Entergy Corp. will grant the wishes of many Vermont officials by closing the 41-year-old Vermont Yankee nuclear plant in 2014, but the company’s relationship with the state is far from over.
The Louisiana-based company and the state are embroiled in four separate lawsuits, and the specifics of those cases shifted last month when Entergy announced the plant’s upcoming shutdown.
The first case is Entergy’s application in front of the Vermont Public Service Board for a new operating license, called a certificate of public good. The second case is an Entergy appeal in federal court of the state’s generation tax. The third lawsuit is Entergy’s appeal in Vermont Supreme Court of a Public Service Board decision. In the fourth case, Vermont Attorney General Bill Sorrell must decide within a 90-day period — which began Aug. 14 — whether to appeal a U.S. Court of Appeals decision that the Vermont Legislature is federally preempted from shutting down the plant.
“There are a lot of Entergy balls in the air right now,” Sorrell said.
Certificate of Public Good
For more than a year, Entergy sought a certificate of public good from the Public Service Board to operate Vermont Yankee until March 21, 2032.
The plant’s initial 40-year operating license expired March 21, 2012, and the U.S. Nuclear Regulatory Commission extended the plant’s federal license to operate for another 20 years.
But on Aug. 27, Entergy announced that it would close the plant before the end of the fourth quarter in 2014. That same day, Entergy resubmitted its application with the Public Service Board, seeking the authority to operate the plant through Dec. 31, 2014.The Department of Public Service, which is charged with representing the interests of Vermonters in this case, has requested extra time to evaluate the amended application.
“We’ve asked the board for a 30-day extension to evaluate what the best process for moving forward is,” said Chris Recchia, commissioner of the department. “We’re pleased that there is a definite closure date proposed.”
Entergy executives said last month that they plan to close the plant at the end of its 18-month refueling cycle, which would be in early October 2014. The amended application, however, asks for the power to operate roughly three months after that date.
“We’re still evaluating that,” Recchia said of the discrepancy. “The fuel rods don’t stop working on the 18-month anniversary, so I’d imagine there will still be some ability to generate power.”
Energy generation tax
On the same day Entergy announced it was closing Vermont Yankee, the company went head-to-head with Sorrell in the U.S. Court of Appeals over a tax hike the Legislature approved in 2012.
The only tax Entergy pays to the state of Vermont is a generation tax based on a kilowatt-hour charge. In September 2012, Entergy sued the state for raising this tax to $0.0025, which is the same generation tax rate Connecticut applies.
The new tax raises roughly $12.5 million for the state, versus the roughly $5 million the former tax raised. In part, the increase was meant to make up for expired agreements with the state that funneled roughly $6 million into Vermont’s Clean Energy Development Fund each year.
Entergy sued the state for four constitutional violations. But, at the end of October, federal Judge Christina Reiss dismissed the case under the Tax Injunction Act, which prevents federal courts from intervening with the collection of state taxes.
While Entergy lawyers argued that the “tax” was a veil to “continue the expired contractual payments,” Reiss ruled that the tax was just that: a tax.
In the court of appeals, Entergy argued once again that the generation tax was not a tax and is unconstitutional.
“We’re just waiting for a decision from the appeals court, and it’s difficult to predict how long the court will take with it,” Sorrell said.
Vermont Supreme Court
When Entergy announced it was closing Vermont Yankee, the Supreme Court asked Entergy to brief the justices about why its appeal of a Public Service Board decision to open a new case for its initial permit application was not now moot, as the company had amended its application.
“The issue on appeal at the Supreme Court has to do with whether or not Vermont Yankee is operating in violation of a board order,” explained Geoff Commons, director of public advocacy for the Department of Public Service.
Entergy says that its appeal of the Public Service Board’s decision is not moot because its attorneys argue “a dispute thus remains as to whether the VY station’s operation … on each and every day since March 21, 2012, was lawful … as well as whether future operation through December 2014 is lawful.”
The Public Service Department says there is no such dispute. Its attorneys argue that the case was moot before the announcement of the plant closing and remains moot.
“No such controversy has ever existed,” Commons wrote in a brief to the justices. “The Public Service Board (“Board”) has never ordered Entergy to shut down the VY Station.”
The briefs were submitted last week, and the Supreme Court justices have not made a decision or set a date for a hearing on this matter. For more, read here .
Sorrell’s 90-day countdown
Almost two weeks before Entergy announced it was closing Vermont Yankee, three justices from the U.S. Court of Appeals ruled that the Vermont Legislature is federally preempted from shutting down the plant.
After U.S. District Court Judge J. Garvan Murtha made the same preemption ruling in January 2012, Attorney General 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.
Sorrell was unhappy with the federal preemption ruling, but was relieved by the court’s decision to relieve Vermont of the legal fee obligation. He now has roughly 60 days left in a 90-day window to appeal the decision to the U.S. Supreme Court.
Sorrell said that although Entergy is closing the plant, that doesn’t mean the decisions of the appellate justices are meaningless.
“Questions of decommissioning and the state’s authority and legislative authority related to decommissioning those are also brought very much to the floor,” he said.