The dry cask storage units outside of the Vermont Yankee plant. Photo by Laura Frohn, News21.org

Cost and revenue figures for decommissioning Vermont Yankee are outdated, deficient and incorrect, according to a study released this month by the Legislature’s Joint Fiscal Office.

The author of the study, Arnie Gundersen, a nuclear expert for Fairewinds Associates, says the Legislature should ask Entergy to hire an independent consultant to recalculate decommissioning costs for the plant before lawmakers discuss the issue this session.

Depending on the extent of the contamination of soils at the Vermont Yankee compound, the fund could be insufficient to handle all decommissioning costs. Entergy has removed several tons of soil from the site already.

Gundersen questions the investment strategy for the decommissioning fund. He also raises concerns about the space allocation for Vermont at the Texas compact low-level radioactive waste site.

The latest official report on decommissioning costs for Vermont Yankee was submitted by TLG Associates in 2007, and it has so many problems that “we’re making policy decisions about the future of Vermont Yankee blindfolded,” said Gundersen in an interview.

Gundersen contends the plant could be dismantled immediately after a shut down in 2012, and decommissioning could be inexpensive enough that Vermont ratepayers would receive tens of millions of dollars in refunds from the decommissioning fund in the early 2020s.

Widely disparate cost estimates

Historically, decommissioning cost estimates have varied widely, according to the report. Four official calculations from TLG Associates show estimates ranging (in 2012 dollars) from $629 million in 1993 to $859 million in 2001.

The report also cites 2009 testimony to the Public Service Board, in which decommissioning projections ranged from less than $560 million to more than $900 million.

The lower estimate came from state nuclear engineer Uldis Vanags, who said Vermont Yankee would cost less to decommission than Maine Yankee. (Gundersen disagrees. He says the two reactor types are very different. Vermont Yankee, a boiling water reactor, would cost at least 40 percent more than Maine Yankee, a pressurized water reactor, to decommission, he said.)

The $900 million-plus estimate came from William Cloutier of TLG. His testimony contains multiple scenarios in which the cost in 2012 dollars exceeds $1 billion.

Gundersen calls for new calculations to be commissioned immediately, which he says would take three months to prepare. Entergy owns TLG; Gundersen wants the new calculations to be performed by an independent company not owned by Entergy, citing an apparent conflict of interest.

The Nuclear Regulatory Commission requires Entergy to submit new decommissioning cost estimates in March. Gundersen said the estimates will likely provide too little detail.

Under the terms of their 2002 Certificate of Public Good from the state, Entergy is required to revise the 2007 calculations at least every five years. The next deadline is 2012.

Vermont Yankee spokesman Larry Smith said he had not read the report and couldn’t comment at this time.

What’s at stake

The size of the decommissioning fund relative to projected decommissioning costs could have an impact on policy decisions regarding Vermont Yankee. If the fund is too low, one option is to delay decommissioning. Entergy has argued that if the plant is closed in 2012 decommissioning would be delayed for 12 to 15 years, until the money, which is invested in the stock market, grows enough to cover the costs. Critics fear the fund won’t grow as fast as decommissioning cost projections.

Another option is to add more money to the fund. The Legislature has twice passed bills that would have required Entergy to add more to the decommissioning reserve; both bills were vetoed by Gov. Jim Douglas. Neil Sheehan, spokesperson for the Nuclear Regulatory Commission, says the NRC required Vermont Yankee to address a shortfall in the fund in 2009. Entergy did so with a $40 million guarantee from its parent company.

If the plant is authorized to continue operating after 2012, the Public Service Department has asked for a financial guarantee from the parent company covering all costs related to decommissioning, spent fuel management and site restoration. Without that guarantee, recovering costs from the plant’s parent company or companies could require protracted litigation.

If the fund is larger than the total decommissioning costs, then Entergy and Vermont rate payers would split the surplus, according to a 2002 agreement between the state and Entergy. However, the NRC’s Sheehan says that a plant’s licensee could also request to apply the surplus to spent fuel storage costs.

(The Department of Energy is liable for spent fuel storage, courts have held, but Entergy has not yet negotiated the details of the settlement.)

How decommissioning costs could escalate—or not

First, the good news. Decommissioning costs could be lower than indicated in the 2007 TLG calculations.

One technical advance could create more low-level nuclear waste, but lower the total costs. Gundersen points to the Zion nuclear power station in Illinois, where a nuclear demolition company is treating everything as radioactive waste, rather than laboriously separating the non-radioactive waste. He refers to a New York Times report that touts the method as being faster, simpler, and 25 percent less expensive.

The catch is it’s not clear whether the space available to Vermont in the Texas Compact low-level radioactive waste site is sufficient to accommodate the increased volume of waste. The Texas Compact Commission, in a controversial 5-2 vote on Jan. 4, opened the site up to 36 other states besides the two compact states, Vermont and Texas.

Gundersen says the waste facility is scheduled to open later this year, but it has yet to receive all its permits. The site must reserve space for Vermont’s radioactive waste from Yankee and other sources, like hospitals, but he said the space calculations are “highly speculative,” and he suggests Vermont may succeed in shipping all its radioactive waste there only if the site is expanded.

Gundersen says it takes three months to update the decommissioning analysis and expects that an independent contractor could make it available by mid-Apri—several weeks before the legislative session ends.”

Computer software that helps optimize the shipping of radioactive waste could also reduce decommissioning costs.

The third possible reduction comes from fending off what Gundersen terms a “raid” on the decommissioning fund of more than $200 million. TLG charges the fund for storing spent nuclear fuel on the site. That’s a reversal from previous calculations for Vermont Yankee, says Gundersen. Furthermore, he said the charges violate NRC rules.

Sheehan seems to agree that NRC rules do not normally allow corporations to charge spent fuel storage to the decommissioning fund. Jay Thayer, who was Entergy Nuclear’s vice-president for operations at the time, told the Vermont Senate Finance Committee in April 2009 that Entergy would not take the spent fuel storage costs from the decommissioning fund. By that time, he said, courts had decided the Department of Energy (DOE) would reimburse companies for the cost of on-site storage of spent nuclear fuel.

The next month, in May 2009, William Cloutier of TLG was less categorical in his testimony to the Public Service Board, but he indicated that Entergy expected DOE reimbursement for interim spent fuel storage, and he provided the Board with decommissioning cost calculations with separate totals for spent fuel storage.

At this time, there appears to be no dispute that the decommissioning fund need not cover spent fuel storage, which Cloutier says costs about $4 million per year.

The bad news is that the soil contamination revealed during last year’s excavations, as Entergy scrambled to fix leaking underground pipes, may cause decommissioning costs to balloon. The 2007 TLG calculations were made before Entergy reported the leaks. The contaminated soil could “dramatically” add to decommissioning costs, Gundersen said.

The fund’s performance has reflected the last several years’ roller-coaster ride of the Dow. It grew from $310 million in 2002, when Entergy bought the plant, to $440 million in 2007, and then lost $100 million in value, according to Gundersen.

It returned to $440 million two months ago, and now it’s at $460 million.

Gundersen says he asked an investment banker, who wishes to remain anonymous, about the fund, and the banker said that a third of it was aggressively invested in the stock market. Gundersen suggests a more conservative investment of the fund may be more appropriate.

On the other hand, aggressive growth that is somehow not affected by future bear markets may be necessary for the fund to cover costs. A 2008 study by William Jacobs of GDS Associates, commissioned by the Public Service Department, concluded that the decommissioning fund would need to grow at nearly 14 percent annually for it to be sufficient to fund immediate decommissioning of the plant after it closes in 2012. If the plant is mothballed for some period of time after 2012, the fund would need to grow by 7 percent or 8 percent.

Gundersen says that the federal government taxes decommissioning funds, so a 7 percent return to the fund means 9 percent before taxes. He calls that an “imaginary” return and jokes, “If you could get 9 percent on your money, I want to give Entergy my 401k!”

The annual return after taxes since June 2002 has been just under 5 percent; since the fund started dipping in value in 2007, the return has been close to 1 percent. NRC rules allow decommissioning calculations to assume that the fund balance will grow at a rate up to 2 percent per year faster than the costs of decommissioning.

What if the fund is inadequate?

Vermont Yankee is now scheduled to close in March 2012 unless: the NRC grants a license extension; the legislature reverses last year’s Senate vote and allows the Public Service Board to issue a new Certificate of Public Good; Peter Shumlin signs the bill; and the Public Service Board determines that an extension is in the best interest of Vermonters. The legislative leadership is unlikely, however, to take a vote on Vermont Yankee this year.

If the decommissioning fund fails to catch up with costs, then NRC policy is to seek reimbursement from the parent company. In discussions of Entergy’s failed proposal to spin off Vermont Yankee and other aging nuclear power plants into a separate company, Entergy assured regulators that the parent company would still be financially responsible for assuring decommissioning. However, Gundersen says an attorney he consulted anticipates that Entergy could delay further payments for decades through litigation.

Also, it’s not clear what would happen if decommissioning began and the funds ran out when the site had been cleaned up to NRC standards, but not to the “greenfield” standard that Entergy agreed to with the state. There could still be structures like the cooling towers on site, and a higher level of radioactive contamination. Sheehan says the NRC license is terminated when the licensee meets NRC decommissioning requirements. Vermont’s decommissioning standards are more stringent: The state’s 2002 decision to allow Entergy to purchase the plant contains a requirement that the plant site be returned to a greenfield.

If Entergy isn’t forthcoming with the additional funds, the burden of decommissioning falls to the state, in which case Vermont could sue the plant’s parent company or companies.

Conflict of Interest

Gundersen’s report says that while TLG has performed all the decommissioning calculations for Vermont Yankee’s owners since 1991, the relationship of the client and the consultant had turned into a conflict of interest at the time of the 2007 report. The study was the first one since Entergy purchased the plant in 2002, and by that time they had also acquired TLG. The relationship between the companies is so close that TLG does not charge Entergy for services, according to testimony from TLG’s Cloutier.

Gundersen calls for an independent firm to carry out the next decommissioning cost calculations. The TLG-Entergy connection is too close, he says. He identifies two changes in the 2007 report that he says “are not in the best interest of the State of Vermont.” Curiously, the changes work in opposite directions.

One is the “raid” on the fund for spent fuel storage. The DOE has liability to cover spent fuel management. Charging those costs to the fund increases decommissioning costs by over $200 million, Gundersen says, which may be a ploy to pressure the state to extend the plant’s operation beyond 2012. The idea, he said, is that if the fund is perceived as woefully inadequate, Vermonters would be more interested in keeping the plant open and generating revenues.

Despite the “raid,” TLG’s total decommissioning cost calculation in 2007 is significantly less in constant dollars than any of its calculations performed before it was owned by Entergy. At about that same time, other nuclear plants were facing increasing real decommissioning costs, Gundersen says.

Asked about the relationship between the companies, the NRC’s Sheehan replied in an e-mail, “The NRC has no objection to TLG conducting decommissioning studies for Entergy.” The agency has a formula to which it compares the calculations, he explained, regardless of who does the study.

What will become of Gundersen’s recommendations

It’s unclear how the state will respond to Gundersen’s report. The report summarizes four recommendations:

1. “An updated and independent decommissioning analysis of the Vermont Yankee nuclear plant should be completed prior to any Legislative discussion of Vermont Yankee decommissioning costs.
2. “The allocation of the Decommissioning Fund Stocks should be determined.
3. “A new wholly independent contractor should be chosen to perform a new and updated decommissioning analysis.
4. “Texas Compact Contract and By-Laws require significant review and adjustment in order to fully protect Vermont. “

Gundersen says it takes three months to update the decommissioning analysis and expects that an independent contractor could make it available by mid-April—several weeks before the legislative session ends.

It’s hard to see how that timeline could be met. The state would need to be convinced that TLG has an unacceptable conflict of interest, even though the NRC is comfortable with the TLG-Entergy relationship. The state would further need to be convinced that it’s important to conduct the new study now rather than waiting until 2012, and it would need to take whatever action necessary to get Entergy to draft and issue a Request for Proposals, receive bids, and select a consultant–immediately.

Meanwhile, the first legislative attention scheduled for Gundersen’s recommendations is Jan. 26 in the House Natural Resources and Energy Committee.

The Public Service Board seems to be an unlikely venue for a quick order; they were still holding hearings this month as part of a docket opened last February to investigate, among other things, whether to shut down Yankee immediately in response to the leaks.

Don’t expect the Legislature to wait for a new, independent analysis. Ann Cummings, chair of the Senate Finance Committee, says that her committee has examined the fund each of the last several years, and she expects to do so again this year. However, even if somehow a new report was made available by mid-April, that would be too late. Crossover date when new bills are expected to have passed from the Senate to the House or vice-versa, is traditionally Town Meeting Day: March 1, this year.

As for how aggressively the decommissioning fund is invested, the Public Service Board or the Legislature could investigate. Both bodies have been highly conscious of not intruding on radiological safety decisions reserved for the NRC, so they would likely want to begin by understanding what authority, if any, they have over a fund regulated by the NRC.

Gundersen says the consequences of the Jan. 4 vote on the Texas Compact Contract and By-Laws may be “irreversible,” regardless of what Vermont’s representatives do. Two of the Compact’s seven commissioners represent Vermont, and both voted for the changes that dismay Gundersen, two days before Peter Shumlin took office. Public Service Commissioner Liz Miller did not respond to an inquiry about plans to replace the commissioners.

The House Natural Resources and Energy Committee is scheduled to hear from Gundersen on his report on 10:30 a.m. Wednesday, Jan. 26.

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Vermont Yankee graffitti. Photo by Josh Larkin

Arnie Gundersen is a nuclear engineer who serves on the Vermont Yankee Public Oversight Panel. He is also the chief engineer for the paralegal services and expert witness research firm Fairewinds Associates of Burlington.

Entergy has long maintained there are no underground pipes at the Vermont Yankee nuclear power plant in Vernon. Gundersen questioned Entergy’s assertions and insisted there had to be pipes under the facility. In early January, water containing the radioactive isotope tritium was found in a test well and in groundwater near the plant. Underground piping is suspected to be the source of the leak.

Gundersen gave a powerpoint presentation to the Senate Natural Resources Committee last week. What follows is the transcript of an interview with Anne Galloway, editor of Vtdigger.org., conducted after that presentation.

Q. Could you talk about how you came to the conclusion that there is underground piping at Vermont Yankee?

Arnie Gundersen: What (Entergy) told us (the Vermont Yankee Public Oversight Panel) was that they had no underground pipe and that the only underground pipe that they had was a drain in the chemistry lab that had been plugged years ago. It hadn’t been excavated, but they knew there was some radioactivity under the plant from this little chemistry drain. That was what we all believed even as late as June. Uldis (Vanags, the state nuclear engineer for the Vermont Department of Public Service) testified under oath that one of the reasons this plant would be easy to decommission is because there’s no contamination.

Q. Where are the master plans of the facility? Aren’t there blueprints of the plant?

AG: There are blueprints of the facility somewhere.

Q: Who has the blueprints?

AG: I’m sure now Entergy does. This week, Entergy told us when they went back, they found seven pipes in the last three weeks that they didn’t know were there, some of which have been there for 33 years.

Q: How many are there total?

AG: I don’t know exactly, but there are around 40 that are radioactive. Now that’s just what they call buried pipe. They try to split hairs here, and they try to differentiate between “buried,” which is in direct contact with either concrete or dirt, and what they call “underground,” which can be in a concrete structure where the pipe is in it, but not in direct contact with the dirt.

So there are other “underground” pipes that are not in that count of 40 “buried” pipe in direct contact with dirt or concrete.

Q: How many “underground” pipes are there?

AG: We don’t know; we’re trying to figure that out.

Q: So some of them are in concrete spaces, they’re in little rooms underneath the facility?

AG: Right, like a long, long basement, sort of, but they have a roof on them, and they are underground. There’s dirt above them and around all sides.

So anyway, until June we all thought there weren’t any. I got appointed to the role of Joint Fiscal Committee oversight. I asked for a report, and (officials at Vermont Yankee) refused to send it to me electronically, but they sent me a hard copy that was 120 pages. I started to read it, and I started hearing about these underground storm drains that have radioactivity in them. That piqued my interest, and I did a little more research, and I thought there’s got to be an off-gas system.

(Gundersen explained, noncondensable gases created in a boiling water nuclear reactor wind up in the condenser. If noncondensable gases stayed in the condenser, the plant would have to be shut down. The condenser has to be kept in a vacuum, so the off-gas system sucks the air off to maintain the vacuum. In addition to sucking the air out, the off-gas system also sucks the radioactivity out and sends it up that big stack. That’s why boiling water reactors have a big stack.)

Q: So what you’re saying is, you thought there might be an off-gas piping system underground?

AG: Originally, we had been led to believe that all those pipes were above ground. The more I studied, the more I thought, that can’t be. They have to be underground. That’s when I started asking the department (about it).

At the end of July, I wrote to the department, and I said, hey, (and I wasn’t saying we were lied to) there’s a misunderstanding here. I highlighted two things, the off-gas systems and the storm drains.

Then on Aug. 13, (David) McElwee (Vermont Yankee’s chief engineer), got back to me, and he said, no, the off-gas system does not have any water in it that could get into the ground, and the issue is closed.

Act 1 of my slide show ends in June when everybody was singing by the same sheet of music, and everybody believed, or was led to believe, there were no underground pipes. Act II (starts in) July when I discovered it, and I bugged the department through August, and I bugged the department in September, and I bugged the department in October. And they just forwarded my e-mails to Entergy, and Entergy said there is no problem, and they never became curious.

Q: Why wasn’t the Department of Public Service involved in finding out what was going on?

AG: That’s a good question. I don’t know. They have never been involved, though. If you go back to 2003, I testified that the off-site dose (radioactive emissions as a result of the “uprate,” a 20 percent increase in power production at the plant) was going to go up. Entergy said no, it’s not. The Department of Public Service blew me off. I testified the towers were weak. Entergy said they’re not, the department said they’re not; they blew me off. (One of the cooling towers collapsed in 2007.)

The decommissioning white paper Maggie Gundersen (his wife and founder of Fairewinds Associates) and I put together? We used materials that came from the department that they just didn’t analyze. (In 2008, the Gundersens estimated it would cost nearly $1 billion to decommission the plant and that Entergy’s decommissioning fund, which is supposed to cover the cost, is valued at under $400 million.)

The department under O’Brien has always sided with Entergy and has never, ever taken the technical recommendations I did. And like, here’s Maggie’s white paper. I mean, what could be more definitive than their own numbers (Entergy and DPS)? And yet unless pushed, (the department) will believe Entergy. And of course when Peter Bradford (a former NRC Commissioner) and I got appointed back in July of 2008, the governor and O’Brien went after us as lunatic anti-nukes.

It’s been the department’s reaction to always support Entergy, and they would have continued to support Entergy were it not for this leak. Had the leak not occurred, they might have gotten away with it.

I gave a courtesy copy of the report on the existence of underground piping “you’re not telling us about” to Entergy and to the department at the same time I sent it to the Joint Fiscal Office (in October). Two days later, Rob Williams (spokesman for Vermont Yankee) attacks the report, as opposed to doing some serious searching to find out whether it was right or wrong.

He sent a press release out on Oct. 22 saying he’d read the consultant’s report and he didn’t like the tone of it. We were too negative, he said, and the issues cited as serious are really just routine.

Well, I’m sorry, lying and not telling us about underground pipe is not routine, it’s serious. I talked to Peter Shumlin (president pro-tem of the Vermont Senat), and he agreed he was going to put it on the agenda for January when the Legislature came back. And of course they came back and within three days there was a leak.

Q: Where do you think the leak is?

AG: I’m pretty sure it’s in the off-gas system. We should know in the next day or two, but I’m pretty sure it’s in the system that I said was underground and radioactive and that the department blew me off on.

Q: What leads you to that conclusion?

AG: The department is saying that I wasn’t specific enough. I said off-gas, and I guess I didn’t point to the specific line. The ground-penetrating radar picked up a problem in the off-gas line, and that’s what they’re digging at in the last couple of days. There may be others, but certainly it looks like ground-penetrating radar is leading them to the off-gas system.

Q: So not only was your report ignored, but Entergy attacked the report. Why do you think the corporation continues to refuse to work with the administration and the legislative leadership on figuring out what was going on and admitting that they screwed up?

AG: I don’t think they can admit they screwed up because of the potential criminal probe going on. It’s not as if they can just throw money at this problem. They did throw money at problems in the past. In 2003, when I was a witness on the stand, they tried to impeach me with information I hadn’t seen. And I caught them. That led to the $50,000 fine against Entergy, and the funds were given to the New England Coalition (a Brattleboro-based non-profit group opposing Vermont Yankee’s relicensing).

I was working for the coalition all summer to do a document search. Well, they only gave us a little bit of documents. Then on the stand, I was testifying and they tried to impeach me. It turns out they had 200,000 documents they hadn’t given the coalition. So what happened then was, the coalition asked for another for six months so I could review it. I was a schoolteacher, and at this point it was October, and I couldn’t provide 100 percent reading of this stuff, and the department said naw, they can do it in six weeks. I had six weeks to read 200,000 pages.

The department sided with Entergy again. The $50,000 fine was nothing compared to what I might have found in the 200,000 pages.

Right after that, they tried to build a temporary building they didn’t tell anybody about. They were pretending it popped up like a mushroom. The coalition discovered it, and I did all the research on it, and they provided us the material two days before the hearing. I testified on it.

This didn’t just pop up; they were planning to do this for a year, and they never told the department.

They got fined another $82,000 for that. But again, the coalition said we have limited resources, we just discovered you guys have been lied to and it resulted in this $82,000 fine, but we need more time so our expert can look into the lies about the building. Well, the department’s position was like Entergy’s. This was O’Brien; he said they had a choice – they didn’t have to look at this building. And the Public Service Board said you alerted us to this building — but we’re not going to extend the proceedings.

The department has always gone out of its way to give Entergy everything it needs to move the ball down the field. Maggie and I, from a technical standpoint, have been the only two forcing the department to represent the people. It is the Department of Public Service. There’s a “P” in the middle of it, you know. And it hasn’t happened. I don’t blame the worker bees, this starts up at Douglas and O’Brien, and their agenda is clear — they want to get this relicensed.

Q: Even now?

AG: They think all of these issues are just speed bumps on the road to relicensing.

Q. What do you think of Douglas’ call for a time out on the Legislature’s decision on whether to relicense Vermont Yankee?

AG: I don’t think it was coincidence that I’m testifying about how the department is in cahoots with Entergy, and Douglas steals the limelight. (Douglas’ press conference occurred in the middle of Gundersen’s presentation to lawmakers last Wednesday.)

VTDigger