BRATTLEBORO — Two Entergy Corp. subsidiaries have filed suit in U.S. District Court against the state of Vermont in an attempt to overturn a new electrical generation tax imposed on Vermont Yankee by the Legislature earlier this year.
At issue is “legislation that imposes a new levy on Vermont Yankee, based upon its generation of electricity, that increases its obligations to the state from approximately $5 million annually to an estimated $12.8 million per year,” according to a press release issued Tuesday just after the lawsuit filed by Entergy Nuclear Vermont Yankee, LLC and Entergy Nuclear Operations, Inc.
The state maintains that the increase was necessary to make up for lost revenues under agreements that ended with Vermont Yankee's original 40-year operating license, which expired in March of this year.
Entergy contends the legislation is expressly preempted by federal law and is unconstitutional.
“While Vermont Yankee is contesting the new levy, it is proposing to pay approximately $5 million annually, roughly what would have been due previously, until the matter is decided,” the company wrote.
In 2003, Vermont Yankee entered into a revenue sharing agreement with the state as a condition of the Vermont Public Service Board's (PSB) issuance of a Certificate of Public Good (CPG) to allow the Vernon reactor to operate at 120 percent of its generating capacity.
The terms of the agreement were spelled out in a memorandum of understanding (MOU) that expired in March 2012. Entergy contends that this agreement resulted in Vermont Yankee making annual payments ranging from several hundred thousand to several million dollars between 2003 and 2012.
In 2005, Vermont Yankee entered into a second MOU with the state related to the PSB's approval of a CPG for dry-cask storage of used nuclear fuel at the station site. This MOU stipulated that Vermont Yankee would make annual payments of approximately $2.6 million through March of 2012.
Earlier this year, the Vermont Legislature decided to amend the law to impose the new levy in order to replace the annual payments Vermont Yankee would no longer be making after the expiration of the MOUs.
“Vermont Yankee fulfilled its obligations under the MOUs,” said Michael Twomey, vice president of external affairs for Entergy Wholesale Commodities. “The state should not be permitted to transform negotiated - and expired - agreements into a new, illegal charge.”
Second lawsuit against state
This is the second federal lawsuit filed by Entergy against the state of Vermont. The first, which was heard in U.S. District Court in Brattleboro last year, challenged Vermont's authority to regulate nuclear safety at Vermont Yankee.
In January of this year, U.S. District Judge J. Garvan Murtha ruled that the Vermont Legislature overstepped its bounds, and that a portion of Acts 74 and 160 were pre-empted by the federal Atomic Energy Act, but that Entergy must still follow Vermont regulations if it wants a new or renewed CPG.
The case is now before the U.S. Second Circuit Court of Appeals in New York City.
At least seven other states have filed amicus curiae, or friend of the court, briefs that support Vermont's contention that it acted properly.
Last week, four groups - the U.S. Chamber of Commerce, the Nuclear Energy Institute, the Washington Legal Foundation, and an ad-hoc group of nuclear scientists - filed amicus briefs with the Second Circuit supporting Entergy's case.
In a brief filed in June with the Second Circuit, Vermont Attorney General William Sorrell said Murtha based his ruling on “cherry-picking from the incomplete legislative record for favorable snippets,” and said that this goes against precedent set in other cases that say courts should not look for “impermissible motives.”
Entergy, which received a 20-year extension of Vermont Yankee's operating license last year from the Nuclear Regulatory Commission, has continued to operate past the March 21, 2012, expiration of its CPG while the PSB considers the case.
Vermont Yankee is no longer selling electricity to Vermont utility companies, as its power purchase agreements with the state expired in March.
The 600-megawatt plant began operation in 1972. The plant has been owned by Entergy since 2002.