State legal bills could affect VY trust fund

Entergy wants to use decommissioning fund to pay costs of state lawsuit challenging its use of that fund

VERNON — State officials have gone to great lengths - including filing a federal lawsuit against the Nuclear Regulatory Commission - to protect the Vermont Yankee decommissioning trust fund from what they see as improper expenditures.

Ironically, it's now possible that some of the state's expenses for that fight may come out of the very same fund that officials have sought to preserve.

Plant owner Entergy has been notified that Vermont will bill the company for legal fees incurred in the state's lawsuit against the NRC. The state's expenses in that case, in which Vermont is challenging the use of trust fund cash for nuclear fuel management, might total $250,000.

In response, the company is looking into whether the state's bills may be paid from Vermont Yankee's decommissioning trust fund.

“We're researching whether legal fees are a decommissioning expense,” company spokesman Martin Cohn said.

But state Public Service Department Commissioner Chris Recchia noted that hundreds of millions of dollars in spent-fuel expenses are at stake in the NRC fight, and he vowed to oppose any attempt by Entergy to use the trust fund for legal expenses.

“If they're so concerned about our legal costs and theirs, they should try to discuss and resolve these issues, which we have always been willing to do,” Recchia said.

Fund moves in mysterious ways

Vermont Yankee ceased producing power on Dec. 29, 2014, and the plant is heading toward a decades-long period of dormancy called SAFSTOR. The timing of actual decommissioning work will depend in part on the growth of the plant's federally regulated decommissioning trust fund, so there have been many battles over appropriate uses for that account.

For all of that scrutiny, though, the trust fund still seems to move in mysterious ways. That was apparent at a Nov. 12 meeting of the Vermont Nuclear Decommissioning Citizens Advisory Panel (VNDCAP) at Vernon Elementary School, just across the street from the plant.

Yankee's trust fund stood at $664.56 million on Dec. 31, 2014, according to NRC documents. At the VNDCAP meeting, Entergy Government Affairs Manager Joe Lynch said that as of Sept. 30, the balance of the fund was $595.73 million, a decrease of nearly $69 million.

Entergy has been withdrawing money from the fund all year, mostly for expenses such as staff salaries and utilities now that the plant no longer produces revenue. But Lynch cited other factors in trust-fund changes, including administrative expenses as well as “market losses and market gains, because the monies are invested.”

There was no breakdown available, however, to determine how much Entergy had spent from the fund for Vermont Yankee decommissioning work and how much of the trust fund's loss in value during 2015 might have been due to those other factors.

Further complicating matters, the company - on the day after the VNDCAP meeting - reported that the trust fund had bounced back up to $610.35 million as of Oct. 30. Cohn said he believed the positive rebound was because “the market responded positively in October.”

Split opinions over fund use

Entergy's trust-fund report prompted a derisive response from the Brattleboro-based New England Coalition on Nuclear Pollution. “I want to congratulate you for the briefest, mumbo-jumbo, three-card monte I've ever seen,” NEC Trustee Ned Childs told Lynch.

That brought a rebuke from advisory panel Chairwoman Kate O'Connor, who urged civility, and a response from panel member David Andrews, who represents current and former International Brotherhood of Electrical Workers staff members at Vermont Yankee.

Entergy's trust-fund status report “didn't surprise me,” Andrews said. “It's in line with the reports that my employer provided some time ago.”

Following extensive debate, advisory panel member Bill Irwin, of the Vermont Department of Health, urged Entergy to provide more-detailed reports of its trust-fund usage.

“It seems to me appropriate that a better accounting of income to the fund and expenses from the fund be provided to the public and to the panel,” Irwin said, adding that, “there is a great concern that the money's going to run out, and there's going to be a plant still there, un-decommissioned.”

Chris Wamser, Entergy Vermont Yankee site vice president, would not commit to making such reports. But he assured the panel that, financially, decommissioning work is going well at Vermont Yankee.

“We're about $5 million under budget so far, year to date, so the team at the station is doing a very good job,” Wamser said.

Lynch also argued that Entergy administrators are striving to be “responsible stewards of the trust” by reducing costs at Yankee. That includes making staff cuts, instituting emergency-planning changes, decreasing energy usage, and trimming equipment inventories.

“We had a warehouse filled with materials that are needed for the equipment that operated the plant,” Lynch said. “We've been going through the process of reducing our inventory to only what is needed to take care of the equipment that is operating right now.”

A lawsuit emerges

At the Nov. 12 meeting, Recchia didn't dispute those cost-saving measures and said he has no problem with the Vermont Yankee trust fund decreasing, since that indicates that “decommissioning activities are occurring.”

However, Recchia and state officials continue to vehemently object to some of Entergy's proposed uses for the trust fund, including insurance, property taxes, and spent-fuel management.

The latter - expected to cost $368 million, with $225 million of that possibly coming from the trust fund - is the biggest point of contention. The NRC already has approved a regulatory exemption allowing Entergy to use the fund for long-term management of Vermont Yankee's spent nuclear fuel, but state officials in August objected by filing suit in the U.S. Court of Appeals.

That battle won't be cheap, and it's now clear that the state expects Entergy to foot the bill.

Cohn said the state has sent Entergy two letters: one a notice that Vermont's legal bills are projected to reach $250,000 in the case, and the other an initial bill for more than $20,000.

The bills themselves apparently are on solid legal ground: Vermont has authority under state law to bill “the involved electric companies” for costs associated with NRC proceedings.

But it apparently will be up to the federal government to determine whether Entergy will be able to pay those bills by withdrawing cash from the decommissioning trust fund.

NRC spokesman Neil Sheehan said the agency already is reviewing expenses identified in Vermont Yankee's Post-Shutdown Decommissioning Activities Report, “including the use of decommissioning trust funds for such purposes as tax payments and insurance costs.”

“Whether expenditures for state legal fees associated with the spent fuel storage funding court challenge could also be encompassed by that review remains to be seen at this point,” Sheehan said.

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