Shutdown fund still short by $7 million
Sep 30 - McClatchy-Tribune
> Regional News - Bob Audette Brattleboro Reformer, Vt.
>
> Even though Entergy has promised to put $51 million toward the
> cost of decommissioning Vermont Yankee nuclear power plant in Vernon,
> that's
> $7
> million short of how much it will take to make the trust whole,
> according to a Sept. 29 letter from the Nuclear Regulatory Commission.
>
> In the letter, the NRC is demanding to know how that shortfall
> will be met.
>
> Entergy has 30 days to reply to the NRC's request. It had no
> comment on the letter at this time.
>
> In July, the NRC informed the operators of 26 nuclear power
> plants around the country that because of the sub-prime crisis on Wall
> Street, their trust funds were inadequate to pay for cleanup of their
> nuclear power plant sites when their reactors are shut down.
>
> The NRC told Entergy that Yankee's fund was short a little more
> than
> $87 million.
>
> Entergy, which owns and operates Yankee, responded that because
> of a rebound in the stock market, the fund was actually only short by
> $58 million. In response to the shortfall, it promised to deposit $51
> million directly into the decommissioning trust fund.
>
> But exactly where it would invest the other $7 million wasn't
> clarified, thus the NRC sent a letter to Entergy on Sept. 29 asking it
> to identify where that money will be going.
>
> "There are different financial instruments a company can use to
> address a decommissioning fund shortfall, including a surety bond,
> letter of credit or a line of credit," said Neil Sheehan,
>
> spokesman for the NRC. "Simply put, we want to know how the other
> financial instruments Entergy plans to use to bridge the gap between
> the $51-million cash deposit and the $58-million estimated shortfall."
>
> In September 2007, the trust fund had accumulated $440 million
> for the eventual cleanup of the site in Vernon. But 13 months later,
> the fund had lost $77 million, down to $364.4 million.
>
> By February 2009, the fund hit a low mark of $347 million.
> Since then,
> however, the fund has grown almost to the point it was at prior to the
> stock market tumble.
>
> By August of this year, the fund had recovered to $411 million.
>
> The NRC estimates it will cost about $550 million to clean up the
> site when the plant is shut down.
>
> According to NRC regulations, a plant operator needs to show a 2
> percent annual rate of return "provided that the site-specific
> estimate is based on a period of safe storage that is specifically
> described in the estimate."
>
> The average annual rate of inflation from 1914 to the present has
> been
> 3.41 percent. That means, on average, the fund has to grow 5.41
> percent per year to reach the required NRC levels.
>
> The NRC encourages trust fund managers to invest decommissioning
> funds in "conservative" financial vehicles -- such as bonds that yield
> lower return rates -- rather than risky ventures that promise higher
> rates of return but might also tank.
>
> But the NRC level is $228 million less than what Entergy's own
> expert, William Cloutier, estimated it will cost to clean up the site
> if the plant is closed in 2012. Cloutier floated a figure of $728
> million.
>
> The disparity in the funding is due to the fact that the NRC only
> requires the site to be cleaned up to "brownfield" status, which would
> not allow for unrestricted use of the site following decommissioning.
>
> "The totals used by us reflect the radiological decommissioning
> of the site," said Sheehan. "The state's estimates, which may require
> returning the site to 'greenfield' condition, would go beyond that."
>
> To realize that $728 million by 2012, the fund would need an 8.66
> percent real rate of return.
>
> That means the trust fund would have to grow more than 12 percent
> a year.
>
> If the plant is allowed to operate until 2032, the cost would be
> a little more than $815 million, requiring a return of 4.42 percent,
> or 7.8 percent prior to being adjusted for inflation.
>
> What Entergy is banking on however, is placing the plant into
> what the NRC calls SAFSTOR, or the mothballing of the plant for up to
> 60 years. With a 2012 shutdown, the rate of return for SAFSTOR would
> have to be between 5.5 and 5.7 percent, after adjustment for
> inflation, with the last of the spent fuel removed from the site
> between 2042 and 2082.
>
> If the plant closes in 2032, the real rate of return for SAFSTOR
> would need to be between 4.2 and 4.5 percent, adjusted for inflation,
> with the last of the spent fuel removed between 2042 and 2082.
>
> Entergy has applied to the Nuclear Regulatory Commission to
> extend the operating license of Vermont Yankee for another 20 years,
> from 2012 to 2032.
> In addition to NRC approval, Entergy must also receive a certificate
> of public good from the Public Service Board and the OK from the
> Vermont Legislature.
>
> The PSB is in the process of reviewing Entergy's application for
> a certificate. The Legislature plans to take up the issue of Yankee's
> continued operation during its next legislative session, which begins
> in January.
>
> Bob Audette can be reached at [email protected], or at
> 802-254-2311, ext. 273.
>
>
> Regional News - Bob Audette Brattleboro Reformer, Vt.
>
> Even though Entergy has promised to put $51 million toward the
> cost of decommissioning Vermont Yankee nuclear power plant in Vernon,
> that's
> $7
> million short of how much it will take to make the trust whole,
> according to a Sept. 29 letter from the Nuclear Regulatory Commission.
>
> In the letter, the NRC is demanding to know how that shortfall
> will be met.
>
> Entergy has 30 days to reply to the NRC's request. It had no
> comment on the letter at this time.
>
> In July, the NRC informed the operators of 26 nuclear power
> plants around the country that because of the sub-prime crisis on Wall
> Street, their trust funds were inadequate to pay for cleanup of their
> nuclear power plant sites when their reactors are shut down.
>
> The NRC told Entergy that Yankee's fund was short a little more
> than
> $87 million.
>
> Entergy, which owns and operates Yankee, responded that because
> of a rebound in the stock market, the fund was actually only short by
> $58 million. In response to the shortfall, it promised to deposit $51
> million directly into the decommissioning trust fund.
>
> But exactly where it would invest the other $7 million wasn't
> clarified, thus the NRC sent a letter to Entergy on Sept. 29 asking it
> to identify where that money will be going.
>
> "There are different financial instruments a company can use to
> address a decommissioning fund shortfall, including a surety bond,
> letter of credit or a line of credit," said Neil Sheehan,
>
> spokesman for the NRC. "Simply put, we want to know how the other
> financial instruments Entergy plans to use to bridge the gap between
> the $51-million cash deposit and the $58-million estimated shortfall."
>
> In September 2007, the trust fund had accumulated $440 million
> for the eventual cleanup of the site in Vernon. But 13 months later,
> the fund had lost $77 million, down to $364.4 million.
>
> By February 2009, the fund hit a low mark of $347 million.
> Since then,
> however, the fund has grown almost to the point it was at prior to the
> stock market tumble.
>
> By August of this year, the fund had recovered to $411 million.
>
> The NRC estimates it will cost about $550 million to clean up the
> site when the plant is shut down.
>
> According to NRC regulations, a plant operator needs to show a 2
> percent annual rate of return "provided that the site-specific
> estimate is based on a period of safe storage that is specifically
> described in the estimate."
>
> The average annual rate of inflation from 1914 to the present has
> been
> 3.41 percent. That means, on average, the fund has to grow 5.41
> percent per year to reach the required NRC levels.
>
> The NRC encourages trust fund managers to invest decommissioning
> funds in "conservative" financial vehicles -- such as bonds that yield
> lower return rates -- rather than risky ventures that promise higher
> rates of return but might also tank.
>
> But the NRC level is $228 million less than what Entergy's own
> expert, William Cloutier, estimated it will cost to clean up the site
> if the plant is closed in 2012. Cloutier floated a figure of $728
> million.
>
> The disparity in the funding is due to the fact that the NRC only
> requires the site to be cleaned up to "brownfield" status, which would
> not allow for unrestricted use of the site following decommissioning.
>
> "The totals used by us reflect the radiological decommissioning
> of the site," said Sheehan. "The state's estimates, which may require
> returning the site to 'greenfield' condition, would go beyond that."
>
> To realize that $728 million by 2012, the fund would need an 8.66
> percent real rate of return.
>
> That means the trust fund would have to grow more than 12 percent
> a year.
>
> If the plant is allowed to operate until 2032, the cost would be
> a little more than $815 million, requiring a return of 4.42 percent,
> or 7.8 percent prior to being adjusted for inflation.
>
> What Entergy is banking on however, is placing the plant into
> what the NRC calls SAFSTOR, or the mothballing of the plant for up to
> 60 years. With a 2012 shutdown, the rate of return for SAFSTOR would
> have to be between 5.5 and 5.7 percent, after adjustment for
> inflation, with the last of the spent fuel removed from the site
> between 2042 and 2082.
>
> If the plant closes in 2032, the real rate of return for SAFSTOR
> would need to be between 4.2 and 4.5 percent, adjusted for inflation,
> with the last of the spent fuel removed between 2042 and 2082.
>
> Entergy has applied to the Nuclear Regulatory Commission to
> extend the operating license of Vermont Yankee for another 20 years,
> from 2012 to 2032.
> In addition to NRC approval, Entergy must also receive a certificate
> of public good from the Public Service Board and the OK from the
> Vermont Legislature.
>
> The PSB is in the process of reviewing Entergy's application for
> a certificate. The Legislature plans to take up the issue of Yankee's
> continued operation during its next legislative session, which begins
> in January.
>
> Bob Audette can be reached at [email protected], or at
> 802-254-2311, ext. 273.
>
>