high magnitude earthquake are quite low. Unfortunately, however, granting that gets him precisely nowhere.

      The assumption behind the question is that earthquakes (and tsunamis) are the only two initiating events for a loss of power accident at a nuclear plant because that’s what occurred at Fukushima, but that’s simply wrong. There have been almost as many different initiating events for nuclear accidents, large and small, as there have been accidents. (I’m not sure there have been ANY 2 accidents with similar causes, so I’m hedging my bets with “almost.”)

      How many earthquakes or tsunamis were there at Chernobyl? Three Mile Island?

  13. Walter Carpenter :

    Wonder how much entergy paid to get this decision.

    • Bill Gardyne :

      Wonder how much the State of Vermont wasted in passing the legislation and paying for the legal defense of it…

      • Walter Carpenter :

        “Wonder how much the State of Vermont wasted in passing the legislation and paying for the legal defense of it”

        Probably not nearly as much as entergy paid off the right people or when they tried to spin off this rickety nuke plant off to a holding company and then attempted to hide it.

      • Bob Stannard :

        Are you referring to the legislation that Entergy supported and financially benefitted from? Like being allowed to uprate the plant by 20%? That certainly helped its bottom line, don’t you think? Like being able to store high-level, nuclear waste in dry casks here in Vermont forever (well, until those containers start to crack and leak; then we’ll fight over who’ll deal with that mess, because Entergy will be long gone).

        Are those the laws you’re talking about? And you do know that it was Entergy who sued Vermont, right? Entergy began the litigation process.

        • Coleman Dunnar :

          “And you do know that it was Entergy who sued Vermont, right? Entergy began the litigation process.”
          Bob: I don’t know about your world but here in the United States it is usually the injured party that begins the litigation. In reading the 2nd Circuit decision it seems the court had a real problem with the legislature doing away with judicial review in the approval process. Don’t know about you but I believe everyone one is entitled to due process, and has the right to seek redress when it is denied by legislative whimsy.

          • Bob Stannard :

            Coleman, your party was injured when the legislature voted not to allow the plant to continue to operate; just as the law that Entergy supported allowed for them to do.

            Entergy knew full well what it was doing back when the laws were being passed. They knew that should the day come when Vermont lost faith in them that they need only cry foul on pre-emption, which is exactly what they did.

            The only mistake made here was that the legislature back then actually believed that Entergy would act in good faith.

            The lessen learned is that Entergy, under no circumstances, can be trusted.

          • Bob Stannard :

            Mr. Dunbar, the laws recently overturned allowed for legislative approval over continued operations of the plant beyond its licensed (and designed) date of 40 years.

            Entergy agreed to this in exchange for the uprate and the ability to store high-level waste in dry casks for the end of time (or the container; whichever comes first).

            It’s called compromising. The only mistake made here was that the legislature of that time trusted Entergy to act in good faith. No one foresaw that Entergy would lie to our PSB and shattered their faith and trust, but that’s what happened.

            The legislature acted in accordance with the law that was passed and supported by Entergy only to have Entergy renege; something else we’ve grown accustomed to seeing Entergy do.

            I would contend that Entergy knew all along that it could cry preemption on laws they supported; thus leading me to believe that it was their intentions to deceive us from the start.

  14. Wayne Andrews :

    What we need is a multy port home electrical switch that will enable a user to choose his/her electrical power. Each switch should have a k/hr rate assigned to it.
    Then……. the utopic “greenies” out there can pick their power and pay accordingly. I bet you the middle class/poor “greenie” will choose the lowest price after their paycheck is dwindled from previously choosing their desires.
    Then the rich “greenie” can choose their more expensive power (we can constantly alter an additional tax on that power because they are rich) and they will be happy and the State will be happy with the extra revenue.
    Finally, I wonder how much food/heat assistance could have been distributed to the needy in lieu of all these lawyers fees Vermont keeps paying and losing the majority of the time?

  15. It would seem this ruling undermines a whole lot of other lawmaking efforts – think of all the laws passed that attack a woman’s right to manage her own body! How many times have lawmakers expressed their desire to outlaw abortion entirely and then cloaked those efforts with bills that claim to protect a woman’s health.

    While this may suck vis-a-vis Vermont and Louisiana Entergy Yankee, this could have some laudable effects elsewhere.

  16. Guy Page :

    In the interests of nuclear safety nationwide, I am heartily pleased that the federal government reasserted its safety prerogative. Just imagine a state-by-state “nuclear safety” program run by political hacks appointed by the likes of former Gov. Rod Blagoyevich in Illinois. There’s a reason they don’t let children play with construction equipment. Some things – like air traffic control, and national defense, and nuclear safety – the U.S. government does extremely well. And deep down I think that even Gov. Shumlin sleeps better at night knowing that the NRC, and not one of his agencies, is ultimately responsible for oversight at VY. Having said that – unless you have spent time with VY employees in the midst of their culture, you simply cannot appreciate the personal, pervasive commitment to safety. Sometimes industry and government regulators DO work together for the common good.

    In this area, credibility and transparency are essential. As someone who has followed the VY-State of Vermont conflict for years both personally and professionally, and who sat in both the lower and appeals courtrooms and heard the arguments pro and con, I am convinced with a capital “C” that the court got it right: the Vermont Legislature and Attorney General were and are incorrect and even evasive when they claim that nuclear safety was not the paramount concern in the anti-Yankee legislation. Were there other legitimate issues? Sure. And the Civil War was, to a degree, about regional economic interests. But in both cases one single issue provided the real “push”.

    Finally, I hope that not only Gov. Shumlin, but the employees of VY can sleep better at night now, too. For a while, at least, their jobs are safe from interests – political and economic – who would rejoice at their elimination.

    • Bob Stannard :

      Guy, no one has ever doubted the individual employee’s dedication to their jobs. What many of us doubt is the industry’s dedication to safety and the regulatory agency, the NRC’s, ability to regulate.

      You must have written your comments prior to watching NBC’s Nightly News last night. There was an excellent report highlighting the fact that all 104 nuclear plants in American are vulnerable to terrorists attack and nothing’s changed to since 9/11.

      Ask yourself why is it that when reviewing the relicensing of a plant that no one is allowed to bring up potential terrorist risks. One would think that in this day and age it might almost be THE number one concern, yet the NRC won’t touch it. Why? Because it would cost the industry a fortune to make their plants safe.

      If knowing the NRC helps you sleep at night, god bless you. But go look at the record of NRC’s enforcement of safety over the past 20-40 years and you won’t sleep a wink.

      And for the readers out there the NRC is funded by the industry; not your tax dollars. That probably doesn’t have any impact on their decisions; decisions made by folks who worked in the industry prior to working for the NRC, and who will be back working in the industry once they leave the NRC.

  17. Josh Fitzhugh :

    I have not read the decision yet but it leaves the Shumlin Administration and Attorney Genleral in a difficult spot: seek appeal to the Supreme Court (or the full Second Circuit) to overturn the closure decision based on legislative comments but run the risk of getting socked with $5 million in fees if that portion of the decision also is reversed (Entergy would surely cross appeal), owr accept the decision and hope the PSB can do something. S

  18. Josh Fitzhugh :

    I have not read the decision yet but it leaves the Shumlin Administration and Attorney Genleral in a difficult spot: seek appeal to the Supreme Court (or the full Second Circuit) to overturn the closure decision based on legislative comments but run the risk of getting socked with $5 million in fees if that portion of the decision also is reversed (Entergy would surely cross appeal), or accept the decision and hope the PSB can do something. Sounds like the latter from the comments I read here…

  19. Bob Stannard says: “You don’t honestly believe that Entergy is going to sit back and pay for decommissioning of this plan.

    Bob has a good point. Unfortunately, Bob’s hero, Governor Peter Shumlin never did his homework, analyzed or anticipated this potential problem before he took off on his ill considered strategy to close Vermont Yankee on the basis of safety. A move rejected by the courts and resulting in a poisoned environment between Energy and the State of Vermont that will only lead to further headaches and costs for the state and its citizens.

    Too be redundant, here’s what I said on this subject in March 2013:

    PSD Commissioner Recchia is seeking new data from the NRC on Vermont Yankee, lets see where this all leads. On the other hand, if the Governor gets his wish and the plant closes, Commissioner Recchia will really have his hands full.

    Here’s a scenario that the Commissioner and others in Vermont government could be facing. The vtdigger states the Governor has suggested that Vermont Yankee may close due to economic pressures. If this proves to be true, in addition to losing tax revenue, hundreds of good paying jobs and suffering other economic dislocations, the state will likely face a long and difficult battle with Entergy’s Louisiana management while going through the plant closing process.

    I assume that there are plenty of laws and regulations that set forth what an owner must do to close and secure a nuclear plant once it stops operating. If Entergy does elect to close VY for economic reasons, or if it ultimately loses in court, my guess is that they will drag their feet and do everything possible to frustrate Vermont officials all while staying within arguable compliance with applicable laws and regulations, as they see them.

    It will be cheaper to litigate each and every dispute with the state as opposed to rapidly pouring untold millions of dollars into the plant closure. Entergy with its team of heavy weight lawyers have the wherewithal and the will to drag Vermont through the courts with expensive litigation costing the state incredible legal fees and other resources.

    No rational business wants to operate where it is not wanted and where it cannot make a fair return on investment. That being the case, Gov. Shumlin, instead of negotiating a controlled glide landing for the closing of VY, which would have allowed some reasonable period to wind down, has instead forced a potential crash landing. A crash landing being a cold turkey shut down of the plant resulting in hundreds of millions of dollars in loses for Entergy.
    The way Entergy sees it, VY is a safe plant and the Nuclear Regulatory Commission agrees with that sentiment. On the other hand, Entergy views Vermont as being motivated by anti-nuclear dogma of the worse kind, which they see as being ignorant and patently unfair.

    For those concerned with safety and pressing for a VY shut down, there could be a black swan event with this plant resulting in a catastrophic accident. I have no way knowing about such an eventuality nor does anyone else. We know that the NRC doesn’t believe the black swan risk warrants closing the plant and I have to place more credence in what they say than the anti-nuclear activists.

    No matter what the final outcome of the plant’s operation is, Vermont will be a loser because Gov. Shumlin elected to play hardball instead of working harder to negotiate a closure settlement where each side got something.
    I have no dog in this fight other than concern for the hundreds of Vermonters, who rely on the plant to support their families, otherwise, the closing of the plant makes no difference to me. The real concern is how the Governor has handled the entire VY matter.

    Moving from VY to a broader scale, a more disturbing issue is the overall management record that Gov. Shumlin is establishing. Instead of being a do your homework and careful executive, he seems to operate with a: READY, FIRE, AIM mentality. This is not good.

    • Bob Stannard :

      Mr. Yankowski, the plant will be decommissioned by the NRC in conjunction with Entergy. Vermont has very little, if any, control over that process.

      The NRC is perfectly fine with a process known as SafStor, which basically mothballs the plant for 60 years. Do you really believe that Entergy, as a company will be around in 60 years? Think Enron.

      The argument is that the money in the fund will increase to the degree that there will be plenty in 60 years to close the plant. Somehow they don’t seem to think that the cost of doing business is going to increase.

      The whole process is a farce and when the dust settles it will be the taxpayers who’ll pick up the bill, as this is a merchant plant with no ratepayers to place on the hook.

      The sooner we (you) realize that nuclear power is nothing more than a taxpayer boondoggle the better off we’ll all be.

  20. Bob, exactly, the taxpayers will pay will. Any chance of working with Energy for a orderly shut down of the plant and establishment of a adequate decommissioning fund went out the window thanks to Gov. Shumlin’s “Close it down of safety reasons” strategy.

    As a lobbyist, you should know that starting a negotiation by punching your opponent in the mouth seldom works, which is exactly what Shumlin and his followers have done with VY.

    Now if you want to talk about boondoggles, lets move the show to Lowell Mountain, the missing link to the grid and coming tsunami of rate increases for consumers. The sooner we (you) realize this the better off we’ll be.

    • Bob Stannard :

      I don’t know you, Mr. Yankowski, but you seem like a reasonably intelligent person. You don’t honestly believe, after all we’ve been through with this corporation, that there was ever a chance to negotiate honorably with them about anything, do you?

      Stop and remember that Entergy and Vermont enjoyed a good relationship when Entergy bought the plant in ’02. When the laws recently overturned were negotiated, with Entergy, they were done so in good faith; at least on behalf of Vermont.

      It was Entergy who lied to the PSB about underground pipes. It was their plant that leaked; leaked again and then leaked again. It was Entergy that proved to be the disingenuous partner in the relationship. Shumlin took advantage of the opportunity presented to him by Entergy. You may recall that the utilities had tried to negotiate a contract with Entergy for almost 2 years. My biggest fear as the lobbyist fighting this corporation was that they would come to a deal. Had Entergy negotiated in good faith with our utilities, they would have won and I would have lost.

      But they are greedy, as well as arrogant. Now, they have no contract and are at the mercy of the open market which is being undercut by natural gas. The plant, according to former CEO J. Wayne Leonard, is not profitable. We’re seeing this reality with the reduction of 30 jobs.

      I’m not taking your Lowell Mt. bait. I’ve opted not to chase that tail. I’m retired. I don’t need to. I will say that I do support energy sources that don’t leave me grandkids with legacy costs, which is exactly what nuclear power does. And no, nuclear power is not clean and no it is not cheap. And no, we will not need an earthquake or a Tsunami to create a catastrophe. We didn’t have either at 3-mile Island or Chernobyl. All we need is human error, which is bound to happen.

      • Coleman Dunnar :

        When the laws recently overturned were negotiated, with Entergy, they were done so in good faith; at least on behalf of Vermont.
        Really Bob? The operative words in your statement are “laws recently overturned”. When the legislature places you in a situation where the deal includes laws that can’t pass the straight face test you characterize that as “good faith”. Remember it wasn’t Entergy that asked for the legislation to politicize the approval process. That effort was a pet project of the president pro-tem of the senate, our current Governor. Time to get you washing machine fixed it’s still stuck on spin cycle.

        • John Greenberg :

          Entergy DID ask for Act 74, without which Title 10 Section 6501a would have forced it to shut down after the uprate.

          The president pro-tem at the time that Act 160 passed was Peter Welch. Shumlin was out of office. Act 160 passed the House by a vote of 130 to zero. There were 58 Rs in the House at the time, including Patty O’Donnell of Vernon, a major VY supporter, who voted FOR the bill, which Governor Douglas signed.

        • Bob Stannard :

          I’m sorry to disappoint you Mr. Dunnar, but it was Entergy who came forward requesting legislation. They had to ask the State for permission to uprate their plant by 20% and to be able to remove high-level nuclear waste from the fuel pool and place it in dry cask storage units. They initiated the process.

          The legislature back then decided, in the spirit of negotiations, that it would be prudent to allow them their request, but in exchange wanted oversight for any continued operations beyond the expiration date of March 2012.

          In any negotiation process one party gets; one party gives until they come to an agreement. Looking back, the worst thing the legislature ever did was to agree to allow this plant to be uprated by 20% beyond its designed capacity. Had they not acquiesced to Entergy’s requests the plant would have closed on schedule.

  21. Bob, I don’t know if anything productive could have been negotiated with Entergy/VY in regard to a mutually agreed upon closing of the plant and establishment of an adequate decommissioning fund. I do know that with so much at stake, it was worth a real good try. This try, or opportunity, to do the responsible thing was missed, all at an ever increasing cost to the taxpayers.

    As a result of Entergy/VY having been knocked back on their heels from company miscommunications regarding plant issues, maybe there was an opportunity or workable leverage for the state to use to achieve its goals. However, we’ll never know because of the way Gov. Shumlin handled things. Maybe, like the Jerry Dodge situation, he can get a second bite at the apple and undo the harm he has caused.

    On the other hand, I’m pleased to see that you’re concerned about companies and executives lying. We should all be concerned especially when the lying impacts public interests. With this thought in mind, maybe we’ll learn who knew what and when concerning the technical operating limitations of the Lowell Mountain project and grid.

    There is a ton of money at stake here and it appears that important technical operating information was either unknown, withheld or ignored in proposing and approving Lowell project. Whatever happened, the truth needs to come out, especially it the ratepayers are going to be asked to step up and assume the financial burden of required costly upgrades to the grid. The truth meter you use to measure the VY/Entergy executives should be used on those who pushed and approved the Lowell Mountain project. Given the magnitude of this issue, maybe the Attorney General needs to be involved. What do you think?

  22. Rob Simoneau :

    From a previous post…
    The economic reality of nuclear power is that it is no longer feasible and was never feasible. Please read the attached report from the University of Vermont School of Law; PUBLIC RISK, PRIVATE PROFIT RATEPAYER COST, UTILITY IMPRUDENCE ADVANCED COST RECOVERY FOR REACTOR CONSTRUCTION CREATES ANOTHER NUCLEAR FIASCO, NOT A RENAISSANCE.

    http://www.vermontlaw.edu/Documents/PublicRiskPrivateProfit_Cooper.pdf

    The end of nuclear power …
    “A record number of reactors closed in North America this year – at San Onofre 2 & 3, CA; Crystal River, FL (pictured, left); Kewaunee, WI; and Gentilly-2 (Quebec). Plus there is a growing list of new reactors and other nuclear projects that are non-starters. Canceled are: Duke/Progress Energy’s proposed twin reactor units at Levy County, FL; and plans to ship radioactive waste from the Bruce nuclear site in Canada to Sweden. The Nuclear Regulatory Commission has also informed Duke that license finalization for its proposed new reactors at William States Lee in SC has been postponed by three years, to 2016. And the nuclear market in the U.S. is so bad, the largest nuclear utility in the world, Electricité de France, has announced it is completely withdrawing.” (source Beyond Nuclear)

    - See more at: http://vtdigger.org/2013/08/06/green-mountain-power-and-entergy-reach-settlement-over-cooling-tower-collapses/#comments

  23. Douglas Hutchinson :

    In reply to Kathy Nelson on August 15th, John Greenberg indicates as he has previously on Digger that the reason Green Mountain Power (GMP) and perhaps other Vermont utilities bought nuclear power from Seabrook is that VY was not competitive on price. As you can see from the following article/press release at the time GMP revealed its deal with Seabrook, the perceived issue with VY was its uncertain future as a result of Vermont legislation not any inability to reach an agreement on price. http://www.deseretnews.com/article/700138359/Vt-utility-to-buy-power-from-NHs-Seabrook.html
    This near contemporaneous link to a Digger article from 3/30/2011 indicates VY was willing to provide power @ 4.9 cents per kilowatt hour to Vermont Electric Co-op (VEC). If I recall correctly, this price is something like .3 cents above the Seabrook deal. GMP with its much larger market share(80 % versus VEC’s 10%) could likely have negotiated a similar deal with VY if GMP had been willing. GMP didn’t want to be in the situation of losing a major power supplier if the state prevailed in court and shut down VY. http://vtdigger.org/2011/03/30/entergy-drops-attempt-to-sell-vermont-yankee-strikes-deal-with-vermont-electric-co-op/
    But hey, this doesn’t fit with Mr Greenberg’s narrative so he prefers to spin it as a price disagreement.

    • Bob Stannard :

      The 4.9 cent rate was only for year one. There were many other complicated factors that were part of their offer that were not part of Seabrooks’ offer

    • John Greenberg :

      Douglas Hutchinson accuses me of ignoring evidence which “doesn’t fit with Mr Greenberg’s narrative so he prefers to spin it as a price disagreement.” But the “new” evidence he introduces isn’t new at all, and I’ve discussed it many times in public comments.

      The 4.9 cents offer Entergy made to VEC was a teaser. As Bob Stannard notes in his comment, the price was offered for 1 year and for 10 MW only, after which the price would have been market price. Entergy considered its offer great PR, so they announced that they had reached a deal with VEC even though the VEC board hadn’t approved it. In fact, not long afterwards, the VEC board voted to reject the offer.

      The evidence for the price differentials being the driving element in the failure of negotiations is everywhere one looks. In the PSB Docket 7440 record, for example, Entergy placed a value on the Revenue Sharing Agreement many times higher than either GMP or CVPS witnesses because of is assumptions about the power market. At one point, Jay Thayer said the RSA would be worth close to $1 billion. GMP estimated its value in the range of $100 million or less; CVPS said (correctly it now appears) that its entire value would likely be its value as insurance against market spikes and that it would otherwise be worth nothing (I point that, just for the record, I too had made in an analysis presented as a public comment to the PSB).

      These same assumptions about the market led Entergy to feel that its offer was “below market,” when in fact, no one else thought so. (The “market” I’m talking about here is the 2012 market viewed from the perspective of 2009-10.)

      It actually doesn’t matter in this context that Entergy was WAY off base (as their most recent testimony, effectively agreeing with CVPS shows)and that Vermont utilities were in the right ballpark. Had Entergy been right and everyone else wrong, the negotiations wouldn’t have gone one bit better.

      What matters is that these prices reflect the thinking of the parties in approaching the negotiations. Tt’s all well and good to say that a price is going to be “below market,” but if one party thinks that means 6 cents and the other thinks it means 4 cents, they’re not going to agree. (These values are pulled out of the air; they’re intended only to make an abstract point. The actual values are not publicly available.)

      Evidence in the current CPG docket confirms that there WAS a difference on price in the negotiations which led to Jay Thayer’s letter to the PSB December 2009 announcing the failure of the negotiations and offering the utilities a price of 6.1 cents, which HE claimed would be below market for which the utilities would also have to accept relinquishing their interest in the revenue sharing agreement, which Thayer valued in the hundreds of millions of dollars.

      The Seabrook deal is for 60MW of 16/7 power (meaning that the utilities don’t have to buy late night power that they don’t need) at a lower price and with no relinquishment of their rights to the RSA.

      Sorry, Mr. Hutchinson, but ALL of the evidence points to my explanation; none, to yours.

      • Douglas Hutchinson :

        Let’s make this simple and succinct.
        1. Nowhere in my comment do I suggest my evidence is “new”
        2. And Greenberg entirely fails to respond to my principal point. After the Vermont senate voted to deny permission for VY to put its application for license renewal before the PSB in February 2010, GMP was no longer interested in negotiating because they didn’t want to enter a long term contract with a merchant power supplier that might not be around after March 2012. And they said so in the first link in my previous post. Notably, they didn’t say they couldn’t reach an agreement on price/terms. In working markets, willing sellers start high, willing buyers start low, there is a lot of posturing and then hopefully somewhere near the deadline there is an agreement. GMP was no longer a willing buyer after February 2010 more than 2 years before the negotiated agreement would take effect. In essence, Greenberg is using the December 2009 offering as the best offer.
        3. The Entergy press release discussing the VEC deal indicates in the second paragraph that it is contingent on VEC Board approval and continuation of VY’s license beyond March 2012. Since VY licensure was in serious doubt after Feb 2010, it’s no wonder VEC turned down the offer. And for what it’s worth the VEC CEO said he considered the potential 20 year deal as below market rate (also seen in the second paragraph) contrary to Mr. Greenberg’s contention. http://vtdigger.org/2011/04/01/vec-board-says-no-agreement-on-vermont-yankee-power-yet/

        • John Greenberg :

          Somehow, Douglas Hutchinson and I seem to be talking past one another and frankly, I no longer have any idea what exactly he’s getting at. I’ll try not to repeat myself here, but to provide some chronology which might at least provide helpful historical context.

          1) From 2007-2009, the utilities and Entergy attempted to negotiate a contract. Since everyone believed that the PPAs would be an integral part of the CPG case, an agreement was reached that they would be available no later than the end of September, 2009 (I’m going by memory here, because the precise date doesn’t matter any more). The utilities missed that deadline and agreed to another: December 21.

          2) On December 21, Jay Thayer wrote to the Board as follows: “In 2007, EVY initiated negotiations with Vermont Yankee Nuclear Power Corporation (“VYNPC”) on a Power Purchase Agreement (“PPA”) for the period following Nuclear Regulatory Commission license renewal pursuant to the “Sale MOU” between EVY, VYNPC, and’ other parties VYNPC ultimately elected not to pursue a new PPA. Subsequently, EVY entered into direct negotiations jointly with CVPS and GMP. Those negotiations have produced an extensive sharing of data and views but have not produced a new PPA governing the period following license renewal.” Mr. Thayer said that Entergy would make “a unilateral offer to sell power to Green Mountain Power Corporation (“GMP”) and Central Vermont Public Service Corporation (“CVPS”) (collectively, the “IOUs”) during the term of a renewed license for the Vermont Yankee Nuclear Power Station (“Vermont Yankee” or “VY”). … EVY will offer to exchange the 10-year Revenue Sharing Agreement (“RSA”) for a 20-year Power Purchase Agreement. The pricing of the PPA will be exactly the same as the pricing contained in the RSA. As a result, the pricing of the PPA is expected to be far below the wholesale price forecast for energy and capacity recently approved by the Board.” This offer was contingent on acceptance of the Enexus deal then on the table. (“The contracts will be subject to several conditions, including consummation of the transaction pending in Docket No.. 7404.”) Subsequently, both NY and VT refused to allow the Enexus deal to be consummated.

          The strike price of the RSA was 6.1 cents per Kwh. Mr. Thayer’s letter states: “the combined benefit of the below market PPA and the remaining RSA payments is expected to be approximately $650 million.” As noted in my previous post, 6.1 cents turns out to be well ABOVE the market price and current market expectations for the next 10 years anyway. But what’s interesting here, I think, is not that Thayer was wrong, but what his stated expectations were at the time.

          As far as I know, this price is the only price of power that was ever made public from these negotiations and the only publicly available price of an offer to the larger Vermont utilities.

          3) The price Entergy was offering and the failure to reach agreement was, in large measure, responsible for the Vermont Senate vote several months later. I say this with some confidence because I had spoken to almost every senator by the end of 2009 and counted 20 solid no votes, 2 solid yes votes, with most of the “leaners” leaning against extending operations. This was BEFORE the announcement of the tritium leaks. In two years of these discussions (and discussions with House members as well), the PPA price was overwhelmingly the biggest issue on the minds of legislators.

          4) As Mr. Hutchinson now notes, the failure of the Senate vote meant that Vermont Yankee could not receive a CPG to operate after 2012 unless and until the Senate vote was reversed AND the House also voted affirmatively to allow continued operations. This remained the case until Judge Murtha ruled that the laws requiring the Senate’s vote were unconstitutional, but it is worth noting, if only in passing, that a 1977 law, 10 VSA 6501a ALSO requires an affirmative legislative vote before Vermont Yankee can store more fuel in dry casks, if the Board’s (and my) interpretation of the term “facility” is upheld. And there remains no guarantee that the Board will grant a CPG for continued operations either. In short, all negotiations between Entergy and the utilities SUBSEQUENT to the Senate vote have been based on legal hypotheticals, if I may put it that way.
          5) On March 30, 2011, Bob Young, then president of CVPS, issued the following statement: “CVPS is a public service company. We want to do what is best for our customers and for the state. As we have long stated, safety has to be the first consideration related to the future of Vermont Yankee. [Bob Young was, at one time, Chairman of the Board of VYNPC.]
          For nearly three years, we have talked with Entergy about a possible contract. We did agree on a lot of things, but we have not signed a contract.
          We concluded that there were four conditions if we were to sign a deal: NRC approval of relicensing; the sale of the plant to a new owner; an agreement for Entergy to sell 20 megawatts in Vermont in addition to sales to CV and GMP; and state approval of the decommissioning and any other issues of interest to the state. It has been our position that we would not enter into a formal contract absent a sale and tacit state approval of any proposed deal.
          They’ve not met all of those conditions. Unless or until they can, we will have nothing to announce.”
          6) Mr. Hutchinson mentions the difference in price between the Seabrook contract and the 10MW 1-year offer to VEC, but provides no context. .3 cents at these low prices comes to a 5% difference, which in utility terms, is not a small number.
          Mr. Hutchinson writes: “GMP with its much larger market share (80 % versus VEC’s 10%) could likely have negotiated a similar deal with VY if GMP had been willing,” but provides no evidence for that statement. Nothing I’m aware of supports it. Perhaps Mr. Hutchinson will present some evidence for all of us to consider. Mr. Hutchinson might bear in mind that, just before the Senate voted in 2010, Entergy offered 25MW of power at 4 cents in vain attempt to sway the vote. http://www.boston.com/business/articles/2010/02/23/awaiting_crucial_vote_vt_nuke_plant_makes_offer/

          Mr. Hutchinson notes that February 2010 was [a little] “more than 2 years before the negotiated agreement would take effect,” but fails to note that it was also about 3 years after negotiations had begun (see #2 above). But if the point of this exercise is to get me to agree that, after the senate vote, price was no longer the only obstacle, I of course do agree. Bob Young’s comments articulate 4 others. It’s also worth noting that the utilities had, by then, issued more than one RFP for power and were in negotiations with various potential sellers.

          I’m not entirely sure what the point of all this is, but I’m always happy to review the history, since many (including Republican party chairman Jack Lindley in the last week) appear anxious to re-write it.

  24. John Greenberg :

    Douglas Hutchinson might want to note Mary Powell’s statement today in the Burlington Free Press: ““Candidly we were never able to get a contract we thought was a good value,” she said.”

    http://www.burlingtonfreepress.com/article/20130827/NEWS07/308270019/Power-grid-unaffected-by-Vermont-Yankee-closing

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