Decommissioning Fund Has Limited Stock Market Exposure

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(Host) The main obstacle to the sale of the Vermont Yankee nuclear plant is a dispute over a $300 million fund that’s set aside to dismantle the reactor. The fund is now partially invested in the stock market. But as VPR’s John Dillon reports, it’s not as risky as some of investments on Wall Street.

(Dillon) In 1982 Vermont Yankee customers began paying about a dollar a month to support a decommissioning fund that will eventually be used to take apart the state’s only nuclear reactor. The fund now totals around $300 million. Thirty percent of it is invested in the stock market – a limit set under a 1994 settlement with the state.

Christine Salembier is Vermont’s public service commissioner, whose department represents ratepayers. She says the idea was to restrict the fund’s exposure to the more volatile equity market. The settlement was reached in a case before the Federal Energy Regulatory Commission, or FERC.

(Salembier) “There was a rate case before the FERC at the time and the industry was petitioning FERC to allow the investment in equities. So Vermont Yankee agreed to a settlement with the Department that restricted their investment to 30%. In the absence of a settlement, nuclear companies have to meet something called a ‘prudent investment standard.’ And that’s essentially an opinion by their investment bankers.”

(Dillon) The trustee for the fund is the Bank of New York. The money is invested through several financial advisers.

Yankee spokesman Rob Williams says the fund has been hit by the downturn in the stock market. But he says federal regulators will make sure there’ll be enough to dismantle the plant when it is scheduled to go offline in 2012.

(Williams) “And if the fund does not perform as well one year compared to the other, that’s when contributions could increase. So there is a mechanism in place to ensure that there’s sufficient funds such that we’ll be able to return this site to a green field when the plant is no longer in operation.”

(Dillon) If the plant is sold as planned to Entergy Nuclear of Jackson, Mississippi, Vermont customers will no longer have to contribute to the fund. If it turns out more money is needed, then Entergy, not consumers, would have to pay.

The more likely scenario is that there will be money left over in the fund. During the hearings on the sale, a state witness estimated that if Entergy owned the plant it could save $100 million in decommissioning costs. The Yankee sale is supposed to close at the end of the month. But Entergy doesn’t like a condition imposed by regulators that requires the surplus to go back to ratepayers.

For Vermont Public Radio, I’m John Dillon.

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