Vermont debates options for energy future
Vermont’s energy future could become clearer in the coming months, with key decisions possible by year’s end on the relicensing of the Vermont Yankee nuclear power plant and on the renewal of utilities’ contracts with Hydro Quebec. Together, Yankee and HQ provide about two-thirds of the electricity currently consumed by Vermont residents and businesses.
Green Mountain Power and Central Vermont Public Service, the state’s largest utilities, are in negotiations with Hydro Quebec on the terms of contracts that would replace existing agreements that begin to expire in 2015. “I’m hoping we’ll get something done this fall,” says Central Vermont CEO Bob Young.
Energy officials and environmentalists expect HQ to remain a significant supplier of electricity to Vermont for the next couple of decades. While the negotiated price of this power could prove controversial, its method of generation is generally considered unobjectionable. Producing hydro-electricity does not entail carbon emissions – an important selling point as consensus grows on the imperative of sharply reducing the output of gases responsible for climate change.
Vermont Yankee also does not burn fossil fuels, and the plant’s defenders cite that as a major reason why its operating license should be extended until 2032. But many environmental activists nevertheless oppose the extension application by the plant’s owner, New Orleans-based Entergy Nuclear. These critics cite safety concerns, unresolved issues of radioactive waste disposal, and financial provisions for decommissioning the plant when it does go permanently offline. Some environmentalists suggest that the Vermont Legislature could refuse next year to allow Yankee to continue operating beyond 2012.
“I don’t think the current proposal by Entergy will be approved,” says Sandra Levine, an attorney with the Conservation Law Foundation. She points to uncertainty over the price of electricity from the plant beyond 2012 as well as Entergy’s unwillingness to move now to fill a fund that is supposed to cover the cost of decommissioning Yankee.
A Vermont Entergy official suggests progress is being made in answering the question of how much Yankee's power is going to cost after 2012. “We hope to have a formal power purchase agreement in place soon,” company spokesman Rob Williams says. Reaching agreement with the state’s utilities may be proving nettlesome, however.
Williams hints that Entergy is seeking a price well above the bargain rate of 4.2 cents per kilowatt hour set by the existing contract. “We must ensure that the agreement on the long-term price of our product supports a business case that we can live with for the long term,” Williams says. “Signing a 20 year contract is not something to be entered into lightly.”
The struggle over filling the fund for decommissioning Yankee may also prove difficult to resolve. Vermont lawmakers have voted on two occasions to require Entergy to amass reserves by 2012 sufficient to cover the full projected cost of dismantling Yankee and cleaning up the Vernon site where it has operated for the past 37 years. Governor James Douglas vetoed the legislation both times.
The battle will be joined again next year, promises State Representative Tony Klein, chairman of the House Committee on Natural Resources and Energy. He says he is motivated to work for passage of another decommissioning bill because “sometimes you’ve got to hit the nail on the head a few times before it sets.”
Estimates of the cost for decommissioning Yankee range from $900 million to $1.5 billion. Having been hammered in the smackdown on Wall Street, the fund now contains about $375 million – $50 million less than it held 18 months ago. Entergy has put no money into the fund since acquiring Yankee in 2002.
The company sought during the past two years to persuade the legislature that “prefunding of the decommissioning plan would have been unduly burdensome and was patently unfair,” Williams notes.
“The Public Service Board sale order in 2002, in which we took ownership of the plant, laid out very carefully the balance of interests between the state and its electric consumers and the company,” the Entergy spokesman adds in an e-mail message. “Our business case with this plant supported purchasing it for $180 million, participating in a long-term contract to provide electricity at attractive prices, sharing revenue for 10 years after 2012 and leaving open the option of delayed decommissioning to allow for decommissioning fund growth,” Williams continues. “The decommissioning bill would have simply destroyed that balance – which would have drastically altered our Vermont Yankee business case.”
In his mention of revenue-sharing during the 2012-22 period, Williams is referring to a “strike-price” provision in the 2002 sales agreement for Yankee. Under its terms, three of the former owners of Yankee – Central Vermont, Green Mountain Power and Central Maine Power – are to share with Entergy whatever revenues accrue from average yearly energy prices in excess of 6.1 cents per kilowatt hour. When the cost of energy was setting records a year ago, Green Mountain Power CEO Chris Dutton predicted that the revenue-sharing agreement could result in a windfall of more than $1 billion for the three utilities over the 10-year life of the provision. That sum would be passed along to the utilities’ customers in the form of savings on their electricity bills, Dutton said.
Williams is still using that $1 billion figure as an argument in favor of extending Yankee’s license, calling the revenue-sharing arrangement a “tremendous value to the state. At present market rates, however, the 6.1-cent/kWh “strike price” would not be met, meaning Vermont ratepayers would enjoy no savings as a result of the sales agreement between Entergy and the utilities.
To Central Vermont’s Young, the sharp rise and fall of kWh costs over the past year simply confirms that “markets move all the time.” He suggests that the strike price could again be exceeded by 2012 when the revenue-sharing agreement would take effect. But Levine, the conservation lawyer, says the price swings show that the strike price should not be regarded as a reliable trigger of revenues and should thus not be seen as a persuasive argument on behalf of Yankee’s relicensing.
Three review bodies within the federal Nuclear Regulatory Commission have recommended approval of Entergy's application for Yankee license renewal. The plant has won those clearances despite a series of mishaps it has suffered since the application was filed in 2006.
Opponents of the extension say these leaks and other problems highlight safety issues that should lead the 5-member commission to turn down Entergy's request. Williams says he expects the NRC to make a final decision later this year.
But even if that ruling proves favorable for Entergy, the company must persuade the Vermont Public Service Board to issue a “certificate of public good” in order for Yankee to continue running. Williams says Entergy has based its case to the board on Yankee's status as a “valuable asset for the state in that it helps to reduce reliance on fossil fuels for the generation of baseload electricity and it is an important girder for the state’s economy.” A sizable number of state legislators, however, view Yankee as more of a potential liability than an actual asset. And the Public Service Board will look to the legislature for guidance in making a decision on whether Yankee qualifies as a “public good.” Neither supporters nor critics of Yankee are confident about how lawmakers will vote next year on the relicensing question.
“Most Vermonters feel that nuclear energy has to be part of the mix for reducing fossil fuel use and supporting the economy,” Williams argues. “I think most environmentalists believe we must continue to make good use of our nuclear plants here and around the world.”
James Moore, a clean energy advocate for the Vermont Public Interest Research Group, is one environmentalist who doesn't believe Vermont should continue to make use of Yankee. “We're seeing more and more problems at that facility, if not daily, then on a weekly basis,” Moore says. “At the same time we're seeing renewables across Vermont and the region absolutely taking off. Vermont Yankee's days are numbered.” Moore and some other Vermont energy experts suggest that a significant portion of the power provided by Yankee could be generated during the next 20 years by sources that also do not rely on fossil fuels while having none of the waste-disposal issues associated with nuclear energy.
State Rep. Klein suggests that ebbing power demand will lead Vermont utilities to try to make a contract with Entergy for about 180 megawatts of power – as compared to the 282 megawatts now available. “We'll have that much power (180 megawatts) built in the state and the region with renewables” in the coming years, Klein asserts.
Others doubt that wind, solar, biomass and hydro will account for so large a share of New England's power supply. These skeptics say that replacing the power Yankee now generates would entail greater reliance on carbon-emitting sources and could cost Vermont ratepayers more as well.
But there's no doubt that the state will have access to all the electricity it needs if Yankee does shut down in 2012. New England is currently “awash” in power, Klein notes. “The lights will not go out if Vermont Yankee isn't extended,” adds Dorothy Schnure, a spokeswoman for Green Mountain Power. “But,” she cautions, “if Yankee is not relicensed, the choices available to us do cost more and do involve carbon.” Green Mountain Power and Central Vermont have jointly issued requests for proposals for replacing the electricity that the utilities currently receive from Yankee. Some of those prospective sources do not use fossil fuels, Schnure notes.
Central Vermont CEO Bob Young adds that “nuclear energy does have its own problems, but on a relative basis it's better than a lot of other [power sources].” Vermonters have made clear that they want the state to go green in its energy choices, Young continues – even though some state residents argue vociferously against erecting wind turbines within sight of their homes. “It might be easier for Vermont to go green if our green power comes from someplace else – Hydro Quebec or out-of-state wind,” Young surmises.
Local opposition as well as an unenthusiastic attitude on the part of the Douglas administration continues to stymie major wind-energy developments in Vermont. The Public Service Board has given the go-ahead for only two wind projects in the past three years. But the political pendulum has begun swinging in the direction of wind-power proponents, VPIRG's Moore maintains. He points to a joint proposal by Green Mountain Power and Vermont Electric Cooperative to build a wind farm on Lowell Mountain in the Northeast Kingdom that could generate as much as 42 megawatts of electricity – enough to light about 15,000 Vermont homes. “Once some wind projects are built or once this current governor is gone, you'll see development of wind power really move forward in this state,” Klein adds.
The State Legislature moved in its recent session to provide Vermont developers of renewable energy with a powerful incentive to move forward with their plans. Lawmakers approved – and Douglas allowed to become law – a bill requiring utilities in the state to purchase all the electricity that would be generated by small-scale wind, solar and manure-methane plants up to a cumulative total of 50 megawatts. The legislation instructs the Public Service Board to determine by September 15 whether to set prices for this power other than those specified in the new law. It stipulates that renewable energy projects of 2.2 megawatts or less will be able to charge between 12 cents and 30 cents per kilowatt hour, depending on the source, with methane from landfill or manure priced at the low end and solar at the high end.
Kevin J Kelley is a US Correspondent Nation Media Group (Kenya) US Phone: 802 989 1669 www.nationmedia.com
