Entergy’s used car deal

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(Host) Sometimes getting a great break on a used car leaves you feeling uneasy. Commentator Timothy McQuiston ways that’s the way the new owners of the Vermont Yankee nuclear power plant might be feeling these days.

(McQuiston) Entergy Nuclear from Louisiana bought the Vermont Yankee power plant in Vernon two summers ago, and they’ve just taken the first step in making the purchase worth their while. When they bought the 30-year-old plant in August 2002, it was in fine shape, and despite the increased security costs associated with 9/11, it appeared to be a good investment.

The biggest upside of the purchase was the ability of the new owners to extend the usefulness of the plant. This could be done in two ways. The power output could be increased, in what they call an uprate. And the plant’s license could be extended past 2012.

Last month, Entergy worked out a deal with the state Department of Public Service to let it uprate the plant. Currently, the reactor is operating at 540 megawatts. Entergy wants to increase that 20 percent to 650 megawatts. At that higher capacity the plant is more profitable and the electric rates to consumers potentially go down. It’s a win-win.

On top of that, Entergy agreed to pay the state upwards of $20 million to support things like low-income energy plans and cleaning up Vermont’s waterways, including Lake Champlain. But in a rare moment of agreement, Republican Speaker of the House Walter Freed and Democratic Senate President Pro Tempore Peter Welch wondered what cleaning up algae in Missisquoi Bay had to do with a business deal clear at the opposite corner of the state?

The windfall would be better spent, they said, on economic development in that hard hit industrial area just up-river from Yankee. Others worried that the Department was selling out for the sake of potentially lower electric rates.

You see, the Department acts as the public’s and ratepayers’ advocate before the state and federal regulators who will ultimately have to approve the power uprate.

But it’s a fact of life now that business and government make deals. The state frequently will give a tax break to a business to keep it thriving in Vermont. In this case, it’s the business that must make the state happy.

But in this discussion about the uprate, the other benefit to the new owners has been largely forgotten, at least for the moment. And that is the part about extending Yankee’s license beyond 2012. When Entergy bought the plant, the uprate AND the license extension looked like sure things, not only because of the apparent good condition of the plant, but also because of the high electric rates in Vermont.

However, running that classic old plant harder now just might exhaust what’s left. Even if the uprate is approved, the re-licensing no longer looks like such a sure thing.

This is Timothy McQuiston.

Timothy McQuiston is editor of Vermont Business Magazine.

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