by Timothy McQuiston, Vermont Business Magazine The Vermont Public Service Board on Friday (March 28, 2014) approved the Memorandum of Understanding (MOU) reached between Entergy and the State of Vermont back in December. The decision to approve the MOU keeps in place the overall Settlement Agreement in which Entergy Vermont Yankee (Entergy VY) agrees to advance steps in decommissioning the plant sooner than otherwise would be required, and to establish a separate $25 million site restoration fund.
“I am pleased that the Board agreed to this MOU and the overall Agreement we reached with Entergy is the best path forward,” Governor Peter Shumlin said in a statement. “The decision provides certainty and predictability for the hard workers at the plant, over $10,000,000 of economic development funding for the region, and lets us focus on the important work of transitioning to a future after Vermont Yankee. Our energy future relies on a different path than the past, one of sustainable renewable energy choices that Vermonters embrace and are already seeing the success and benefits of, and I look forward to continuing to move that effort forward” he added.
Public Service Department Commissioner Christopher Recchia also expressed his appreciation for the Board’s endorsement of the MOU.
“We will look closely at the Board’s entire decision of today, but our initial review is that it fully supports the MOU, and by doing so enables us to move forward very quickly with advancing the overall Settlement Agreement, including receiving the initial $2 million economic development payment to the state, and release of approximately $5.2 to the Clean Energy Development Fund.” Recchia said.
In its order (SEEBELOW), the PSB said: "We find that the realization of these benefits is in the best interests of Vermonters, notwithstanding the significant concerns raised by numerous parties in this proceeding. The value of these benefits is complemented by the short duration of the permission we are granting Entergy VY. This limited period of time is likely not longer than the interval of time we would have allowed Entergy VY for winding up its operations had we decided, in the absence of the MOU, to deny the Company's request to extend its time for operating in Vermont."
The Agreement reached on December 23, 2013 already resulted in the dismissal of then-pending federal litigation, including potential petitions to the US Supreme Court and disputes about Entergy VY’s attorney’s fees.
The Board’s decision today means the other terms of the Agreement will move forward as well, including:
Agreement to resolve Vermont Supreme Court litigation between the parties;
Agreement to the principles that spent nuclear fuel should be moved from the spent fuel pool to dry cask storage in a timely manner and that to facilitate the prompt economic redevelopment of the VY Station site, the decommissioning process should occur without unreasonable delay;
Agreement that Entergy VY will make a filing with the NRC for authority to begin radiological decommissioning within four months after it has made a reasonable determination that the funds in the Nuclear Decommissioning Trust are adequate to complete decommissioning and remaining spent fuel management activities that the federal government has not agreed to reimburse. In addition, once this authority is received from the NRC, Entergy VY will promptly commence, pursue and complete as soon as reasonably possible radiological decontamination and dismantling activities;
Agreement by Entergy VY to prepare two years earlier than required by NRC regulations a site-specific cost evaluation study and site assessment related to all plant conditions and to decommissioning, including an evaluation of the costs of prompt decommissioning;
Acknowledgment of state jurisdiction over site restoration after radiological decommissioning is complete and commitment to negotiate terms of site restoration which address removal of structures and level of radiological exposure after site restoration is complete;
Agreement to seek from NRC the release of portions of the site for reuse as appropriate, and agreement to give the State a right of first refusal to purchase the site or any portion thereof as may become available;
Payments to the State as follows:
$5.2 million for the Clean Energy Development Fund (CEDF), at least 50 percent of which will be used under CEDF criteria for renewable energy projects in or benefitting Windham County
$10 million for economic development in Windham County, payable $2 million per year for 5 years
$5 million for transitional payments to the Tax Department in 2015, after cessation of operations, to ensure that the State has an opportunity to evaluate and implement any appropriate taxation related to the site thereafter; and
Agreement to create a new Site Restoration Trust through initial payments totaling $25 million ($10 million in year one, and $5 million for three years thereafter), plus an additional parent guaranty, to ensure that separate funds are available if needed to return the site to a greenfield so that the site is available for re-use without restriction.
Critics of the agreement say it does not guarantee the plant will have enough money reserved to fully deconstruct the plant in a timely manner. The cost to decommission the plant in 60 years has been estimated at more than $1 billion, according to the company’s 2012 Decommissioning Cost Analysis report.
Entergy has reserved just over $600 million to date, according to the Department of Public Service.
Joint Statementfrom the Connecticut River Watershed Council (CRWC) and Vermont Natural Resources Council (VNRC):
"The PSB’s decision means the VY plant will be under a legal obligation to cease power generation at the end of 2014. This is good news. The decision also means Entergy must provide $10 million to promote economic development in Windham County and commit to site restoration measures.
"The Vermont Yankee proceedings were long and complicated and addressed many important issues. Vermont Natural Resources Council and Connecticut River Watershed Council were primarily involved in the proceedings to address Vermont Yankee’s discharge of hot water into the Connecticut River.
"The PSB has decided to implement the terms of the MOU between Entergy and the State of Vermont. We recognize that the PSB certainly had the authority to require closed cycle cooling to stop the thermal pollution of the Connecticut River now, but we understand this would have likely violated the terms of the MOU between Entergy and the State of Vermont.
"The MOU and the CPG require the Agency of Natural Resources to pursue issues related to VY’s thermal discharge through the ANR permitting process. The Board stated that the MOU provides a short-term mechanism to address the thermal discharge concerns. It is important to note, however, that the Board also acknowledged that if the VY Station were going to operate for an additional eighteen years, the evidence put forward by CRWC, VNRC and the ANR might have led the Board to “conclude that Entergy VY had not met its obligation to demonstrate that the discharge would not adversely affect the water quality” of the Connecticut River. The PSB therefore recognized that there are concerns with the VY Station’s thermal discharge.
"Updating VY’s discharge permit is long overdue, and we call on the ANR to swiftly implement a revised discharge permit that protects the ecological health of the Connecticut River."
The MOU does not set a timeline for decommissioning. Instead, it states Entergy will draft a decommissioning cost analysis by the end of the year. Entergy will then request to begin decommissioning with the Nuclear Regulatory Commission within 120 days after it determines it has sufficient money in its fund to complete the process, sooner than federal regulations require.
But Entergy plans to draw on its decommissioning trust fund – money put away for the plant’s radiological cleanup and dismantlement – to move spent fuel from onsite cooling pools and into dry casks on a cement pad near the plant, where the radioactive fuel will sit indefinitely.
The Vermont Attorney General has said the state opposes the company’s plan because it could delay decommissioning, and has committed to fighting the plan in court if necessary.
Entergy plans to take more than $200 million out of the decommissioning trust fund to move spent fuel, according to a company filing with the NRC in 2009. The decommissioning trust fund grows over time, and drawing on this fund early will slow its growth, which state officials say could postpone the date by which the company begins decommissioning the plant.
The company will have to sue the Department of Energy to have these funds reimbursed. The department would not speculate whether the funds would be reimbursed.
PSB ORDER INTRODUCTION March 28, 2014
In this Order, the Vermont Public Service Board conditionally grants a request from Entergy Nuclear Vermont Yankee, LLC and Entergy Nuclear Operations, Inc (jointly, "Entergy VY" or the "Company") to amend their Certificate of Public Good to authorize Entergy VY to own and operate the Vermont Yankee Nuclear Power Station in Vernon, Vermont, until December 31, 2014. We find that Entergy VY's ownership and operation of the VY Station from March 21, 2012, through the end of this year, subject to a Memorandum of Understanding ("MOU")1 among Entergy VY, the Vermont Department of Public Service ("Department" or "DPS"), and the Agency of Natural Resources ("ANR"), is in the best interest of the state of Vermont and thereby will promote the general good. Extending the duration of the CPG under the terms of the MOU will provide several material benefits to the state that would not be attainable for Vermonters absent the MOU. Specifically, these benefits include:
• Entergy VY commits to pay the State $10 million over the next five years to promote economic development in Windham County, which will aid the area as jobs are lost following the closure of the VY Station.
• Entergy VY agrees to conditions that will ensure adequate site restoration and increase the likelihood that the site will be available for other uses more rapidly than the Nuclear Regulatory Commission ("NRC") would require. These include:
(1) commitment to complete a site assessment study by the end of this year and to a process for developing the appropriate standard for site restoration that will be determined by the Board;
(2) establishment of a separate, $25 million fund specifically for site restoration, supported by a guarantee by Entergy VY's parent corporation to provide additional funds if the site restoration fund falls below $60 million; and
(3) a commitment to commence site restoration promptly after completing radiological decommissioning.
• Entergy VY will pay $5.2 million in to the Clean Energy Development Fund ("CEDF") for clean energy development activities, with half of the funds to be used to benefit Windham County.
• Entergy VY has agreed to December 31, 2014, as the date on which its rights under this CPG to own or operate the VY Station for purposes other than decommissioning will terminate.
We find that the realization of these benefits is in the best interests of Vermonters, notwithstanding the significant concerns raised by numerous parties in this proceeding. The value of these benefits is complemented by the short duration of the permission we are granting Entergy VY. This limited period of time is likely not longer than the interval of time we would have allowed Entergy VY for winding up its operations had we decided, in the absence of the MOU, to deny the Company's request to extend its time for operating in Vermont.
In 2002, the Board approved the sale of the VY Station to Entergy VY and issued a CPG authorizing ENVY to own and ENO to operate the VY Station. That right, however, was limited to operating the VY Station only until March 21, 2012, unless a new or renewed CPG for Entergy VY was first issued.4 Entergy VY initiated this proceeding seeking such authorization. The process of reviewing Entergy VY's request for, what at that time was a 20-year CPG, began in 2008 and has lasted over six years. In the last two years, it has involved unusually contentious litigation. During that time, significant concerns have been raised over whether Entergy VY's long-term operation and ownership of the VY Station would promote the general good. Principally, these questions have related to whether Entergy VY has been, and could, going forward, be, a company that lives by its commitments, adheres to legal requirements, including statutes and rules, provides accurate and timely information, and generally is a fair partner for Vermont. This question — which we examine in all proceedings where companies seek authorization to do business regulated by the Board — typically requires us to examine the company's performance and expectation about future activities and its willingness to deal candidly with its regulatory stakeholders.
In both of these areas, the evidence in this case has raised substantial questions. In its twelve years of operating in Vermont, Entergy VY has failed to comply with numerous Board orders and statutory requirements. It has failed to follow procedural requirements that protect the integrity of Board proceedings. The Company has engaged in unacceptable conduct that erodes public trust and confidence in its capacity to act in good faith and to engage in fair dealing; an investigative report prepared by Vermont's Attorney General concluded that Entergy VY "repeatedly misled State officials with direct misstatements and repeatedly failed to clarify misperceptions."5 The Company's sustained record of misconduct has been troubling to observe over the years and has continued to trouble us as we determine whether to grant Entergy VY a license to operate.
If Entergy VY were planning to operate the VY Station for another twenty years as originally requested, its track record may well have led us to find that ownership and operation would not promote the general good. However, for economic reasons, Entergy VY has now decided to cease operations. The MOU reflects this decision. While its decision to cease operations by the end of next year does not excuse Entergy VY's past bad conduct, the decision does alter the perspective from which we contemplate that conduct, given that we are no longer assessing the legal and regulatory implications of granting an operating license for the long term. Considered in light of the short operational period remaining and the closure secured by the MOU on numerous outstanding matters, we find that granting the CPG extension subject to the conditions set out in the MOU is reasonable and in the best interests of the State.
Parties also have raised questions about other aspects of Entergy VY's continued operation of the VY Station, primarily the effect the thermal discharge from the VY Station will have on the Connecticut River. The operation of the VY Station uses large amounts of water for cooling the steam that is used to generate power. This water is discharged into the Connecticut River and is regulated by a permit under the National Pollutant Discharge Elimination System ("NPDES"). Several parties, including ANR, raised concern that even the authorized discharge from the VY Station is adversely affecting fish populations. Under the MOU, these issues will be addressed through the NPDES permitting process. We find this to be an acceptable — if imperfect — outcome, particularly since the remaining operating period and potential to impact the fish population is of limited duration.
Other parties had questioned whether Entergy VY could assure us that it had the financial resources to fulfill its commitment made at the time it acquired the VY Station to fully restore the site after the facility is closed. The MOU addresses these concerns in two ways. Entergy VY has agreed to a process under which the scope of its site restoration obligations would be fully defined. Entergy VY has also agreed to set aside $25 million earmarked for site restoration.
These are material commitments that will help ensure timely and adequate restoration of the VY Station site.
Finally, it is important for the public to understand the limits of the Board's jurisdiction, and therefore what this decision does not do. The operation of the VY Station has long been controversial within Vermont. In this proceeding, the Board has heard from many members of the public urging us to direct the closure of the VY Station, on the one hand, or asking that we preserve the benefits of the power it generates, on the other. However, by law, this regulatory review necessarily focuses on the more narrow question of whether granting Entergy VY continued authority to own and operate the VY Station through the end of 2014 would promote the general good of the state. Therefore, we have not considered questions such as whether to order the closure of the VY Station, the merits of nuclear power, or any potential radiological safety concerns about the VY Station — these matters are outside our purview to regulate under current state and federal law. Rather, the issue for the Board is whether to authorize Entergy VY's continued ownership and operation of the VY Station for a brief period for purposes other than decommissioning.
1. Over the years, Entergy VY has entered into several memoranda of understanding in various proceedings.
Many of these remain relevant and are cited herein. Unless otherwise specified, as used in this Order, "MOU" refers
to the Memorandum of Understanding entered into by Entergy VY, the Department of Public Service, and the
Agency of Natural Resources in this proceeding and filed with the Board on December 23, 2013. Other memoranda
of understanding are referred to by the appropriate docket in which they were filed, e.g., the "Docket 6545 MOU."
2. In the Settlement Agreement among the MOU signatories, Entergy VY also committed to commence
decommissioning within 120 days after it has made a reasonable determination that the funds in the
Decommissioning Trust Fund are adequate to complete decommissioning and remaining spent nuclear fuel ("SNF")
management activities.
3. The MOU specifies certain factual circumstances that could lead to operation for a short period thereafter.
4. See Docket 6545, Order of 6/13/02. The CPG authorized ownership and operation of the VY Station after
March 21, 2012, solely for the purpose of decommissioning. Docket 6545, Order of 7/11/02 at 17.
5. Exh. Board-5 at 8.
John Herrick of vtdigger.org contributed to this report.
http://psb.vermont.gov/sites/psb/files/orders/2014/2014-03/7862%20Final%...