Editorial: A shocker
Tuesday’s announcement that Entergy Corp. is closing the Vermont Yankee nuclear power plant undoubtedly came as a shock to foes and fans alike.
True, the Vernon facility was never going to fade into the background to simply produce electrical power in the region, even if the Vermont Public Service Board finally ruled in favor of renewing the plant’s licensing agreement for another 20 years. Anti-nuke advocates inside Vermont, including its state government, as well as in Massachusetts and New Hampshire were going to continue to their efforts to shut the plant down.
The decision, however, apparently has less to do with the protests that have been part of the nuclear power landscape and more to do with the economic realities of running Vermont Yankee.
According to Entergy, the decision was based on a number of financial circumstances, including:
∎ “A natural gas market that has undergone a transformational shift in supply due to the impacts of shale gas, resulting in sustained low natural gas prices and wholesale energy prices.
∎ “A high cost structure for this single unit plant. Since 2002, the company has invested more than $400 million in the safe and reliable operation of the facility. In addition, the financial impact of cumulative regulation is especially challenging to a small plant in these market conditions.
∎ “Wholesale market design flaws that continue to result in artificially low energy and capacity prices in the region, and do not provide adequate compensation to merchant nuclear plants for the fuel diversity benefits they provide.”
At least, these were the financial factors the New Orleans-based company was willing to share with the public at this time. No doubt there are issues that Entergy is more circumspect about, including expectations among the company’s stockholders about profit margins and continued reinvestment in a four-decades-old nuclear power plant.
We’d also include the economic impact that decommissioning the nuclear plant will have on the company.
“Regarding decommissioning, assuming end of operations in fourth-quarter 2014, the amount required to meet the NRC minimum for decommissioning financial assurance for license termination is $566 million,” the statement continued. “The Vermont Yankee decommissioning trust had a balance of approximately $582 million as of July 31, 2013, excluding the $40 million guarantee by Entergy Corporation to satisfy NRC requirements following the 2009 review of financial assurance levels.”
The financial impact won’t be influencing just Entergy’s future.
The decision to shut down also has economic and other implications for the workforce, the town of Vernon and its neighbors and the state of Vermont — implications that are going to take time to digest.
The source and cost of replacement power for the state — and the Northeast power grid — and the extent to which such power will impact electricity prices, carbon dioxide production and pollution is largely unknown.
That’s something Vermont lawmakers are going to have to come to grips with earlier than they actually imagined — once they get over the shock of this decision.