Vermont Yankee Fund Suffers Big Market Loss

November 19, 2008

By Dave Gram
The Associated Press

MONTPELIER -- The fund set aside to pay for dismantling the Vermont Yankee nuclear plant when it shuts down was about $400 million short of what would be needed to do the job, according to an estimate by a subsidiary of the plant's owner.

Then it lost nearly $76 million more amid the turmoil in the financial markets during the past 13 months, with more than $33 million of that loss coming last month, according to the state Department of Public Service.

The health of the decommissioning fund -- money set aside to haul away the plant's radioactive components when it is retired -- has been a hot issue this year. Gov. Jim Douglas vetoed a bill passed by the Legislature calling on Vermont Yankee owner Entergy Nuclear to shore up the fund, amid complaints from lawmakers that Vermonters might end up stuck with the bill.

"That's part of the cost of doing business, and it's only responsible for the state to make sure that happens," Rep. Tony Klein, D-East Montpelier and chairman of the House Natural Resources and Energy Committee, said Tuesday of the push to require Vermont Yankee owner Entergy Nuclear to top off the fund.

Entergy officials have argued in the past that the fund would grow over time with returns on investment, though they have said the plant likely would have to be left idle after shutdown for decades for the fund to grow sufficiently. Recent market performance has raised doubts about those calculations, Klein said.

"There's no guarantee that the decommissioning fund is going to recover remotely the amount that's necessary to cover the cost of closing that plant," Klein said.

Stephen Wark, spokesman for the Department of Public Service, said the Douglas administration had no regrets about opposing the bill passed by lawmakers this year to require Entergy to guarantee the adequacy of the fund.

"It wasn't economically feasible at the time, because it called for a 100 percent infusion of funds," Wark said of the bill. "It was not reasonable or viable. The solution has to be a long-term solution, which I'm sure will be the focus of not only legislative discussions this year but (Public Service) board proceedings, as we move forward in the CPG case."

The CPG case is the review by the Public Service Board and the Legislature of Vermont Yankee's request for a license extension of 20 years beyond its currently scheduled shutdown date of 2012. The board is to decide whether the plant should receive a "certificate of public good" -- and the Legislature will weigh in -- on whether the plant should obtain the license extension it is seeking.

According to figures provided by the state Department of Public Service, the decommissioning fund stood at $440 million Sept. 30, 2007; $427.4 million March 31; $397 million Sept. 30; and $364.4 million Oct. 31.

In January 2007, Entergy subsidiary TLG Services issued a report offering a range of possibilities on when the plant shuts down, how quickly its radioactive waste is removed and other factors. Depending on those factors, TLG estimated the costs could range between $655 million and $991 million, Vermont Yankee spokesman Robert Williams said.

Fairewinds Associates, a Burlington-based consultant that has worked with groups critical of nuclear power, issued a report late last year criticizing the TLG estimates, saying they were based on generic calculations and not specifically on Vermont Yankee. Fairewinds estimates the costs of decommissioning the Vernon plant eventually could approach $1.2 billion.

Williams responded in an e-mail to questions about the fund. "October has definitely been a down month. The fund however is invested conservatively, and we expect over time that the fund will continue its long-term growth such that we can fully fund decommissioning. The fund is overseen by the (federal Nuclear Regulatory Commission) ... and so are the decommissioning cost estimates. The fund fully meets the NRC's requirements."

Diane Screnci, spokeswoman for the NRC's Northeast regional office, said Tuesday that Vermont Yankee is due to report to the NRC on the condition of its fund March 31. She said the agency can order a nuclear plant owner to "make needed adjustments" to decommissioning funds, as when there has been "a decline in investments or a cost spike."