Related Company: Central Vermont Public Service CorpEntergy Vermont Yankee today sent a letter to the Vermont Public Service Board saying it will submit a new power purchase agreement in early January 2010. The new, 20-year contract offer will provide 115 megawatts of power from 628 megawatt plant at $61 per megawatt hour starting in 2012. The Vermont utilities are paying $42 per megawatt hour now. All parties were expecting the price to go up. The Vermont utilities have said that were also planning to diversify their portfolios going forward and buy less from Vermont Yankee, but not as little as Entergy is proposing, which is about half of what it is selling in Vermont currently.
The Entergy proposal also would terminate the revenue sharing agreement it currently has with Vermont utilities. This was seen as a hedge for the Vermont utilities if prices on the spot market increased and would kick in at that $62 per megawatt hour price. Entergy is estimating that the new deal would save Vermonters about $500 million through 2032. But under the current RSA, it was projected that Vermonters would save about $1 billion.
Entergy is seeking to extend the license of the plant for 20 years beyond the scheduled shutdown in 2012. The license extension requires approval by the Vermont Legislature. Most of the Democratic leadership in the Legislature opposes the re-licensing.
Central Vermont Public Service CEO Bob Young issued this statement on the Entergy contract offer:
"Entergy’s public offer is to substitute a purchase power agreement for some or all of our rights under a pre-existing Revenue Sharing Agreement. That RSA, agreed to as part of the sale of VY to Entergy back in 2002, provides Vermont customers a share of plant revenue from 2012 to 2022 whenever it exceeds $61 a megawatt-hour, with inflation adjusters, if the plant continues to operate.
We believe that this particular proposed swap fails to make our customers better off. Since we already have the value of the RSA if the plant is relicensed, any new arrangement must provide incremental value to our customers.
Although we are withholding our support for Entergy’s proposed contract, we look forward to feedback on Entergy’s offer from policymakers and the public and we will use that information in determining our next steps.
If the plant is not relicensed, the advantages of the revenue sharing agreement, as well as the jobs, tax revenue and other economic benefits of the plant will disappear."
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