Entergy to sell Vermont Yankee, will hasten clean up

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Entergy to sell Vermont Yankee, will hasten clean up

Tue, 11/08/2016 - 11:17am -- tim

Vermont Business Magazine The owner of the Vermont Yankee nuclear power station announced today that it intends to sell the closed power station to a third party, which, if approved, could move up the ultimate decommissioning date by 45 years to 2030. That decommissioning, however, would likely not include moving the radioactive spent fuel from the Vernon site.

Entergy Corporation said in an SEC filing that it has entered into a purchase and sale agreement with NorthStar Group Services, Inc to sell to a NorthStar subsidiary 100 percent of the membership interests in Entergy Nuclear Vermont Yankee, LLC, the owner of the Vermont Yankee Nuclear Power Station. The sale of ENVY to NorthStar will include the transfer of ENVY’s nuclear decommissioning trust and its obligations for spent fuel management and decommissioning. Entergy also announced plans to accelerate the transfer of all spent nuclear fuel to dry cask storage by approximately two years from 2020 to 2018, subject to obtaining necessary regulatory approvals.

Governor Peter Shumlin, who led the fight to close the plant, was "pleased" at the announcement, but said the state must move cautiously to make sure this is indeed the good deal it appears to be.

"Today’s announcement that Entergy is planning to file for approval at the Public Service Board to transfer ownership of the Vermont Yankee site to a third-party offers the potential for an accelerated decommissioning of the plant. This is something my Administration has advocated for, and as a governor who is from Windham County, I can tell you that it would be a major positive for the economy and for jobs in Southern Vermont. I am also pleased that Entergy is announcing plans to move up by two years, to 2018, the date by which spent fuel will be transferred to dry cask storage.

Moving all the spent nuclear fuel into the cement dry casks (ISFSI) from the spent fuel pool will be moved up two years to 2018, where it will remain for the foreseeable future. Entergy photo.

“However, I want to be clear that Vermont needs an open and transparent look at the financial capabilities of the buyer to be able to complete the decommissioning at Vermont Yankee. Vermont will advocate for rigorous financial disclosure in the Public Service Board process. The state and the public must have confidence that the buyer has financial backing to meet the decommissioning schedule, even in the event that they find additional cleanup work necessary that we cannot foresee. We will also advocate for strong site restoration standards that will allow for safe and productive reuse of the site.

“My Administration looks forward to starting a process at the Board to determine if this transaction meets the public good of the state."

Presumably, with a faster cleanup there would remain a greater number of workers until the plant site is cleaned up. Under Entergy's SAFSTOR plan, once the fuel is transfered to dry casks, the plant would be mothballed until the ultimate decommissiong begins, which could take up to 60 years.

Entergy shut down Vermont Yankee in December 2014 after deciding that it was no longer financially viable. According to financial reports, the plant had been operating at a loss before it was refueled in 2013. Entergy also had planned to shutter the FitzPatrick nuclear plant in Oswego, NY, for financial reasons, until Exelon agreed to buy the plant last summer and refuel it. New York Governor Andrew Cuomo had led the effort to save the plant and its 600 jobs.

The ultimate location of the spent nuclear fuel at Vermont Yankee is the responsibility of the federal government, which has yet to locate a national repository for the highly radioactive waste. All the spent fuel at every nuclear power plant in the country is still stored on site.

The sale of Entergy Nuclear Vermont Yankee is subject to closing conditions, including approval by the NRC and the Vermont Public Service Board. Entergy and NorthStar will ask the Public Service Board to approve proposed site restoration standards that are generally consistent with those of other regional decommissioning projects. The companies anticipate that the transaction will close by the end of 2018.

"By accelerating decommissioning, we are fulfilling a commitment we made in 2013 to decommission Vermont Yankee as soon as reasonably possible," said Bill Mohl, President, Entergy Wholesale Commodities. "Decommissioning and site restoration, drawing on NorthStar's expertise, will provide economic development for the region."

Mohl added, "For Entergy, this transaction enables us to manage financial risk and reduce our company's merchant power footprint."

According to a statement, NorthStar, based in New York, is one of the premier US dismantling and remediation companies and is partnering through a subsidiary with industry leaders AREVA, Waste Control Specialists and Burns & McDonnell to perform specialized services drawing on each company's core competencies. The NorthStar team members have collectively worked on more than 300 nuclear and non-nuclear power plant projects over the past 15 years and bring deep expertise in complex and specialized tasks such as reactor vessel segmentation, waste packaging/transportation/disposal, environmental remediation, site closure and spent fuel management.

"Our in-house expertise, combined with the proven track record of our partners, provides the complete package of skills needed to ensure the timely, safe, cost-efficient decommissioning and restoration of the Vermont Yankee site," said Scott State, NorthStar's chief executive officer. "Our primary objective is to complete the decommissioning of the non-Independent Spent Fuel Storage Installation portion of the site decades earlier than originally planned so that a majority of Vermont Yankee can be re-developed to promote business for the region."

Under Entergy's original schedule, as outlined in its Post Shutdown Decommissioning Activities Report filed with the NRC, Entergy expected to initiate decontamination and dismantlement in 2068, with projected completion of both decommissioning and site restoration by 2075. Under the agreement with Entergy, NorthStar has committed to initiate decontamination and dismantlement by 2021 and to complete decommissioning and restoration of the Vermont Yankee site (with the exception of the independent spent fuel storage installation - ISFSI, or dry casks), by 2030. Thereafter, NorthStar will continue to operate and maintain the ISFSI until the US Department of Energy fulfills its statutory and contractual obligations to remove all of the spent nuclear fuel from Vermont Yankee. NorthStar will then decommission the ISFSI, terminate the NRC license and complete site restoration.

Holtec International, the manufacturer of the dry storage systems used at Vermont Yankee, submitted license amendment requests to the NRC earlier this year, which if approved, will support complete transfer of all of Vermont Yankee's spent nuclear fuel to dry storage by the end of 2018.

Financial Information
As consideration for its interest in ENVY, Entergy will receive nominal cash consideration and a promissory note payable to Entergy in an amount equal to the amount owed at the time of closing under a credit facility to finance Vermont Yankee's dry fuel storage costs, which facility will be either assumed or refinanced by an Entergy subsidiary at or before the closing. The transfer of ENVY to NorthStar will include the transfer of ENVY's nuclear decommissioning trust and its obligations for spent fuel management and decommissioning. As a result, the nuclear decommissioning trust and associated asset retirement obligation will be removed from Entergy's balance sheet at closing. The transaction is expected to result in a loss at closing, the amount of which cannot be determined at this time, based on the difference between Entergy's book basis in ENVY at the time of closing and the sale price plus any agreed adjustments. Subject to satisfaction or waiver of the conditions to closing, the transaction is expected to be completed in late 2018. On an ongoing basis, the sale is expected to be mildly accretive to operational results once the transaction is completed, primarily due to the elimination of future decommissioning accretion expenses.

A contractually agreed minimum level of funding at close in Vermont Yankee's nuclear decommissioning trust ("NDT") is a condition to close.  The amount of any contribution to the NDT that may be required to meet the minimum funding level is highly uncertain and will depend on, among other things, the level of future reimbursements from the NDT for work performed prior to closing and the market performance of the investments in the NDT through closing.  However, assuming a December 31, 2018, closing and a level of expenditures from the NDT for work prior to the closing that is consistent with Entergy's current estimates, Entergy estimates that no contribution would be required to meet this condition if the rate of return on the NDT assets from September 30, 2016, through closing is at least 5.5% per annum and that a contribution of approximately $10 million to $12 million would be required for every 1.0% by which the rate of return falls below 5.5% over such period.  Entergy is not required to make any contribution to the NDT to cause this condition to be satisfied, but would have the option to do so prior to closing.

About Vermont Yankee and Entergy
The Vermont Yankee Nuclear Power Station, a single unit boiling water reactor, began commercial operation in 1972. Entergy purchased the plant in 2002 from the Vermont Yankee Nuclear Power Corp. It permanently ceased operations on Dec. 29, 2014. At full power, Vermont Yankee supplied nearly one-third of all electricity consumed in Vermont. More information is available at www.entergy.com and www.vydecommissioning.com.

Entergy, based in New Orleans, is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 10,000 megawatts of nuclear power. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of approximately $11.5 billion and more than 13,000 employees.

About the NorthStar Team
NorthStar is the world's most comprehensive facility and environmental solutions company with over $600 million in annual sales and licensed in all 50 states. The company was ranked the #1 Demolition & Wrecking Contractor and #1 Asbestos Abatement Contractor in the USA by Engineering News-Record in 2016. NorthStar owns and maintains a large, nationwide inventory of specialized dismantling equipment and employs over 3,000 people. NorthStar's team includes:

  • AREVA, based in Paris with US decommissioning headquarters in Washington, DC, will be responsible for reactor vessel and internals segmentation and used nuclear fuel management support, including waste disposal transportation services. AREVA is a world leader in nuclear decommissioning services and used nuclear fuel management representing 10,000 employees worldwide and 600 US employees.
  • Waste Control Specialists (WCS) will be responsible for waste management, packaging, transportation and disposal. Based in Dallas, WCS operates a radioactive waste disposal site in Andrews, Texas, that is the most comprehensive solution in the nation for low-level radioactive waste. WCS and partners AREVA and NAC International have submitted an application to the NRC to construct and operate a Consolidated Interim Storage Facility for spent fuel at its Andrews, Texas site.
  • Burns & McDonnell, based in Kansas City, Mo., will provide engineering and regulatory support. Burns & McDonnell is a global full service engineering and environmental solutions firm with 5,500 employees worldwide.

Source: Entergy. Governor Shumlin 11.8.2016