It was the first topic that Entergy CEO J Wayne Leonard tackled in the utility’s quarterly earnings call with investors and reporters: What is the future of Vermont Yankee?
“We are committed to maintaining open and timely communications however great the challenge is for gaining public support and disproving a negative that the age of the plant is determinate of its condition, as is essentially the position the governor took last month,” said Leonard.
Leonard then quoted Gov. Peter Shumlin as saying VY was “designed to shut down in 2012 and that 40 years is up in 2012.” Leonard said this echoed campaign statements Shumlin made, including: “It’s old it’s tired and it should be retired.”
Leonard said the governor is encouraging his counterpart in New York to take a similar approach and oppose the relicensing of Indian Point.
“While states and governors are certainly free to voice their opinions,” Leonard added, the Nuclear Regulatory Commission, “which has jurisdiction in these matters must deal with the facts. And the fact is the 40-year life was based on the expected economic life, not the physical life, that nuclear plants were designed for.”
Leonard also said despite the tritium leaks and component failures in recent years, Vermont Yankee has remained a reliable power producer and generated cash for Entergy.
“For all the pessimists out there, and I’m sure there may be a few, one thing you should know and that has not been communicated well, Vermont Yankee, at best, has completely covered its overhead,” added Leonard.
One year ago, Vermont Yankee learned of two underground pipes that were leaking tritium into the groundwater. The leaks were from pipes that Entergy executives had previously told lawmakers and the Public Service Board never existed. Attorney General BIll Sorrell is still investigating whether Entergy officials lied under oath.
“I had a status meeting within the past two weeks and am hoping for a decision during the time frame of late March to late April,” Sorrell told Seven Days. Sorrell has had to recently shift some of the legal team working on the Entergy case to a pending U.S. Supreme Court challenge of a state law, which allows physicians to have their prescribing information kept private from pharmaceutical companies and marketers.
The NRC estimates that more than three million gallons of tritiated water have been released into the groundwater. To date, about 340,000 gallons have been extracted from the ground and treated offsite. State health officials believe the leak began in 2009 and was only discovered and reported in 2010.
Recently, Entergy began to find trace amounts of tritium in wells well outside the known tritium plume, causing them to test for additional leaks. To date, two pipes have been tested and they do not appear to have leaks.
Entergy has been replacing underground and buried pipes and has additional plans to replace pipes during an October refueling outage. Whether it will refuel in October — something it does every 18 months — remains a question mark.
Entergy’s earnings call comes on the heels of Gov. Shumlin’s announcement last week that he has set up a “reliability oversight panel” to delve more deeply into how Vermont Yankee can be shut down on time. In addition, Public Service Commissioner Liz Miller has reconvened the Vermont State Nuclear Advisory Panel. The seven-member panel had largely been defunct under her predecessor. The panel will hold its first meeting on Feb. 20 Feb. 22* in Vernon.
A Senate vote last year — orchestrated by then-Senate President Pro Tem Shumlin — effectively put a halt to the state Public Service Board’s review of VY’s request for a renewed certificate of public good. Meanwhile the federal Nuclear Regulatory Commission is closing in on making a final up or down decision on VY’s application to keep running another 20 years.
What are the odds they’ll say yes? To date the NRC has yet to deny a license extension.
And, what happens if the NRC doesn’t act before next year when the current operating license expires? Here’s what the NRC itself notes in a 100-plus page FAQ about nuclear power licenses:
Question: “What happens if the review of a license renewal application is not completed before the current license expires?”
Answer: “If the applicant files a sufficiently complete application for renewal of its operating license at least five years before the existing license expires but the renewal of the license is delayed because of administrative or judicial appeal, then the existing license will still be considered valid until a final decision on the renewal application has been made.’”
In other words, VY could argue a year from now that it has a legit license to keep running. And, who’s to stop them? Would the state take Entergy to court or the NRC? As noted last year in Seven Days, the idea of Entergy filing a federal pre-emption lawsuit isn’t completely out of the question.
Will Entergy play that card? Leonard wouldn’t say in today’s earnings call, but he did say the time is nigh to make a decision on how the utility will proceed.
“We are looking for support from the people of Vermont and we are looking for support from the utilities,” said Leonard. “We want to be regarded as good partners with Vermont, but at the same time in some respects we’re being pushed into a bit of a corner here and there is a point where there is a line in the sand and we’ll have to determine if we’ll push forward or not.”
Leonard said recent comments by the state’s largest private employer IBM that its power needs would increase, coupled with calls from various manufacturers and the region’s grid operator that VY provides stable and reliable power all weigh in their favor.
Leonard expects that by mid-year Entergy will have a new power purchase agreement with in-state utilities.
*This post has been updated to correct the date of the VSNAP meeting.
This article appears in Feb 9-15, 2011.
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JOHN, “the current offer from VY is to supply 115 MW to VT utilities at 6.1 cents per kwh (with an annual price escalator).In other words, whether or not VY runs after its current license expires, VT utilities will be purchasing 150 MW of the power they are currently buying from VY from other sources. So we’re talking about replacing 115 MW”Lets stop debating points that are unfactual. Offers are not contracts. Trying to guess causes a lot of back and forth that is essentially pointless. I think you provide a good opposing viewpoint from myself and Webber, but much of the back and forth is lost on unfactual projections. “I will certainly grant that ISO-New England, the grid operator, needs to have a certain number of baseload generators on board to fulfill this function in the world as it is now. (Technological advances in electricity storage, for example, may well change this picture in the not so distant future). But ISO’s needs are already more than met by existing generators in New England.”Why then John did ISO release a report that stated without Vermont Yankee reliability of the grid would be increased and I believe they said severe. You are putting a lot faith in the “grid” and utilizing spot market energy. This in my opinion is a gamble, something large companies like IBM are going to shudder at.”In any case, while the rest of us are arguing about alternatives, the utilities are actually implementing theirs, thus changing the facts on the ground. The bulk of this power HAS been replaced,”John maybe you could provide us with some facts backing this up. I don’t believe that all this power has been replaced. Please list the sources you have for this and the amount of energy contacted for. It may end a lot of the arguments.
As I anticipated, Webber has no idea what he’s talking about. Let’s start here: “Duh, because that’s how much baseload power we are now getting from VY, at that price.” Currently, VY buys 265 MW from VY, not 300-400 MW, at a price, this year, of 4.4 cents per kwh. Next year through the end of the operating license, assuming the plant continues to operate that long, the price will be 4.5 cents.The current contract ends when the operating license expires in March, 2012. The next day, the current offer from VY is to supply 115 MW to VT utilities at 6.1 cents per kwh (with an annual price escalator).In other words, whether or not VY runs after its current license expires, VT utilities will be purchasing 150 MW of the power they are currently buying from VY from other sources. So we’re talking about replacing 115 MW, not 300-400 MW.Second, Webber asks: “Are you arguing that we DON’T need baseload power?” If, by baseload power, Webber means power generated 24 hours a day 7 days a week by one source, the answer is yes: that is precisely what I’m arguing. The whole point of having a power GRID is, in effect, to relieve each utility of the burden of having to provide power at all times, by sharing the burden. This opens up all kinds of possibilities. Allow me to construct a scenario out of whole cloth — before anyone accuses me, this is a FANTASY — to make this clear. If generator A had a plant which operated most efficiently at night, say, and generator B had one which operated best during the day, then as long as the 24 hour demand were met, neither would have to operate their plants at anything but the most efficient times. Obviously, in the real world, it doesn’t work quite so simply. In the real world, the grid operator receives bids on an ongoing basis from all the operators in the system, and chooses from those bids the cheapest suppliers of electricity to meet the demand at any given time (in 5 minute segments), while at the same time, retaining sufficient running reserves to keep the system powered under all contingencies. In other words, while my fantasy-example oversimplifies the reality, it gets to the essence of it, which is that the grid operator maintains power on the grid at the lowest price on a 24-7 basis, REGARDLESS of where the actual electrons are coming from at any given moment. I will certainly grant that ISO-New England, the grid operator, needs to have a certain number of baseload generators on board to fulfill this function in the world as it is now. (Technological advances in electricity storage, for example, may well change this picture in the not so distant future). But ISO’s needs are already more than met by existing generators in New England. To the extent that ISO foresees any problem, it is with the region’s transmission system, not any lack of generation.By being part of the ISO grid system, VT utilities are in large part relieved of the obligation of providing 24-7 power from a very small number of local sources. The existence of the grid is pure Adam Smith division of labor at its finest: by allowing each operator to do what it does best, the system as a whole functions most efficiently. All this means that, when VY retires, it is simply NOT the case that VT utilities must replace it with baseload generation.As to the price, I have repeatedly noted that the VY offer currently on the table appears now to be slightly above the expected market price for power, and that, for the next several years (for which there have been ISO auctions) there is a significant overhang of power in New England (ca 8,000 MW). This, in turn, means that if all else were to have failed (and it already hasn’t, thanks to the contracts already signed by VT utilities), the power currently bought from VY could be replaced by market purchases on a 24/7 basis at a lower price than VY is offering.Accordingly, I’ve also just responded to this: “You want to pay more for electricity? Volunteer to pay more YOURSELF.” Look in the mirror Webber, and spare me the “duhs.” Webber characterizes New England market based electricity as coming from “coal and oil fired power plants.” Actually, less than 1/4 of New England power comes from these sources. The rest comes from nuclear and natural gas (roughly 70% combined), hydro, etc. Energy efficiency (demand side management) is also becoming an important source for New England, and will continue to grow, thanks to major federal infusions of capital and numerous state programs.All that said, however, I agree with Webber that “Vermont should NOT … buy short-term contract and spot market electricity produced by out of state, non-taxpaying, non-benefit providing … power plants.” While I have just pointed out that this solution IS feasible and economic for ratepayers, it clearly is less beneficial to the overall state economy than a variety of other plans. The plan I’ve proposed, for example, is to sharply increase efficiency programs which provide the lowest cost “power” and to use some of the rate savings from that effort to offset slightly higher than market in-state renewables projects. But there are MANY other alternatives available. In any case, while the rest of us are arguing about alternatives, the utilities are actually implementing theirs, thus changing the facts on the ground. The bulk of this power HAS been replaced, whether Webber and I like the solutions chosen or not.
“9) Webber wants to know “So, where are these projects in the regulatory/permitting process?” You mean the projects that “Nobody’s building … in Vermont?” Try reading the papers. It’s their job, not mine, to keep you informed.”Translation: Greenberg can’t point to any baseload projects that are anywhere near the building stage. Because there are none.”10) Perhaps Webber can tell us exactly how he arrived at these 3 conclusions: “we need about 300-400 MWs of baseload power at about $.06 per”. The 3 separate conclusions are 1) the amount of power (300-400 MW) 2) the notion that it needs to be “baseload power” and 3) the price.”Duh, because that’s how much baseload power we are now getting from VY, at that price. Are you arguing that we DON’T need baseload power? I assume you know what baseload power is? And are you arguing that it doesn’t need to be at an affordable price?Vermont should NOT shoot itself in the foot and turn off an available baseload power source so that it can buy short-term contract and spot market electricity produced by out of state, non-taxpaying, non-benefit providing coal and oil fired power plants. Especially, if VY is going to continue operating and all we do is host it without getting any of its power. STUPID, STUPID, STUPID.You want to pay more for electricity? Volunteer to pay more YOURSELF. LEAVE MY DAMN ELECTRICITY SUPPLY AND MY BILL ALONE.
Yes, the aforementioned comment has been removed.We welcome spirited debate, but please, keep it civil. No personal attacks.
I apologize for that comment, I would edit it back out if I could. But of note, while it is certainly abusive, defamatory…. that might be a little far. You would have to prove it wasn’t true.
Here we go again: 1) JCarter: “You still didn’t address future prices.” Actually, I did, though not in the way JCarter wishes. I wrote: “I have no idea what market prices will look like 20 years from now. I do, however, have a pretty certain notion that no one else does either, given the evidence I’ve seen in the last few years.” If JCarter wants to give us a prediction and tell us how he made it, and what his track record for such predictions has been, that’s fine. Otherwise, I’ll stand by my comment: I have yet to see anyone make these predictions with any success.a) “Do you think spot prices will be less the $0.06/KWH?” Even if we buy into JCarter’s notion that market prices are predictable, that’s the wrong question. The VY proposed price is 6.1 cents for 2012, and it will never go down to 6 cents. But much more importantly, it then rises every year as has been pointed out multiple times in these comments. Unlike Carter, I don’t know how much the price escalator will rise, since that involves a prediction about the future price of uranium, cost of specialized utility labor, and general economic inflation. (These predictions are a tad less dicey than market price projections, but still highly problematic.) However, I do know that historically, this escalator has risen about 4% per year. If we use that figure and project the VY contract figure forward, JCarter’s question should be, do I think spot market prices will be less than 12.9 cents a year in 20 years. My answer, however, remains the same. I don’t know, and neither does JCarter, nor anyone else. But at least now the question is correctly framed for this debate.2) “The fact is who created it has little bearing…” except that YOU insisted, repeatedly, on calling it the Shumlin “blue ribbon” panel. “The fact that an ANTI Yankee legislature created it however does provide credibility that if it were unsafe the panel would have stated as much.” The legislature which created the panel was NOT anti-VY, though obviously some members were, nor was the governor who signed the bill. Remember, the panel was created in 2008. Most of the estimates I saw and heard at that time were that if a vote on VY were held, the plant would win overwhelmingly. Sure, the legislature turned against VY as it got better informed, but it didn’t start there.Moreover, the Oversight Panel did not conclude that VY is reliable (and they didn’t consider safety), as JCarter keeps asserting. They concluded it MIGHT be reliable IF…. There’s a difference, which JCarter finds it convenient to ignore.3) “Irrevelant? [sic] Ok, I guess predictions of prices in 2 years are, but past performance isn’t?” I don’t know what this is talking about.4) “So offers that weren’t accepted are also relevent[sic]?” There’s only one offer, and it’s the only price which has been presented to the public for VY power after 2012. It is relevant because a) It is a filing to the Public Service Board in the docket opened to consider whether or not VY should receive a Certificate of Public Good (and therefore was used in those deliberations), and 2) it indicates quite clearly the lowest price Entergy was willing to accept, at least in December 2008. Given that there is no better price indication to use, anyone wanting to discuss rate impacts of closing VY needs to use these contract prices as a starting point, just as JCarter and I both do.5) The difference between these prices (remember, 6.1 cents is only the INITIAL price) and those imagined by JCarter is just that: JCarter imagines, presumably without having consulted GMP, a price that GMP might offer to pay, & then imagines that Entergy would accept it, again without consulting Entergy, and despite the fact that Entergy told the Public Service Board their best offer was considerably higher, and that they had failed to reach agreement with the utilities, after 2 years of negotiations. If JCarter wants to tell us that GMP and Entergy have given him the right to represent their negotiating positions in these columns, I will stand corrected.Otherwise, unlike JCarter, I think it is reasonable to distinguish a matter of public record from a set of counterfactual hypotheses pulled out of thin air, especially when these latter contradict the known public record. 6) Power companies are doing more than “making plans.” They’re signing contracts for power, quite a number of which have been reported by the press. The HQ contract is not just an offer; it’s a contract, signed and agreed to by both parties.7) “I nor Webber said anything about subsidies other then VY is where the subsidies for wind and solar are coming from.” Webber: “And even if we put all those turbines up, and even if they produced power all the time, they do so only at an enormous subsidy.” It is also worth noting that, in addition to funds from VY, the Clean Energy Development fund includes millions of federal dollars.8) The BFP article quoted by JCarter actually says NOTHING about the amount of power available. It concerns the transmission system, quotes ISO as saying that “with or without Vermont Yankee, the system in Vermont has reliability issues that must be addressed,” and notes that the utilities have until 2016 to fix the problem. Indeed, it quotes VELCO chair Chris Dutton thus: ““I’m beginning to sense the world isn’t going to come to an end in March 2012,” Dutton told the committee. “Many of us are beginning to feel a little better about this situation than we were.“”9) Webber wants to know “So, where are these projects in the regulatory/permitting process?” You mean the projects that “Nobody’s building … in Vermont?” Try reading the papers. It’s their job, not mine, to keep you informed.10) Perhaps Webber can tell us exactly how he arrived at these 3 conclusions: “we need about 300-400 MWs of baseload power at about $.06 per”. The 3 separate conclusions are 1) the amount of power (300-400 MW) 2) the notion that it needs to be “baseload power” and 3) the price.
Webber, tit tit, only John Greenberg gets to criticize other people’s arguments as fantasy.
“7) Webber also tells us “Nobody’s building a biomass plant in Vermont,” which will come as shocking news to the Beaver Woods folks who are currently seeking permits for two of them.”So, where are these projects in the regulatory/permitting process? Exactly when will they come online (if ever)? How much power will they produce?To replace VY’s baseload power (not to mention the taxes it and its employees pay, and their contribution to the VT economy, and the CEDF and other funds we currently extort from them), we need about 300-400 MWs of baseload power at about $.06 per, especially at the alarming rate you’re using electricity to post your fantasies on this blog.
OK John, 1.) You still didn’t address future prices. So in 2012 you have a PREDICTION. What about 2022 or 2032. Do you think spot prices will be less the $0.06/KWH?2.) Semantics. The fact is who created it has little bearing on the fact their assessment was that VY can operate safely. It could have been created by Symington, Smith, etc. The fact that an ANTI Yankee legislature created it however does provide credibility that if it were unsafe the panel would have stated as much3.) Irrevelant? Ok, I guess predictions of prices in 2 years are, but past performance isn’t? 4.) So offers that weren’t accepted are also relevent?5.) Fantasy? Well here I concede to you John, the offer VY stated along with projections of energy prices as well as any negotiations that have not been agreed upon and contracted for would/could be considered fantasy. 6.) Sure several companies are making plans, Webber also addressed it. GMP is making plans for a wind farm in Lowell. It still needs approval. Until it gets approval it is um…. fantasy.8.) You are building quite the straw man there John. I nor Webber said anything about subsidies other then VY is where the subsidies for wind and solar are coming from. Without VY there is no CEDF, the state doesn’t have 10Million to put into them every year. Finally, John you end with a catchy quote. What does it mean when you build straw men to knock over and fail to address points? Oh, interesting article in the BFP today… it is oddle relevant to the spot market and pricing. “An August report from ISO-New England said, “The studies completed so far have shown that with or without Vermont Yankee, the system in Vermont has reliability issues that must be addressed; without Vermont Yankee in service, those issues are more severe and could affect neighboring areas. The potential reliability issues could include thermal overloads on high-voltage transmission lines and voltage instability, either of which could damage equipment, compromise grid stability, or cause uncontrolled outages.””Yup, plenty of power.
The VY propaganda manufacturing factory must be working overtime. Answering the latest bunch of lies, nonsense, red herrings, misconstructions, etc.:1) JCarter writes: “The spot market is lower then contracted rates TODAY…” The market price that I have been referring to is NOT today’s. It is the price which is anticipated (by utility experts) beginning in March, 2012, which is the relevant price when comparing to VY’s new contract, which would begin at that time.Market prices for electricity are extremely volatile. They rise and fall in daily, seasonal and weather related patterns, but they also move in all sorts of unexpected ways. There is much “expert” testimony based on predicting them, all of which, at least in the last few years, have been dramatically revised multiple times. I am NOT an expert and have never represented myself as one. I have no idea what market prices will look like 20 years from now. I do, however, have a pretty certain notion that no one else does either, given the evidence I’ve seen in the last few years. 2) JCarter writes: “was Shumlin in charge of the Legislature when the oversight Panel was created?” First, the Speaker of the House might have a word or two about that. Second, the Majority Leader is “in charge of” the Senate in the sense that he or she certainly attempts to guide it, in many cases, successfully. But that’s not always so easy: ask Harry Reid. And, in any case, he or she does NOT replace the Senate and vote out legislation single-handedly. The law creating the Oversight Panel was created by the whole legislature and signed by the governor, just like any other law. Shumlin was certainly one of the key legislative players, though equally certainly not the only one.3) JCarter writes: “The NRC has stated that the Tritium leaks at the plant are not at levels that constitute a hazard. That the plant is operating safely.” True, but irrelevant in a discussion of relicensing. What the NRC has NOT said yet is whether the plant can operate safely for the next 20 years. They will do so, if they do, when they actually re-license the plant. My car is operating safely now, but I doubt very much if it will be 20 years from now. In any case, these are 2 separate judgments, and, so far, the NRC has made only one of them.4) Doug Hoffer writes: “The price of Entergy’s last offer would have been pegged to market prices….” Not so. The offer was at a fixed price of 6.1 cents for the year between 2012 and 2013. The offer then had the price escalator that Hoffer correctly mentions built into it, so that, in the next year, it would have been 6.1 cents + the escalator, and so on each following year. This means, in particular, that the price of the VY contract would NEVER fall below the initial price of 6.1 cents and that it is virtually guaranteed to rise every year.The HQ contract, as I understand it from press reports, begins with a “smoothed” market price, and then periodically adjusts to market prices. This means that if the market price for power falls in a given year (as it did in 2008), the HQ contract price will fall with it. If it rises sharply in another year, the HQ contract will follow it up. Even with the smoothing mechanism, HQ prices are likely to fluctuate enormously.In other words, regardless of power source and other differences (station vs. system power), these are completely different TYPES of contract. The VY contract operates somewhat like a fixed rate security with a built-in escalator. The HQ contract is more like a floating rate security.5) JCarter presents this fantasy: “Do you think perhaps if GMP said we’ll buy X KWH for 5.5 cents they would turn it down? Do you think they wouldn’t negotiate with power companies if the Legislature decided to let PSB give them a CPG? Of course not.” What does JCarter think has been happening for the last 3 years?? The utilities have been negotiating all of this time, as they have periodically told both the Public Service Board (under oath) and the press. They have been unable to reach an agreement, which was the PREMISE of Jay Thayer’s letter making the price offer we’ve been discussing. The parties claim they are still negotiating and recent press reports have suggested they are close to agreement. Nevertheless, no other offer has ever emerged, at least so far.6) Webber writes: “Apparently, absolutely and positively nobody but you believes that Vermont can “save” or renewable-ize” our way out of the need for reliable, inexpensive baseload power at any time in the near future.” Actually, there are at least 3 such plans which have been presented, including a plan presented by the Department of Public Service as testimony both to the legislature and to the Public Service Board. Meanwhile, the utilities are rapidly making this issue moot by signing contract after contract for renewable power (unfortunately, some of it is out of state) and also by constructing their own power projects in Vermont.7) Webber also tells us “Nobody’s building a biomass plant in Vermont,” which will come as shocking news to the Beaver Woods folks who are currently seeking permits for two of them.8) All of the discussion of subsidies for renewables, by Webber and JCarter is a canard. Every form of energy production in the United States has been subsidized. Who do you think did the research and development from which nuclear power plants developed? Who has provided Price Anderson insurance since 1956 because the free market refused to? Who is currently providing loan guarantees because capital markets refuse to do so? Etc. etc. Nuclear power has received and is still receiving billions in subsidies, just as coal, oil, biofuels, natural gas, and every other source, real and imagined.9) Webber: “…after VY is dead, and after they’ve paid double their current elecricity [sic] bill.” As Ronald Reagan put it: “There you go again.” It’s time for Webber to present the figures on which this ongoing lie is based, or withdraw the statement. The utilities testified to possible rate increases of 3-7.5% at a time when they expected higher market prices than they do now. The actual effect of closing VY and buying from the market (one of many solutions, and NOT the best) would be a small price decrease. Finally, JCarter tells me “You have a clear bias and currently you are not looking at things from an impartial viewpoint.” There’s an old legal dictum: When the law is against you, argue the facts. When the facts are against you, argue the law. When both are against you, attack the plaintiff. Good move!