Save Vermont Yankee. If not you, who? If not now, when?

By Rod Adams

I told some friends the other day that I often feel like a time traveler from the Age of Reason who sees questionable behavior and is forced by training to ask, “Why?”

Although I have already written a couple of articles on this particular topic, it is time for one more post intended to provoke thoughts and discussions aimed at finding a way to prevent an action that we all know is wrong and shortsighted. I’m writing about the pending closure of the Vermont Yankee nuclear power plant, a 650-MWe nuclear power plant located on the Vermont side of the Vermont/New Hampshire border (also known as the Connecticut River) and only a dozen or so miles from the Massachusetts border.

It is a safe, reliable, zero-emission nuclear power plant with a low, predictable fuel cost and a moderately generous, but predictable payroll. It has recently been extensively refurbished as part of a power uprate program; it has an operating license that is good until 2032 and may be able to be extended; and it has a brand new emergency diesel engine.

It is in a region of the United States where the reliable generating capacity is suddenly so tight that the total auction price for capacity has recently tripled from $1 billion in 2013 to more than $3 billion in the most recent auction.

Aside: It’s probably worth mentioning that if Vermont Yankee had bid into that auction, the prices would have settled at a far lower level. That is the nature of the response in an under damped system that is in a delicate balance; wild swings can result from the imposition of minor disturbances. It is not at all surprising that companies with generating facilities participating in the New England capacity auction did not approach Entergy about purchasing Vermont Yankee. There is no shock in finding out that 100 percent of the companies approached as logical candidates with complimentary assets politely declined to make any bids after a due diligence presentation. End Aside.

Vermont Yankee is also in a region of the country with a growing dependence on natural gas for both electricity and heat, but a pipeline network that was not sized to carry enough gas for both types of customers.

Here is a recent quote from Leo Denault, Entergy Corporation chief executive officer and chairman, about the power situation in New England:

“If we continue to see Northeast power markets drive what should be economical units to retire prematurely and not fairly reward generators for the attributes they provide—including fuel supply diversity and reliability, as well as environmental benefits—what was a volatile outlier this winter… could become a recurring situation.”  Denault also noted the harsh winter’s ability to expose pipeline deficiencies that constrained certain resources during periods of high demand: “There is simply not enough natural gas pipeline capacity in New England to serve both heating demand and natural gas-fired power plants during extreme cold.”

(SNL Energy’s Power Daily — April 25, 2014)

Any industrial customers that are left in the region are left out in the cold, and it can get quite cold in New England, especially during a polar vortex.

The state of Vermont bears a large portion of the responsibility for the pending closure; in fact, there are politicians in the state who have bragged about their success in getting rid of a reliable, low cost, clean energy source (of course, they may slant their claims a bit).

Peter Shumlin—both as senator and then as governor—and his allies made life uncomfortable for Entergy during the 12 years that the company owned the facility. Their efforts added substantial costs to the total operations and maintenance costs and they demanded several different kinds of tribute in return for “allowing” the plant to keep operating.

It is understandable that there are many people on the plant staff who are sad that they are losing their jobs, but conflicted about leaving a state that did not value their contributions anyway.

Unfortunately, nuclear professionals did not do all they could to help the valiant efforts of Meredith and George Angwin, Howard Shaffer, Robert Hargraves, and others who worked hard to counter the FUD (fear, uncertainty and doubt) spread by the professional fear mongers like Arnie Gundersen, or the actions of professional nuclear energy industry critics like Mark Cooper and Peter Bradford.

So far, the antinuclear forces seem to have won the day.

Entergy has announced that no one wanted the plant. I will take them at their word, but I have to ask what kind of effort they invested to market the facility? It is almost like getting up one day and finding out that your neighbor, who owns a house that you always liked and thought would be a great place for your son or daughter to use to raise your grandchildren, had decided to tear down the house to leave a vacant lawn because that was easier than paying the upkeep after they retired to Florida.

He tells you that “everyone” knew the place was for sale and also knew that he planned to tear it down if no one came up with a reasonable offer. Somehow, you never noticed the little “For Sale” sign tucked in the bottom right hand corner of a front window. Perhaps it was because there was an overgrown plant out in front covering the sign.

At any rate, my little allegory would have a happy ending if you just happened to wake up and get your paper early enough on the day that the dumpsters were being delivered to stop your neighbor and halt the destruction before it started.

In the case of Vermont Yankee, there are potentially interested investors that never knew that the plant was for sale. There are also plenty of technically qualified people who could be formed into a technically qualified management team in short order to own and operate a nuclear plant that has already done all of the hard work of establishing procedures, schedules, required programs like QA and RP, and all of the host of other things that would need to be done for any new facility.

The reactions I have received from some very bright people when I describe the current plan can be summarized by the quote I received—second hand—from a correspondent who knows Nathan Myhrvold, the CEO of Intellectual Ventures and a partner with Bill Gates in Terrapower. My correspondent asked Myhrvold if he had any ideas about saving the plant. This is the response he received:

Not really…. It is an insane decision to shut it, but that is what nuclear has become…

Perhaps I am just a little odd, but I just don’t see how people can stand idly by and watch while a small group of people take actions that will harm a much larger group of people over a long time to come. If the action is, indeed, insane, the question is why should we allow it to happen?

Who is going to point out the insanity? When?

Back to the headline, which was the motto over one of the doorways at my alma mater.

“If not you, who? If not now, when?”

I guess that—for now—it’s going to be me and a few diehards who are still working hard in Vermont. With any luck, in a short period of time it will be me, those few diehards, and a dedicated team of well-resourced professionals who recognize that shutting down a well-operated nuclear plant is a betrayal of the people who have worked so hard to try to make the United States less dependent on foreign supplies of energy.

Some might say, who am I to question the analysis and decisions of a big company like Entergy. Surely the people working there know more about the situation than I do and should be trusted to have made the right call. As one of my many heroes famously advised: “Trust, but verify.” After I see the numbers, I might make a different call, but all of the publicly available numbers are pointing me in a different direction.

I may just be a guy who spends a good bit of his day blogging on the Internet, yes sometimes in my PJs. However, I’m also a guy who has been doing that for a long time while also holding down responsible positions in the US Navy and at a respected nuclear power plant design firm.

If you’re fortunate enough to have had the assignments I have had and you are any good at all, you end up meeting a few credible people who respect your ability. I even have a few friends in finance, some from my days at the Naval Academy and some from my sustained but eventually failed efforts to raise capital for Adams Atomic Engines, Inc.

BTW—did you know that the New England power grid burned diesel and jet fuel to supply 4 percent of its winter power this past year and that on some days, generators that were burning distilled petroleum products represented fully 25 percent of the electrical power supply? And those figures happened even WITH Vermont Yankee and Brayton Point supplying reliable power…

vermont yankee c 405x201

_______________________

Adams

Adams

Rod Adams is a nuclear advocate with extensive small nuclear plant operating experience. Adams is a former engineer officer, USS Von Steuben. He is the host and producer of The Atomic Show Podcast. Adams has been an ANS member since 2005. He writes about nuclear technology at his own blog, Atomic Insights.

19 Responses to Save Vermont Yankee. If not you, who? If not now, when?

  1. Dennis Mosebey

    Rod, I assure you that you and just about everyone else in nuclear is MUCH smarter than Entergy. Entergy is a short sighted conglomerate that focuses like so many companies only on bottom line stockholder share value. They and Exelon are much the same buy up as many plants as you can, run em todeath, beat up the people while you do it, then when the going gets tough bail out. It is their culture and as a long time nuclear professional I have no use for them. So rest assured your analysis is sound. I just do not think anyone is going to buy her given the hostility of the state, that probably has as much or more to do with no one’s interest—many our tired of fighting the stupidity of state and federal government officials who think they are heroes. But I applaud your work and your article. Sorry I do not run my own big company or I would consider buying it. The Northeast will need it when gas prices take off down the road. But by then the golden parachutes will have long opened on the Entergy Executives and Board who were so short sighted. Sorry to be a bit negative, but I needed to vent. This whole situation infuriates me no end.

  2. Jeff Walther

    Good luck!! I’m glad someone with some resources is fighting this fight.

    I searched out and started reading these blogs because the energy policy of Austin, TX is insane. They turned down a chance to participate in the expansion of STNP in 2009 because, according to their consultant, there was a small chance that overruns would cause the net cost of new STNP power to be as high as $.12/KWHr. They have then proceeded to subscribe to wind, solar and wood burning (!!) sources which all have a guaranteed price **higher** than the “high” price from STNP which had a small probability of happening.

    It’s like committing suicide today because you might bump your shin tomorrow. Insane. The charlatans have sold the nation on insanity as energy policy.

  3. Very good piece. Reason is always hard for those motivated by narrow money or political interests. Just look at our San Onofre 2.2GWe plant now being ‘replaced’ by gas and Four Corners coal, for a state claiming to be the ‘green’ leader.

  4. Aaron Rizzio

    It should be emphasized to the people and legislators of VT that under current rules VYNPP & VY’s ~538 tons of cumulative 40yrs of UNF are GOING NOWHERE fast; Yucca Mtn. is blocked, certainly for as long as Reid is US Senate majority leader, and under federal law Entergy has more than half a century to decommission the reactor.

    Rod has raised real concerns that without VY’s output ISO-NE electricity rates (and certainly CO2 emissions) will increase. What would be the cost to maintain VY in a state of cold shutdown in order to not foreclose on the possibility of restarting the unit after a period of some years if VY critics fail to find a more politically correct form of conservation or generation totaling VY’s output of ~5 million MWh(e)/yr?

    I’d estimate to maintain a skeleton crew to watch over and maintain the reactor — in addition to what the taxpayer’s will pay to secure the UNF dry casks — is <$10M/yr . Issue a challenge to VY's implacable critics: VYNPP will turn in its 20-yr license extension just as soon as you replace its ultra-low carbon MWs; call it the "Vermont Energy Challenge". The onus will be placed on "renewable" energy enthusiast around the world for a VT mini-Energiewend. It will answer the question even before Germany or Japan once and for all: "Can 'alternative' energy ever really displace fission?" Estimates are that without VY both costs will spike and VT will be incapable of replacing VY's output. VT's per capita emissions will likely increase faster than any other state in the US as they pay more money for electricity imports equivalent to 2.5 million added tons of CO2. Perhaps a DoE grant could be obtained to babysit the plant in order to run such an elucidative experiment, it would be a bargain compared to the Solindra boondoggle.

    So long as Yucca remains blocked the courts will continue to award hundreds of millions of dollars in taxpayer's money to current and former NPP operators due to the federal government's defaulting on its promise to take possession of UNF. Also it remains totally up in the air how the NRC will re-asses its "Waste Confidence Rule" in the wake of another recent federal appeals court ruling; VT may end up stuck with all VY's UNF as a monument along the banks of the CT river (just as at the site of former Yankee Rowe, further down the river) with no VY for a century or more, maybe "forever".

  5. Cory Stansbury

    Aaron,
    Don’t forget the NRC license fee of $5,328,000. That would apply, running or not.

  6. Robert Russell

    What an incredible waste! We here in Texas are fighting to close polluting coal generation, and yankees are closing clean nuclear because of agitprop.

  7. Aaron Rizzio

    Corey,
    Must a license fee be paid each year? I didn’t know that. I’m trying to avoid any re-license fee by holding on to Entergy’s; I understand they are transferable (?), as when Entergy bought the unit in 2002, I think — did they have to pay for a new license I don’t know.

    My overall point is that the marginal cost of holding the status of the plant in cold shutdown vs SAFSTOR should be less than rebuilding a new NPP. Keeps options open until we see how well ISO-NE can perform in its absence.

  8. Cory Stansbury

    That is the yearly fee.

  9. Well Jeff Forbes and Bill Mohl from Entergy Corp. are coming to VY tomorrow to speak at the employees again may be you should drive up and button hole them.

  10. @Cory and Aaron

    The annual license fee will drop precipitously — to $231,000 — once the fuel is removed and the operating license is “turned in” to the NRC.

    http://www.nrc.gov/reading-rm/doc-collections/cfr/part171/full-text.html#part171-0015

    For an operating, revenue-generating plant of conventional size, the annual operating license fee is not TOO onerous, though it is a fee whose magnitude is growing far faster than the rate of inflation partly because the NRC keeps spending money on items like Fukushima that have little or nothing to do with the safety of US licensees.

    For a reactor that is being held in an operating condition, but not actually operating, the fee is ridiculously high and contributes to the pressure to move quickly from an operating license to a possession-only license.

    For SMRs, the annual fee is absurdly high and unfair.

  11. Kurt Lathrop

    Rod,

    You make some good points. I think that these same arguments could also apply to Oyster Creek, which is scheduled to be shut down in 2019, simply because the previous governor signed the order, and the current governor doesn’t have the cojones to rescind it.

  12. Rod,

    As you know, I did a very positive post about the buyout yesterday.
    http://yesvy.blogspot.com/2014/05/saving-vermont-yankee-rod-adams-moves.html

    Today, I worried that I had oversold the situation, and that employees might be thinking that the buyout is sure to happen and they don’t need to look for a new job. I did a more nuanced post (I hope) about the fact that the buy-out is far from a slam-dunk.
    http://yesvy.blogspot.com/2014/05/employee-ownership.html

    For me, it has been kind of hard getting the tone right.

  13. From Toronto, Canada, good article. One observation. There is an underwater cable from Newfoundland to New Brunswick or Nova Scotia planned to transmit hydro-electric power from a major project and I believe a significant portion is expected will be transmitted to the N.E. U.S. Maybe that partially answers why the apparent lack of interest?

  14. @Meredith

    I enjoyed both of your posts. Obviously, the employee buyout idea would only work if the employees really wanted to make it work. It is a risky proposition and I can understand why there is not much interest from them at this point. Their fellow Vermonters sure haven’t rolled out the red carpet, have they?

    However, there are other avenues and other potential purchasers who may be able to see the value hidden under the FUD that activists have used to almost bury VY alive.

    We’re in bottom of 13th, behind by a couple of runs and are down to our last couple of outs. That doesn’t mean the game is over yet.

  15. Caroline

    If you, and if now, then “what”?

    You have many supporters with you. The only thing that is left is a real call to action. What can the supporters do now? You probably have the best feel for it since you are “one of the few diehards still working hard in Vermont.” You know what has been done, hasn’t been done, or who are the people to tug on. A few ideas might include the following: ways for mass numbers of people to send letters to government officials/new england electric grid officials/congresspeople at the click of the button. Maybe a kickstarter… for something. A kickstarter for a public awareness campaign may be a good start. A kickstarter for the entire plant might be tough. Let us know! Or just keep writing!

  16. Frank Jablonski

    It seems unlikely that a revival effort would be successful because the agreements between Entergy and Vermont, e.g., the MOU, seems to preclude it. Entergy makes commitments as the owner, and has to be the owner to meet those commitments. The commitments are incompatible with revival, as, I expect Vermont wanted.

    Some language from the agreement: ” . . .under no circumstance, including pursuant to 3 V.S.A. $ 814(b), shall Entergy VY refuel or in any way supplement or extend the normal life of the fuel at the VY Station for the current operating cycle, or conduct nuclear power generating operations at the VY Station after February 28,2015.” * * * “EVY shall commence site restoration in accordance with the overall site restoration standards established pursuant to paragraph 5 promptly after completing radiological decommissioning.”

    Entergy’s website confirms that, in the Company’s view, “Entergy has committed eventually to restoring the site by removing structures and, if appropriate, re-grading and reseeding the land.”

    Obviously, you can’t operate a plant whose structures have been removed.

    While agreements can be bypassed or voided, they are never bypassed or voided, in my experience, without a legal fight when the circumstances are such that the parties are equipped to undertake one, and view themselves as having a lot at stake.

    So, in baseball terms, I think the last strike has probably passed the batter and is on the way to the catcher’s mitt. I wish it weren’t so, but those wishing for a different outcome, including me, do not seem able to map out a path to a different result. I would prefer to be wrong about this.

    I think the outcome for VY confirms again that many organizations and policy makers who characterize themselves as “environmentalists” do not, objectively, care about air quality or asserted concerns about climate when those concerns are stacked against an opportunity to eliminate a nuclear plant. Their perspective is badly misguided, and has had, is having, and will have, terrible consequences, as commenters such as James Hansen have noted.

  17. Aaron Rizzio

    Frank,
    Regarding the sentence “EVY shall commence site restoration in accordance with the overall site restoration standards established pursuant to paragraph 5 promptly after completing radiological decommissioning.” Entergy is committed to greenfield site restoration “promptly AFTER completing radiological decommissioning”; does anyone know exactly what this means? How long could “radiological decommissioning” take? 40-50 years of SAFSTOR? After all VT wouldn’t want to jeopardize workers with unnecessary gamma rays from cobalt-60 considering all the fuss they made over a few picocuries of tritium.

  18. @Frank Jablonski

    You are more likely to be right than wrong, after all, you are the lawyer, not me.

    However, isn’t there something in American contract law that voids an illegal agreement?

    What if it could be shown that Entergy threw in the towel on Vermont Yankee after realizing that it could make a lot more money from capacity payments for its remaining generating plants if VY dropped out of the New England ISO capacity auction?

    The part that would put that announcement into questionable legal territory is the recognition that, by making a timely announcement, Entergy was sending a signal to Energy Capital Partners that its newly purchased Brayton Point coal fired generating station was now the swing producer that could tip the capacity auction from oversupplied to slightly under supplied.

    Entergy made its announcement on August 27, 2013, within weeks of ECP’s purchase of three power plants from Dominion. Just 5 weeks later, on October 8, ECP announced that it was closing the 1500 MWe Brayton Point and would not be participating in the 2017-2018 capacity market auction scheduled for Jan 2014.

    The result of that auction was that capacity payments skyrocketed from $1.06 billion for the 2016-2017 auction to $3.05 billion for the 2017-2018 auction. With the long lead time required for base load power plants, this is not a one year problem.

    That is not “just business.” There are several less kind terms for the convenient timing of the announcements, the effect on competition, and the effect on millions of electricity customers.

    People have already accused ECP of market manipulation.

    http://www.bostonglobe.com/business/2014/04/28/power-plant-owner-denies-market-manipulation-scheme/RsN9EST5TeQqG7BSWjV8KN/story.html

    So far, most have overlooked the fact that Entergy’s abrupt announcement that it was closing VY is the action that gave ECP the power to swing the market with just one power plant.

    Why did Entergy file an expensive, 159 page proposal with the PSB on August 19, 2013 (dated Aug 16) for an extension of its Certificate of Public Good through March 2032 and then, before the PSB had time to make a decision, decide at a board meeting on August 25 to quit and close the plant?

  19. Frank Jablonski

    @ Rod Adams
    You are right that illegal contracts are void.
    Getting this contract declared void would be just one step toward getting this clean air asset to be kept on line. There would still be everything else that would have to be done, plus any additional issues created by the passage of time, e.g., such as those posed by a surrendered license. I am not aware of any defined pathways nor qualified (i.e., moneyed) stakeholders available to address those issues. Thus, my pessimistic baseball analogy,
    However, back to the contract for starters.
    Entergy’s possible ability to benefit from a suddenly constrained capacity market does not mean Entergy was acting in concert with Energy Capital Partners. This would require a conspiracy. All that has been shown is temporal proximity between two acts. The temporal proximity of the acts here is not even enough for Public Citizen to point a finger at Entergy.
    VY was economically problematic for Entergy because of the way the market is structured. This is the root problem, in my view, and a key place to focus attention.
    Beyond the economics, it does not seem reasonably debatable that the State where VY is located wants VY offline. Why would Entergy keep up an exhausting fight for an asset that has been rendered marginal in a market that is structured to devalue its contributions? The most plausible inference for the decision to “throw in the towel” is probably that Entergy just said “enough already.” Maybe this happened after Board members reviewed the economics in light of these surrounding circumstances and market trends and asked: “why are we doing this?”
    Entergy is a Company with fiduciary duties to its owners, period. It has no such duties to any shared desire among nuclear advocates to see nuclear maintained or expanded. Nor does Entergy have any obligation to elevating the level of air quality in Vermont in New England above what is legally required of its remaining plants, or above what local governments and citizens will accept in order to get rid of a nuclear power plant.
    Maintaining VY, IMO, would have been a better policy because it would have delivered better environmental protection (emissions benefits); having it on the system would preserve an overall-low-cost producer; in the current circumstance, keeping it would also have meant lower capacity prices in the NE ISO region. The market is structured so that it does not recognize any incremental value for these attributes.
    I don’t see, at least at this point, how it would be likely that a court would 1) deem Entergy to have been legally required to have kept fighting exhausting endless battles with Vermont in order to preserve VY’s capacity on the NE ISO system; 2) deem the Entergy-Vermont contract made incident to Entergy’s decision to stop fighting to be void; 3) deny the State that entered into the contract with Entergy the benefits (in the State’s view) of that contract; 4) prevent Entergy from giving up its operating license, and 5) make all of these determinations lickety-split, in lawyer-years.
    One lawyer year is seven human years.
    Disclaimer: this analysis is worth every nickel paid for it and I could be wrong even if this were not the case. All the same, this seems most logical to me.

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