Vermont Yankee Decommissioning Fund Declines, Again.

By BOB AUDETTE, Reformer Staff

Wednesday, March 11, 2009

BRATTLEBORO – If you've been keeping an eye on Vermont Yankee's decommissioning trust fund, it has had so many ups and downs in the past year you might need to take some anti-nausea medication.

In just the past year, the fund has lost $80 million, from $427 million in March 2008 to $347 million by the end of last month. Since September 2007, the fund has lost $93 million.

When Entergy bought the plant in 2002, the amount in the fund was $304 million.

Entergy, which owns and operates Yankee, has applied to the Nuclear Regulatory Commission to extend the plant's operating license from 2012 to 2032. Entergy must also receive approval from the state Legislature and the Vermont Public Service Board.

Both the Legislature and the board have been holding hearings to discuss the benefits to Vermonters of the plant's continued operation.

Of major concern to many legislators has been the status of the decommissioning fund and whether any of the cost to clean up the site could fall to Vermonters.

Entergy has maintained the trust fund is adequate to pay for decommissioning and has resisted attempts to ensure it is fully funded prior to extended operation.

The NRC has repeated that even if Entergy or one of its subsidiaries files for bankruptcy, it would hold Entergy responsible for all clean-up costs.

The decommissioning of Vermont Yankee nuclear power plant in Vernon is expected to cost anywhere between $600 million and $1 billion. 

From March to November 2008, the fund dropped steadily until December, when it made back $12 million. But by the end of January, the fund was down to $361 million and lost another $14 million in February.  The trust was funded by a surcharge on ratepayers prior to Entergy's purchase. Since the purchase, ratepayers have not been obligated to contribute to the fund, but neither has Entergy.

In November 2008, a consultant testified to the state that the decommissioning fund "appears to be adequate" to fund all activities to clean up the site in Vernon when the nuclear power plant shuts down.

However, warned the consultant, his conclusion is based on the assumption that the plant will close in 2032. The consultant noted that if the plant is shut down in 2012, with the movement of spent fuel starting in 2017 or in 2057, the trust fund would not be adequate to begin decommissioning until 2072.

William Jacobs, Jr., the vice president of Generation Support Services for GDS Associates, Inc., also wrote that due to recent turmoil in the stock market, there may be a need for "... potential additional contributions to the fund ...."

If the plant receives a license extension, it could go immediately into the clean-up phase in 2032 and would not require SAFSTOR, which mothballs a nuclear site until a decommissioning fund is adequate for clean up.

Jacobs recommended Entergy and regulators keep a close watch on the fund and also suggested that Entergy consider "periodic contributions."

"While this decline in the decommissioning trust fund is worrisome, it is reasonable to believe that over the 60-year life of the decommissioning fund, the earnings would approach historical rates," he stated. "However, recent experience with the decrease in value of the decommissioning trust fund and current performance of the equities markets demonstrates the need for continuous monitoring of fund earnings and the potential for additional contributions to the fund if conditions warrant."

Since Entergy acquired Vermont Yankee, the fund has grown at an annual rate of 6.73 percent, but two scenarios involving closure in 2012 would require growth rates between 12.05 and 13.53 percent, which Jacobs said were "unreasonably high fund earning rates because of the early large expenditures required (by decommissioning)."

Other scenarios submitted by Entergy were reasonable, he wrote, with SAFSTOR alternatives requiring a growth rate of between 4.6 and 7.89 percent. Since 2002, the funds have shown a rate of return of 6.73 percent, but recent changes in the stock market have lowered that rate of return, resulting in the losses mentioned previously.

Bob Audette can be reached at raudette@reformer.com, or 802-254-2311, ext. 273.