Entergy's stance on decommissioning fund appears to change

By Dave Gram, Associated Press Writer

June 4, 2008

MONTPELIER, Vt. --At least three times when its purchase of the Vermont Yankee nuclear plant was under review in 2001 and 2002, Entergy Corp. said publicly that it would assume the costs of decommissioning the plant when it eventually shut down.

Now there are fears the decommissioning fund will come up short, possibly by hundreds of millions of dollars, and Entergy is saying something different.

It turns out that decommissioning is not the responsibility of a $11 billion company that owns 10 nuclear plants around the country. Instead, it's on Entergy Nuclear Vermont Yankee, or ENVY, a subsidiary of New Orleans-based Entergy whose assets include one aging reactor in Vernon and some real estate in Brattleboro.

The strength of the decommissioning fund and how well backed up it is have become big issues in recent months. Entergy wants to sell Vermont Yankee and five other plants to a newly created company for $4.5 billion.

Meanwhile, neither Entergy nor ENVY have been making regular contributions into the fund since the 2002 sale, as the New England utilities that previously owned the plant had been doing. The fund was recently said to contain about $425 million, while costs for decommissioning Vermont Yankee have been estimated at up to $800 million.

Lawmakers, worried that Vermonters could "be left holding the bag" on decommissioning costs, in the words of Sen. Ann Cummings, D-Washington, passed a bill calling for the Public Service Board to require that Entergy make new financial guarantees that the fund would be backed up before it approved the new transaction.

Gov. Jim Douglas vetoed the bill, saying it could prompt Entergy to raise electric rates after its current contract to sell power to Vermont's utilities expires in 2012.

As lawmakers were debating the bill, Entergy representatives were telling anyone who would listen that the parent company never had responsibility for the Vermont Yankee decommissioning fund.

"Today the responsibility for decommissioning Vermont Yankee is with its owner," Entergy Nuclear vice president and chief financial officer Wanda Curry told the House Commerce Committee on April 16. "You can think about it in numerous ways, but its owner is Entergy Nuclear Vermont Yankee. Its owner is not Entergy."

That would appear to run counter to three Entergy press releases issued in 2001 and 2002. The first, dated Aug. 15, 2001, announcing Entergy's plan to buy Vermont Yankee, said, "Entergy will also assume decommissioning liability for the plant and the plant's decommissioning trust fund, which is required by the U.S. Nuclear Regulatory Commission."

The second, dated Feb. 25, 2002, said, "Entergy will assume all financial and operational risks of increases in operating and fuel costs, decommissioning costs, used fuel cots, nuclear waste disposal costs, costs of any accidents at VY or other nuclear plants in the U.S., costs of premature shutdowns and extended outages."

The third, issued July 18, 2002, less than two weeks before the sale was completed, was headlined "Entergy Notifies Vermont Yankee Owners: 'A deal is a deal'."

At the time, there was widespread speculation that the decommissioning fund could end up with more money in it than needed, rather than coming up short, and Entergy demanded a share of that projected surplus.

"Entergy believes that it is fundamentally inequitable for it to bear all of the downside decommissioning fund risk without the potential to share in the upside if funding levels or actual decommissioning costs turn out better than expected," it said.

Entergy and Vermont Yankee spokesman Robert Williams said this week that two legal documents on file at the state Public Service Board -- the board order approving the sale and a memorandum of understanding signed by the Dean administration's Department of Public Service -- made clear that the purchaser of the plant was Entergy Nuclear Vermont Yankee.

Of the news releases, Williams said initially, "That could have been more precise. ... Obviously it should have been more precise. We'll review what was stated."

He called back later and added, "We're a separate entity here, but we're part of the overall Entergy company and that's why the word Entergy was used in the news releases. But it was not intended to convey anything other than the facts that were presented in the testimony (before the Public Service Board) and that were signed in the agreement and approved by the regulators here."

Rep. Warren Kitzmiller, D-Montpelier and chairman of the House panel that heard Curry's testimony, said after excerpts from the Entergy press releases were read to him, "Those lead me to think that Entergy was misleading. If Entergy didn't mean Entergy as a corporation, why were they saying it that way? At the very least they have misled the citizenry of Vermont."

David O'Brien, commissioner of the Department of Public Service, agreed with Williams that the key 2002 legal documents leave Entergy's parent company off the hook for decommissioning costs at Vermont Yankee.

"Press releases aren't binding in law," O'Brien said. "What's binding in law is the Public Service Board order" approving the sale. "What difference does it make what a press release says at the end of the day?"

Source: The Boston Globe