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Entergy projects big VY surplus

Company believes $190.6 million will remain after decommissioning, in sharp contrast to state concerns

VERNON—Though some are worried that Entergy could run out of cash before cleaning up Vermont Yankee, the company is projecting a significant — and growing — surplus at the end of its obligations in Vernon.

Entergy’s latest Nuclear Regulatory Commission filing shows $190.6 million left in the plant’s decommissioning trust fund at the end of Vermont Yankee’s decommissioning in 2075. That’s $9.3 million more than the surplus the company estimated a year ago.

“What’s being borne out now ... is the confidence that we have been expressing in our decommissioning cost estimate,” Vermont Yankee spokesman Marty Cohn said.

Any substantial surplus could be significant, since a little over half will come back to Vermont. But state officials remain skeptical of Entergy’s estimates, especially given the extended time frames involved.

“The sooner you actually do this work, the more certain you are of the costs and the benefits associated with it,” said Chris Recchia, state Public Service Department commissioner.

Entergy stopped power production at Vermont Yankee in December 2014, and the plant is going into an extended period of dormancy called SAFSTOR. Under federal rules, SAFSTOR can last for up to 60 years.

Though the nuclear industry says there is a radiological basis for SAFSTOR, there also is a financial incentive: Vermont Yankee decommissioning is expected to cost $1.24 billion, and the plant’s trust fund — which at last report held $583.2 million — needs time to grow.

Entergy’s detailed trust-fund projections, filed with the NRC March 30, show the complex, fluctuating interplay of annual decreases due to decommissioning spending and annual increases due to investment earnings.

After net declines in the fund’s value through 2023, the fund is expected to grow steadily in the following decades as annual decommissioning costs level off. Big declines begin again in 2068, when the plant’s dormancy ends and large-scale decommissioning work commences — with costs reaching as high as $105.7 million in 2070.

The end result of all of those variables is a $190.6 million trust-fund surplus when cleanup is complete, according to Entergy’s latest calculations.

While the company has said it is operating under budget thus far for Vermont Yankee decommissioning, Cohn declined to draw a straight line between that and Entergy’s long-term projections; rather, he cited the company’s careful planning and expectations for prudent spending throughout the plant’s cleanup process.

“We’ve put out a decommissioning cost estimate,” Cohn said. “We are confident in its content, and it has been reviewed by the NRC.”

The Vermont Yankee trust fund, though, has been a bitterly contested matter. State officials, via regulatory filings and a lawsuit, have protested some of Entergy’s proposed uses of the fund — especially hundreds of millions of dollars in spending for management of spent nuclear fuel.

The concern is that Entergy could run out of money. The NRC and a nuclear-industry group both claim that can’t happen, but four states, including Vermont, last month filed paperwork arguing that the federal agency’s “woefully inadequate” financial regulations could leave states holding the bag.

In an April 15 interview at his Montpelier office, Recchia reiterated that concern. But he also said officials are working to ensure that Vermont Yankee’s cleanup won’t lead to any state liability.

“I am focused entirely on making sure that does not happen, and that the site is cleaned up for any [reuse] as soon as possible,” Recchia said.

Just as Vermont, Massachusetts, Connecticut and New York officials did in their NRC filing last month, Recchia cast doubt on the accuracy of decommissioning cost and trust-fund income estimates made decades in advance.

“The further out you go — when you’re talking 20, 30, 40, 50 years out — the assumptions you’re making really become more and more speculative,” Recchia said. “Obviously, the costs of labor, the costs of decommissioning, will increase over time. And you’re guessing about that increase as much as you’re guessing about your [investment] income — probably more so.”

State documents show that, as part of Entergy’s 2002 purchase of Vermont Yankee, the company entered into a master trust agreement saying 55 percent of any excess money left after the plant’s cleanup would be returned to Vermont Yankee Nuclear Power Corp. and Green Mountain Power.

Vermont Yankee Nuclear Power Corp. is the plant’s former owner, and Green Mountain Power now owns that corporation. So, as it stands, “the reality is that this pretty much all comes back to Green Mountain Power,” Recchia said.

If the current surplus projection holds true, Entergy would turn over $105 million at the end of decommissioning.

Vermont Yankee’s trust fund was created via a per-kilowatt-hour fee charged to the state’s electricity customers.

When cleanup is complete, “we would expect ... that money would be returned to ratepayers,” Recchia said.

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Originally published in The Commons issue #353 (Wednesday, April 20, 2016). This story appeared on page D1.

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