Douglas vetoes bill calling for funding of Vermont Yankee decommissioning

Saturday, May 23
MONTPELIER -- For the second year in a row, Gov. Jim Douglas has vetoed legislation calling on the Vermont Yankee nuclear plant's owners to set aside more money for the plant's eventual dismantling.
The governor also appeared to leave open the possibility of mothballing the plant on the bank of the Connecticut River in Vernon for up to 60 years after it stops operating to give the decommissioning fund time to grow. His Department of Public Service has opposed that idea during hearings on a proposal to expand the plant's operating license for 20 years.
Douglas, a Republican, said the Democrat-controlled Legislature's bill would have prompted Vermont Yankee to raise the rates it charges Vermont's power companies to buy energy during the license extension period.
Vermont Yankee, owned by Jackson, Miss.-based Entergy Nuclear, is at least $500 million short of the estimated $800 million to $900 million it is expected to cost to dismantle the plant, according to estimates provided during legislative testimony. The fund, invested in stocks, bonds and other securities, has shrunk in the past two years amid market turmoil.
The company last year floated a proposal to spin off Vermont Yankee and its other northern nuclear plants to form a new company, leading lawmakers to question if decommissioning costs would be covered, and to pass bills two years in a row calling for guarantees.
In a 4-page veto letter to lawmakers, Douglas argued that the bill "threatens our economic recovery by unnecessarily increasing electric rates for consumers and businesses." He added that it "breaks a promise made by the state of Vermont to a private entity and it exposes taxpayers to certain litigation."
Douglas said the state had agreed when Entergy bought Vermont Yankee in 2002 that mothballing the retired reactor for up to 60 years could be a strategy for retiring Vermont Yankee.
"Now I need to step forward and defend the actions of a previous administration that agreed (to that) as an acceptable decommissioning strategy in the name of honoring the state's commitments," Douglas said in his veto message.
Meanwhile, in hearings before the Public Service Board on Vermont Yankee's request for the license extension, state regulators are calling for prompt decommissioning after a 2032 shutdown. It calls for the plant owner to make regular payments into the fund during the 20-year license extension period so there will be enough money to dismantle it in the 2030s.
Rep. Tony Klein, D-East Montpelier, chairman of the House Natural Resources and Energy Committee and a key author of the bill, said the 2002 board order approving the sale listed a 60-year mothballing as just one of several options for the plant's eventual decommissioning.
A mothballed plant wouldn't pay property taxes, since Vermont Yankee's property taxes are based on how much power it produces, Klein said. It also wouldn't provide the jobs that its supporters say make it a major economic engine in southeastern Vermont, he added.
"That is a bad, bad idea," Klein said of Safstor. "If that is what's good for Entergy, I choose what's good for the state of Vermont over what's good for Entergy."
Department of Public Service Commissioner David O'Brien said Douglas' position was consistent with the position his department has taken in the board hearings.
He said saving up decommissioning funds would be part of the deal his department hopes to negotiate for the 20-year license extension period.
The deal O'Brien's department has asked the board to approve "basically says to them (Entergy or Vermont Yankee's next owner) that if you're going to operate between 2012 and beyond, you have to come up with the difference in the fund."