Saturday, December 18, 2010

Why Peter Shumlin will save Vermont Yankee

The high cost of closing the reactor will be keenly felt in the state’s economy

Vermont Governor-elect Peter Shumlin (right) must have woken up in a cold sweat in the middle of the night over the future of the Vermont Yankee nuclear reactor.

In troubled sleep, the newly elected top state official might have seen the size of the electric bill Vermonters would be paying for replacement fossil power to keep their homes and businesses warm during the state’s long and frigid winters. Like Scrooge in Dickens’ ‘Christmas Tale,” Shumlin might have also seen the ghost of future utility bills haunting his political legacy.

Also, he might have seen major employers, like IBM with 6,000 workers, leaving the state and heading for places like Vietnam to make computer chips. The reason is that IBM, and other major employers, won’t be able to compete globally with the loss of $0.06/KwHr electricity and its replacement at double or more of that cost. He will realize the shockingly high price price of replacement power, and its consequences, would be blamed on him.

Also, a closed reactor will become a political and visual eyesore for the rest of his term of office and much longer. The spent fuel isn’t going anywhere and decommissioning could take a decade or longer to complete.

Shumlin’s political opponents will have a field day with both issues.

Shumlin’s wake up call

Right after waking up, Shumlin might have immediately placed a ‘wake up call’ to his transition team and ordered them to get him a tour of the plant to begin the process of making peace with the future of the reactor.


It appears that’s exactly what happened. Shumlin hasn't even been sworn in yet, and he's already tackling the future of the state's energy security.

Vermont Governor Elect Peter Shumlin visited the Vermont Yankee nuclear power plant this week. He got a tour of the facility and during the visit emphasized the need for Entergy, the utility that owns and operates the reactor, to restart pumping and treating groundwater for radioactive tritium. OK, that’s all well and good even though the tritium isn’t a public health threat to anyone off-site.

The visit raises the significant question of whether Shumlin is softening his tough stance that the plant should not be relicensed by the NRC for another 20 years. On the surface, it appears the answer is no because in an interview with a local TV station, he repeated his call for it to be "retired" in 2012. That's when the current license runs out.

Politics drives purpose

There are political reasons why Shumlin might change his mind.

electric meterThe first is that closing the plant will subject Vermont rate payers to having to buy replacement, fossil-based power at rates as high as $0.15/KwHr. This is two-and-a-half times the rate they pay now for electricity from Vermont Yankee, which supplies about one third of the electricity used in Vermont. That’s a huge hit on voter pocketbooks and its effects will be felt across the state.

(Update: People who think Ontario Hydro will come to Vermont's rescue should think again. The reason is most of the reactors in Ontario run by Bruce Power are going off line in 2012 for an 18-24 month period of refurbishment. It could be a lot longer if AECL's bungled refurbishment of the Point Lepreau reactor in New Brunswick is any indication of the future. While the Bruce reactors are down, Ontario Hydro's power will be needed in Canada.)

The second reason is that closing the plant in 2012 insures that it will become a highly visible political eyesore for Shumlin. It will take two years to move the plant from being actively operated to generate electricity to be ready to begin D&D. It will take another decade to decommission the plant. The spent fuel from the plant will remain at the site for up to 60 years.

He can call for “immediate” decommissioning, but it won’t matter or make a difference. There is nothing the governor can do to change that schedule since the NRC is in charge of this process. The agency will follow its own regulations which lay out a process for safely permanently shutting down a nuclear reactor.

First term recall election?

Shumlin's political opponents won't hesitate to tag him with the responsibility for heart-stopping increases in the cost of electricity and that he's turned an economic asset which supports 700 jobs into a high security spent fuel respository that supports a dozen jobs.

They will also tag him with the loss of thousands of other jobs in a small state as its biggest employers exit in search of cheap electricity.

A first-term loss for re-election in 2012 isn’t outside of the realm of political feasibility if things get really bad with brownouts on top of higher electric bills. Even with replacement power, the loss of Vermont Yankee might make the regional electricity grid unstable impacting other utilities, and their customers, in other New England states. All this will happen on his watch if he succeeds in closing the plant in 2012. That’s just two years from now.

How much power does Shumlin really have?

The decision to close the reactor isn't Vermont's to make. The NRC issues the license, not the state legislature. Entergy spokesman Larry Smith said as much following Shumlin's tour of the plant.

"We are moving forward with our plans at the federal level to get a new license from the Nuclear Regulatory Commission and to seek approval from the Vermont Legislature and a certificate of public good from the Public Service Board," Smith said.

That outcome might be based on some changes at Vermont Yankee that even an anti-nuclear arch druid like Shumlin might find to be an attractive alternative to sky high electricity rates and ignominiously losing his job over them.

What price license renewal?

According to WCAX TYV, a new owner at the plant and a new, low-price power agreement might stop lawmakers from pulling the plug. Entergy has confirmed it is talking with other utilities about selling the reactor and transferring its license. A deal would be contingent on settling issues with the Vermont legislature.

A politically savvy source in Vermont told this blog in November Shumlin “gets it” that political reality will require him to make a deal over the future of Vermont Yankee. The only question now is how he gets there and what the deal looks like to voters in terms of its impact on their checkbooks.

Update 12/19/10

Several people have sent comments suggesting the if the current or future owner(s) of Vermont Yankee made a substantial contribution to the Vermont Clean Energy Development Fund, on order of several $millions, that would appease Gov-elect Shumlin.

This sounds at first like a bribe. In in Germany Chancellor Angela Merkel imposed a 50% profits tax on the nation's 17 operating nuclear reactors to generate about $2.3 billion annually for renewable technologies.

This is a proposal for piracy operating under the delusion that solar energy makes any sense in Vermont, which has the same lousy winters as Germany in terms of days of sunshine.

Also, Shumlin is entering a two-year term which places his re-election right in the middle of the first effects on the economy if Vermont Yankee shuts down.

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Meredith Angwin said...

Great post, Dan! I have several posts on the economic consequences to Vermont business if Yankee closes.

Shumlin's major renewable supporters will have big problems if the plant shuts down. Right now, the Clean Energy Development Fund (CEDF) is supported at the several-million-dollar a year level by Vermont Yankee, in a deal they made with the legislature when Vermont Yankee wanted to put in dry cask storage. That deal supports building renewables...supports as in "provides money for the renewable tax breaks." That deal ends with the plant license.

Vermont is facing a major budget deficit, so there's no easy way to make up the money for the wind turbine industries if Entergy isn't putting money into the CEDF.

I suspect the renewable industries may tell Shumlin: call them names, but keep them running and make sure they contribute even MORE to the CEDF!

Peter Bradford said...

Vermont governors are elected for two year terms not four, and are you sure the state has a recall provision? As a Vermonter, I've never heard of it.

Finally, why exactly will Vermont "buy replacement, fossil-based power at rates as high as $0.15/KwHr"? Power prices in the New England region, currently +/-5 cents per kWh, are driven by the price of natural gas, which is not projected to increase much over the next decade. Capacity could (but need not) come from Hydro-Quebec, not fossil fuels.

None of this is to say Vermont Yankee should close, just that prophesies of sure-fired economic doom from one side are entitled to no more respect than prohesies of certain radiological doom from the other.

djysrv said...

Regarding the election cycle, in that case, Schumlin's drive to close Vermont Yankee would coincide with the 2012 election.

Also, Ontario Hydro electricity will not be available in 2012. Bruce Power is taking its reactors offline for refurbishment. Ontario's juice will be needed in Canada,

Jeff Schmidt said...

All this talk about the CEDF kind of rubs me the wrong way. Now, I'm not a Vermonter, so in some respects, this isn't my fight, but there is a truth that injustice effects us all, sooner or later, in some measure or other.

I have a fundamental problem with forcing a company to subsidize it's competition - competition which couldn't possibly compete on its own merits. If the State wants to subsidize it, fine, but they shouldn't levy unjust taxes against a business. I just don't see how it can be justified to force Vermont Yankee to contribute millions of dollars per annum to a Fund to pay significant parts of the costs for investors to build competing businesses.

As for the issue of long term storage waste - honestly, the Nuclear Industry, and the States, need to sue the federal government to make good on its obligations to provide a long-term storage facility for nuclear waste. It's completely ridiculous that we are storing waste at reactor sites because the government never got around to building a facility to receive it.