Report Says Vermont Yankee Not Generating Enough Cash

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The Entergy Corporation will be back in court next week, defending its right to keep operating the Vermont Yankee nuclear plant.

But as Entergy continues its legal battle, a financial firm says Yankee is a drag on the company’s finances.

The research report from UBS Securities says Entergy could decide to shutdown Yankee and its Fitzpatrick plant in New York state because they’re not generating much cash for the company.

Nuclear power plants like Yankee compete with natural gas fired plants in the wholesale electric market. And the abundance of natural gas has kept electricity prices down, putting financial pressure on the company’s older nuclear units.

Nuclear engineer and Yankee critic Arnie Gundersen says the UBS report didn’t even include all the dire news facing the Vermont plant.

"It didn’t look at Vermont Yankee in particular to see all of the additional cash drains that are going to be required in the future," he says.

Gundersen says the 43-year-old Vermont Yankee faces some expensive repairs. The plant has the same design as the Fukishima reactors in Japan that were severely damaged following a tsunami in 2011. Gundersen says federal regulators will soon require plants like Yankee to make post-Fukishima modifications that could cost tens of millions of dollars.

Yankee also needs a new condenser, a piece of equipment that will cost $100 million or more to replace.

"So there’s about a quarter of billion dollars in repairs to Vermont Yankee that will have to be made in the next couple of years," he says. "And this analyst and I agree that it doesn’t make economic sense for a small plant like that."

Yankee spokesman Rob Williams says the company will not comment in detail on the UBS report.

"Our nuclear units, throughout Entergy nuclear, they’re important sources of clean and reliable electricity. And we remain fully focused on the safe operation of those plants," he says. "But as a matter of policy we don’t comment on the financial performance of the individual plants."   

Entergy and the state of Vermont will be back in a federal court room next week arguing in a case that could decide the role of states to oversee nuclear power plants.

Vermont lost the first round last January when a federal court judge struck down two Vermont laws that gave the Legislature authority over the plant’s future. District Judge Garvan Murtha said the Legislature was improperly motivated by concerns over nuclear safety. Murtha cited federal law that says safety issues are the sole responsibility of the federal government.

The state of Vermont appealed, and the oral argument in the case takes place next week before the 2nd circuit court of appeals. Vermont Law School Professor Patrick Parenteau has followed the case closely. He says the challenge for the state is to convince the three judge panel to not delve deeply into the legislative record which shows lawmakers repeatedly talked about safety concerns.

"You can get into the weeds in this case and lose it very quickly but if they can get above that and convince the court that they shouldn’t go beyond the text of the statute, and they ought to defer to the state on a question that isn’t clearly pre-empted by federal law, then they’re in good shape," he says.

The state Supreme Court also holds a hearing next week on a motion by the New England Coalition to shut down Vermont Yankee.

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