State claims it could be left with big bills for Yankee cleanup

20110612_yankeeSliderVERNON — The federal government’s “woefully inadequate” financial regulations could leave states like Vermont with big bills and massive cleanups long after a nuclear plant closes, state officials argue in newly released documents.

Vermont — with backing from Massachusetts, Connecticut and New York — is lobbying for the federal Nuclear Regulatory Commission to tighten its financial rules and broaden its cost projections for decommissioning nuclear plants.

The states contend such changes are especially important for plants like Vermont Yankee that owners are putting into a period of dormancy, dubbed SAFSTOR, that can last up to 60 years. The risks of unexpected problems and skyrocketing costs, officials say, are much greater at SAFSTOR plants.

“Decommissioning cost estimates truly are ‘estimates.’ They are by no means guarantees,” state officials wrote. “If a significant and unexpected decommissioning cost increase occurs at any merchant generator facility, it is unclear where the extra money will come from. That is a risk that the states should not have to face.”

The NRC is embarking on a yearslong process for revamping its decommissioning rules. That’s welcome news for Vermont, where officials have complained that states and host communities don’t have enough say in such matters.

Based on their experiences since Vermont Yankee ceased producing power in December 2014, state officials are pushing for a variety of changes. The state’s congressional delegation also has chimed in with similar concerns.

March 18 was the deadline for initial public comments on NRC rule-making. A federal website shows that more than 100 comments were submitted; governmental entities and interest groups weighed in, along with the nuclear industry and licensees like Vermont Yankee owner Entergy.

The push for a more “meaningful role” for states and localities is not a new theme in the decommissioning debate. But in written comments sent March 18 to the NRC, Vermont officials — along with the three other states’ attorneys general — placed new emphasis on the economic risks of nuclear cleanup.

“The financing of decommissioning — and of spent fuel management and site restoration — is a matter of critical importance to the host states,” officials wrote.

Such concerns extend beyond the allowable uses of a nuclear plant’s decommissioning trust fund, which has been a flashpoint at Vermont Yankee. Now, Vermont officials are questioning all of the federal government’s basic assumptions about the costs of decommissioning and how those assumptions might come back to haunt state governments.

“The very real possibility of a licensee going bankrupt is an issue that the NRC has never fully addressed in a meaningful way,” state officials wrote. “The current regulations regarding financial assurance (for decommissioning) are woefully inadequate and, notably, fall far short of the scope and depth of financial assurances that the nuclear industry itself seeks when selling or buying a closed nuclear power plant.”

vermont Yankee
The spent fuel pool at Vermont Yankee nuclear power plant. File photo courtesy Vermont Yankee

“This is an issue that could greatly impact host states if they are left with a radiologically contaminated (or otherwise unusable) site within their borders, due to a licensee’s failure to fully fund decommissioning or site restoration,” state officials added. “The NRC cannot allow that to happen.”

The states raise several specific financial concerns, including:

• The SAFSTOR method, state officials argue, has little radiological basis. Instead, the extended cleanup schedule “has become a financial mechanism that licensees use to claim sufficient or even excess funds for decommissioning, when they in fact do not have sufficient funds,” officials wrote.

That’s because the NRC allows nuclear operators to assume an annual 2 percent rate of return on decommissioning trust funds in the decades after a plant is mothballed. One problem with that assumption, the states contend, is that “market volatility increases the chances of a shortfall” when decommissioning finally starts.

• Another problem, the states say, is that dormancy actually raises the price of plant cleanup by introducing “tens to hundreds of millions of dollars in costs that are not incurred if a plant goes into immediate decommissioning.”

That includes the expense of getting a plant ready for SAFSTOR along with decades of security and maintenance required at a dormant plant. “Such an allocation of resources is wasteful and is not a good use of ratepayer or licensee funds,” state officials wrote.

• Additional contamination issues can crop up at a shut-down plant, officials said. As one example, state officials cited the recent groundwater intrusion problem at Vermont Yankee, which has forced Entergy to find storage and disposal methods for large amounts of contaminated liquid.

For that reason and others, the states say the 60-year decommissioning schedule allowed under SAFSTOR should be reduced to 10 years. “We don’t want to see plants simply being mothballed for decades,” Vermont Attorney General William Sorrell said. “Nor do we want to have a plant owner without the money to cover an environmentally protective cleanup.”

• The states also argue that delays in decommissioning can raise cleanup costs at a rate that far exceeds the expected 2 percent growth in a plant’s trust fund. Citing research by NRC staff, officials say that, since 1986, decommissioning costs have grown at a rate between 4.7 percent and 9 percent annually.

At Vermont Yankee, decommissioning is expected to cost $1.24 billion. Entergy in 2015 spent about $58 million from the plant’s trust fund, which stood at $588.5 million at the end of January.

Neil Sheehan
Neil Sheehan is a spokesman for the NRC. File photo from The Commons

The NRC conducts regular reviews of Vermont Yankee’s trust fund and has found no concerns thus far. In fact, federal officials have decided there will be enough money not only for radiological cleanup but also for long-term management of spent nuclear fuel at the Vernon site.

But the four states say that, in order to address their financial concerns, federal regulators must raise the financial bar for plants like Yankee. Officials even suggest that plant owners should be required to provide financial assurance at 200 percent of a site’s estimated decommissioning costs.

That would be “reasonable in light of historical instances such as Connecticut Yankee, where costs were actually around double what was anticipated,” state officials wrote. “The cost increase at Connecticut Yankee cannot be viewed as an isolated instance. Decommissioning a nuclear plant is a major industrial activity with many unknowns.”

NRC spokesman Neil Sheehan offered some defense of the agency’s regulations, noting officials’ financial scrutiny of merchant plants like Vermont Yankee. He said the expected 2 percent annual growth in trust funds is a “conservatively set rate,” and he said the length of SAFSTOR is considered when the NRC evaluates those funds.

At the same time, he acknowledged the agency has much to consider when revising its decommissioning rules. “The NRC staff will have to dig into the details of the many comments submitted,” Sheehan said.

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  • Two observations:

    1. The irony of state officials now crying about woefully inadequate financial regulations related to the Vermont Yankee clean-up costs and the further cry for more stringent regulation. This position taken following years of these same state officials ignoring the issue of woefully inadequate standards for industrial wind and solar development and siting and the need to establish meaningful siting standards.

    2. Consider the costs for the decommissioning of Vermont Yankee to fall on the state as part of the Shumlin legacy to be left with the tax payers……with more pain of this same legacy to come.

    • John Greenberg

      Both of Peter Yankowski’s comments lack factual basis.

      1) “This position taken following years of these same state officials ignoring the issue of woefully inadequate standards for industrial wind and solar development …” The Public Service Board requires adequate decommissioning plans for wind and solar development as a prerequisite for a CPG. As far as I know, DPS supports this policy.

      2) “Consider the costs for the decommissioning of Vermont Yankee to fall on the state as part of the Shumlin legacy …..” Peter Shumlin tried and failed to shut down VY. The plant closed because it was uneconomic to run.

      Additionally, the plant was going to close at some point, and with the NRC having preemptive regulatory authority over decommissioning, the problem discussed in the article would have been absolutely identical regardless of who was governor at the time the plant closed. That’s why 3 other states are joining in. Peter Shumlin had nothing to do with closing the other plants in the other states.

      Actually, Peter Shumlin’s administration did improve the VY decommissioning situation ever so slightly by agreeing to an MOU with Entergy which required VY to provide various funding streams for the non-radiological (and therefore NOT regulated by NRC) aspects of decommissioning. Previous governors made no such attempt and got no such agreement.

  • bruce wilkie

    No foolin”? I’ll be darned! Imagine that.

  • Moshe Braner

    “delays in decommissioning can raise cleanup costs at a rate that far exceeds the expected 2 percent growth in a plant’s trust fund”

    – exactly. Money does not make money any more, except in (short term) pyramid schemes. The fund may increase in in nominal terms, but not in purchasing power. That’s why we should have had Entergy put the needed amount into the fund. Now it’s too late, and trusting in the investment fairy will not fix it.

    • John Greenberg


      “That’s why we should have had Entergy put the needed amount into the fund.” Precisely how should “we” have done that considering that NRC has preemptive regulatory authority in this as in other areas of nuclear regulation?

      • Leonard Suschena

        So Entergy was supposed to fully fund the decommissioning costs, but the previous owner, a Vermont Corporation that built and operated VY for 3 decades, didn’t have too? Sounds like good old boy Vermont politics.

        • John Greenberg

          Leonard Suschena:

          “So Entergy was supposed to fully fund the decommissioning costs, but the previous owner, a Vermont Corporation that built and operated VY for 3 decades, didn’t have too?”

          I don’t know where you’re getting this idea – it’s certainly nothing I’ve ever said.

          The Vermont Yankee Nuclear Power Corporation – the previous owner – charged its customers (which were utilities around New England) annually for decommissioning, and was rate-regulated by FERC in doing so. The rates which FERC allowed VYNPC to collect were then passed through to retail customers by the utilities which bought power from VY (which were also, by and large, its owners).

          That’s where all of the money in the decommissioning fund originated. Moreover, VYNPC had a contractual agreement with FERC (a “FERC rate”) which required the owners to supply any funds needed for decommissioning if the decommissioning fund proved inadequate when needed.

          When the plant was sold to Entergy, Entergy discontinued the practice of making annual deposits (or, in fact, ANY deposits) into the fund. Since this left the fund woefully short of the funds needed for immediate decommissioning (by Entergy’s own estimates) when the plant closed, Entergy adopted the so-called SAFSTOR method, which it claims will allow the funds to grow to sufficient size for future decommissioning. The problem, of course, is that decommissioning costs also continue to grow.

          “Sounds like good old boy Vermont politics.” This charge has even less basis than your first allegation. VYPNC was ENTIRELY regulated by federal agencies: NRC for safety, and FERC for financial matters. The State of Vermont – and consequently any “good old boys” in Vermont – had NOTHING whatsoever to do with the plant’s regulation. Vermont legislators and regulators were (are) preempted by the federal government from any attempts to regulate VY.

  • Pete Novick

    In 2002, the NRC approved the transfer of the Facility Operating License DPR-28 of Vermont Yankee from Entergy Nuclear Vermont Yankee, LLC (Entergy Nuclear VY), Entergy Nuclear Operations, Inc. (ENO) to Entergy Nuclear VY and ENO.

    Here’s a link to the NRC’s


    Section III contains the NRC’s order with respect to the decommissioning trust funds and it’s worth a read.

    Also, here’s a link to the 2002 MOU between Entergy Nuclear VY, GMP, CVPS and the Vermont PSB:

    Here is the paragraph from the MOU

    “Transfer of Decommissioning Fund: Pursuant to Section 6.10(b) of the PSA, at Closing the entire fund balance in the VYNPC Qualified Decommissioning Trust Fund and Non Qualified Decommissioning Trust Fund will be transferred to the funds established by Buyer’s Post Closing Decommissioning Trust Agreement (as defined in the PSA).”

    I don’t have any confidence that either the federal government or the state government really knows what is going on with respect to the Decommissioning Trust Fund.

    Who is the fund trustee?

    What are his/her/their fiduciary responsibilities?

    Where is the fund maintained?

    How are the funds invested?

    Who is responsible to audit the fund and where are the audit results published?

    Energy is a publicly-owned company and its stock trades on the NYSE.

    How about VTDigger post the answers.


  • Vermont politicians voted to close Vermont Yankee before we had any new energy source secured. VT could have purchased power from James Bay hydro at a much less cost, but no, promote wind and solar which costs more is the way to go, they say. I say let the politicians pay for the cost of shutting down Vt Yankee out of their own pockets, not the public.

    • John Greenberg

      Roger Sweatt:

      Your comment is wrong in every particular.

      1) “Vermont politicians voted to close Vermont Yankee before we had any new energy source secured.”

      The only vote to close VY was the Vermont Senate’s in March 2010; the House never voted on the issue. By the time of the vote, the contract negotiations between Entergy and Vermont’s utilities for VY power had failed. The public was given notice of the failure in a letter by Entergy’s Jay Thayer to the Public Service Board in late December 2009.

      Because the talks were not going well (and no doubt to apply some pressure to Entergy to improve its offer), Vermont’s utilities had put out RFPs for replacement sources of power earlier in 2009. Some of those resulted in power purchase agreements, some of which were signed in 2009 and others in 2010. Meanwhile, the wholesale electric power market price had fallen substantially, which meant that power purchases in the open market were also an option. Mary Powell summed it up saying: “Candidly we were never able to get a contract we thought was a good value,” she said.”

      To the best of my knowledge, ALL of the alternative contracts were priced lower than those offered for VY power, so by NOT signing the contracts Entergy offered them, the utilities saved ratepayers substantial amounts (millions of dollars). That savings is ongoing.

      2) “VT could have purchased power from James Bay hydro at a much less cost …” One of the contracts just mentioned was for power from HQ (largely from James Bay) and it was indeed priced at a lower cost than VY. It was finalized in 2010 (a few months after the Senate vote, I believe). A previous HQ contract (negotiated many years earlier) was also still in effect at the time. Only a little additional power could have been purchased from HQ at that time, because the transmission lines into Vermont were nearly at capacity. New lines are currently in various stages of the planning/permitting process.

      3) “but no, promote wind and solar which costs more is the way to go” This ignores the 60 MW contract that GMP signed with Seabrook, which in the context of Vermont power, is no small matter. Wind and solar provide FAR less power than the Seabrook contract, even if they are incessantly debated in these columns.

      4) “I say let the politicians pay for the cost of shutting down Vt Yankee out of their own pockets, not the public.”

      This comment is wrong on multiple counts. First, the Senate did, as noted, vote to close down VY, but Entergy sued and won a federal court case which effectively reversed the vote. The plant continued to operate until Entergy, not Vermont politicians, opted to shut it down for the very same economic reasons that it invoked months later to announce the closing of Pilgrim and Fitzpatrick. In essence, the low price of natural gas (which accounts for the low wholesale electric market price mentioned above) makes nuclear power uncompetitive in current markets. Other nuclear utilities all over the US have made similar decisions for similar reasons. There are quotes to this effect from CEOs (and former CEOs) of nuclear utilities all over the business press.

      Second, during the years that VY was owned locally, ratepayers (from Vermont and other New England states) made payments into the decommissioning fund on an ongoing basis. These funds were regulated by FERC. Indeed, the entire decommissioning fund for VY came from ratepayers; roughly half came from Vermont ratepayers. FERC contracts also required utilities to supply additional funds, as needed, to complete decommissioning. (The assumption at the time was that the plant would close when the original operating license expired in 2007, later revised to 2012, and that it would be decommissioned promptly).

      Around the time that the plant was sold to Entergy, the decommissioning funds were released from direct rate regulation by FERC. Accordingly, VY become a “merchant plant” and Entergy ceased putting additional resources into the VY decommissioning fund, so all of the growth in the fund since then is from financial markets.

      At the time of the sale (2002), the decommissioning fund had about ½ as much money available as the contemporary decommissioning estimates declared necessary. That remained more or less the case 12 years later when the plant closed. Both figures had grown, but the ratio remained roughly the same.

      Vermont politicians had nothing whatsoever to do with this then or now. Indeed, the whole reason that the 4 states have addressed their pleas to the NRC is that they have NO authority to act in this matter on their own. They can ONLY petition federal authorities. The federal government retains full regulatory authority in this area.

      The only portion of decommissioning over which states can exercise any autonomous authority is those aspects which do NOT deal with radioactive contamination. Basically, this means that the states can regulate what happens to the VY site once it has been cleaned up radiologically to NRC standards (at which point NRC will release it from federal regulation). This portion accounts for a small percentage (roughly 5-10% depending on whose estimates you believe) of the total amount needed for decommissioning.

      As noted in an earlier comment above, the Shumlin administration negotiated an MOU with Entergy in 2014 which allowed Entergy to operate the plant without further legal contest for a few months in exchange for which Entergy established a separate fund for this portion of the decommissioning. Entergy provided the new fund with $25 million (if memory serves). Entergy’s estimate is that $50 million will be needed, so the amount is in a similar ratio to the need as the rest of the decommissioning fund.

      Clearly, there are many commenters here who want to blame Peter Shumlin in particular, or Vermont politicians in general, for what some see as the unfortunate decision to close VY. While it is certainly true that Shumlin, other politicians (many for far longer than Mr. Shumlin who was for the plant before he was against it), and activists like me TRIED to close the plant, the fact of the matter is: we failed.

      Moreover, the issues we currently confront due to the plant’s recent closing would have been posed at whatever time and for whatever reason the plant closed. And sooner or later, the plant was going to close. Specifically, the decommissioning fund has been inadequate since Entergy stopped adding resources, the federal government retains preemptive authority over the plant and its funding, and there is nothing Vermonters can do (other than petition the NRC, which has been ongoing since at least the Kunin administration) to remedy the situation.

      Put differently, Vermont politicians have tried to act within the constraints of federal preemption, but those limits are stringent. Accusing Vermont politicians of failing to do what they have no authority to do has no basis in the real world and is grossly unfair.

  • Kim Fried

    Even with an issue so critical to the future of Vermont and it’s citizens the Legislature and Governor just can’t look at the details. Hurry up, brownie points to be made and of course their planning strategy of “ready, shoot, aim. Over and over again.

  • Homer Sulham

    Sounds like higher taxes may be on the horizon..

  • That is your opinion Mr. Greenberg, not mine.
    The feds are politicians to, you know.
    Wind and solar do not pay for themselves.

  • Ed Gullo

    This seems to happen again and again.
    Corporations make money, then leave a mess with taxpayers on the hook for the cleanup.
    We may need a mix of energy sources, but if investors won’t build a nuclear plant without government subsidies and insurance, it should not exist..OR taxpayers should share in the profits.
    But that would kinda be socialism. Wouldn’t it?

  • Before VY shut down, I asked the representatives from the NRC at a couple of different hearings what is the fallback plan if Entergy VY declares bankruptcy, and the fund is not adequate. Their only answer? Entergy says they will be there to do the job. No other answers. Vermont is going to be stuck with the expense long after most of us are dead.

    • Leonard Suschena

      If Entergy did go bankrupt, the decommissioning fund cannot be part of the bankrupt settlement. The nuclear license would have to be transferred to another holder. Exelon shutdown Zion, the license was transferred to a decommissioning company, most decommissions happen that way, and that company takes over control and decommissioning of the plant. Shutting down VY was never an issue until the Vermont company sold it to an out of state company outside the “good ole boy” Vermont political network.