State legal fees could come from VY decommissioning fund

VERNON – Vermont officials have gone to great lengths – including filing a federal lawsuit against the Nuclear Regulatory Commission – to protect the Vermont Yankee decommissioning trust fund from what they see as improper expenditures.

Ironically, it’s now possible that some of the state’s expenses for that fight may come out of the same fund that officials have sought to preserve.

Plant owner Entergy has been notified that Vermont will bill the company for legal fees incurred in the state’s lawsuit against the NRC. The state’s expenses in that case, in which Vermont is challenging the use of trust fund cash for nuclear fuel management, may total $250,000.

In response, Entergy is looking into whether the state’s bills may be paid from Vermont Yankee’s decommissioning trust fund.

“We’re researching whether legal fees are a decommissioning expense,” company spokesman Martin Cohn said Friday.

Chris Recchia

Department of Public Service Commissioner Chris Recchia. File photo by John Herrick/VTDigger

But state Public Service Department Commissioner Chris Recchia noted that hundreds of millions of dollars in spent-fuel expenses are at stake in the NRC fight, and he vowed to oppose any attempt by Entergy to use the trust fund for legal expenses.

“If they’re so concerned about our legal costs and theirs, they should try to discuss and resolve these issues, which we have always been willing to do,” Recchia said.

Vermont Yankee ceased producing power Dec. 29, and the nuclear power plant is heading toward a decades-long period of dormancy called SAFSTOR. The timing of actual decommissioning work will depend in part on the growth of the plant’s federally regulated decommissioning trust fund, so there have been many battles over appropriate uses for that account.

For all of that scrutiny, though, the trust fund still seems to move in mysterious ways. That was apparent at a Thursday meeting of the Vermont Nuclear Decommissioning Citizens Advisory Panel at Vernon Elementary School, just across the street from the plant.

Yankee’s trust fund stood at $664.56 million on Dec. 31, according to NRC documents. Thursday, Entergy Government Affairs Manager Joe Lynch said there was $595.73 million in the fund as of Sept. 30 – a decrease of nearly $69 million from the beginning of 2015.

Entergy has been withdrawing money from the fund all year, mostly for expenses such as staff salaries and utilities now that the plant no longer produces revenue. But Lynch said there are other factors in trust-fund changes including administrative expenses as well as “market losses and market gains, because the monies are invested.”

There was no breakdown available, however, to determine how much Entergy had spent from the fund for Vermont Yankee decommissioning work and how much of the trust fund’s drawdown during 2015 might have been due to those other factors cited by Lynch.

Further complicating matters, the company on Friday reported that the trust fund had bounced back up to $610.35 million as of Oct. 30. Cohn said he believed the positive rebound was because “the market responded positively in October.”

Entergy’s trust fund report Thursday prompted a derisive response from the Brattleboro-based New England Coalition on Nuclear Pollution.

“I want to congratulate you for the briefest, mumbo-jumbo, three-card monte I’ve ever seen,” NEC trustee Ned Childs told Lynch.

That brought a rebuke from advisory panel Chairwoman Kate O’Connor, who urged civility, and a response from panel member David Andrews, who represents current and former International Brotherhood of Electrical Workers staff members at Vermont Yankee.

Entergy’s trust fund status report “didn’t surprise me,” Andrews said. “It’s in line with the reports that my employer provided some time ago.”

Following extensive debate, advisory panel member Bill Irwin, of the Vermont Department of Health, urged Entergy to provide more-detailed reports of its trust fund usage.

“It seems to me appropriate that a better accounting of income to the fund and expenses from the fund be provided to the public and to the panel,” Irwin said, adding that, “there is a great concern that the money’s going to run out, and there’s going to be a plant still there, un-decommissioned.”

Chris Wamser, Entergy Vermont Yankee site vice president, would not commit to making such reports. But he assured the panel that, financially, decommissioning work is going well at Vermont Yankee.

“We’re about $5 million under budget so far, year to date, so the team at the station is doing a very good job,” Wamser said.

Lynch also argued that Entergy administrators are striving to be “responsible stewards of the trust” by reducing costs at Yankee. That includes making staff cuts, instituting emergency-planning changes, decreasing energy usage and trimming equipment inventories.

“We had a warehouse filled with materials that are needed for the equipment that operated the plant,” Lynch said. “We’ve been going through the process of reducing our inventory to only what is needed to take care of the equipment that is operating right now.”

At Thursday’s meeting, Recchia didn’t dispute those cost-saving measures and said he has no problem with the Vermont Yankee trust fund decreasing, since that indicates that “decommissioning activities are occurring.”

However, Recchia and state officials continue to vehemently object to some of Entergy’s proposed uses for the trust fund including insurance, property taxes and spent fuel management.

Fuel management – expected to cost $368 million, with $225 million of that possibly coming from the trust fund – is the source of most of state officials’ heartburn. The NRC already has approved a regulatory exemption allowing Entergy to use the fund for long-term management of Vermont Yankee’s spent nuclear fuel, but Vermont officials in August objected by filing suit in the U.S. Court of Appeals.

That battle won’t be cheap, and it’s now clear that the state expects Entergy to foot the bill. Cohn said the state has sent Entergy two letters – one a notice that Vermont’s legal bills are projected to reach $250,000 in the case, and the other an initial bill for more than $20,000.

The bills themselves apparently are on solid legal ground: Vermont has authority under state law to bill “the involved electric companies” for costs associated with NRC proceedings.

But it apparently will be up to the federal government to determine whether Entergy will be able to pay those bills by withdrawing cash from the decommissioning trust fund. NRC spokesman Neil Sheehan said the agency already is reviewing expenses identified in Vermont Yankee’s Post-Shutdown Decommissioning Activities Report “including the use of decommissioning trust funds for such purposes as tax payments and insurance costs.”

“Whether expenditures for state legal fees associated with the spent fuel storage funding court challenge could also be encompassed by that review remains to be seen at this point,” Sheehan said.

Mike Faher

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  • Howard Shaffer

    Remember that the used fuel management expenses are refundable per Federal Court decision. Some money has already been refunded.

  • Tom Buchanan

    While the bulk of the money spent on spent fuel management will almost certainly be refunded through the DOE, there are likely some costs that DOE will not cover, including the cost of capital. If Entergy were confident of full repayment from DOE, the company would advance the funds for spent fuel management from its own revolving credit line, rather than shift the risk of under-reimbursement to the Decommissioning Trust Fund.

    The withdrawals from the trust fund during the transition to SAFSTOR shouldn’t be a surprise to NEC or anybody else. There are legitimate costs associated with the transition, and Entergy has been forthright about that all along. As an example, the February 2012 Decommissioning Cost Analysis includes projects for a scenario with a shutdown in 2012, SAFSTOR, and all fuel off-site by 2082. Under that scenario $65.4 million would be spent in 2012 (year 1), $104 million would be spent in 2013, $34.6 million in 2014 and 2015, and then $26.7 million in 2017. From that point annual SAFSTOR costs would be in the range of $6.8 million. If we roll those dates forward and consider 2015 as year one, the costs thus far are roughly in line with projections.

    The bigger issue, as the Department has noted, is what those funds are being used for. Use of the trust should be limited to only legitimate decommissioning expenses, and probably not things like property taxes and legal fees which should alternatively be paid by the parent company. Likewise, spent fuel management fees should probably not be withdrawn from the fund, although Entergy may have a reasonable argument for doing so based on past MOU’s and PSB Orders. The costs that are legitimately for decommissioning expenses need to be closely scrutinized to be sure they are actually legitimate and not inflated to benefit the company. The NRC has no interest in protecting the fund from inappropriate withdrawals as long as Entergy can show that it will be sufficient to radiologically decommission in 60 years. Vermont, of course, doesn’t want Entergy to use SAFSTOR as a panacea for funding the work, and wants to be sure there are sufficient funds to also restore the site after radiological work has been completed. The NRC doesn’t consider any of the site restoration work when reviewing the value of the fund.

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