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August 29th, 2013

Entergy Nukes Vermont Yankee

by Andrew Price, President & COO

Entergy, the owner of the aging Vermont Yankee nuclear power plant, announced on Tuesday that it will shutter the plant before the end of 2014. The nuclear plant, located on the Connecticut River in the southeastern corner of Vermont, has generated about 600 MW of base load electricity for the past 41 years. While this is only a small slice of New England’s 28,000 MWs of peak load, it could increase prices for both electric and natural gas consumers in New England – particularly during peak winter hours - for the next several years.

If all of the power generated by Vermont Yankee were replaced with efficient natural gas fired generation, regional demand for natural gas could increase by 90,000 MMBtu per day. Prices for natural gas, delivered into the region for the 2014/2015 winter, jumped more than 10% on the news or about 45 cents per MMBtu.

Certain retail electricity suppliers, who received wholesale electricity from the nuclear plant, have had to temporarily suspend new offers for electricity service beyond 2014. These suppliers are scrambling to line up replacement generation.

Several factors seemed to play a part in Entergy’s decision to shut this nuclear plant. Vermont Yankee is nearing an expensive re-fueling next year, has almost run out of storage for its spent fuel and is facing stiff competition from low price natural gas fueled power plants during most hours of the year. Ironically, the region was already likely to face significant winter-time natural gas constraints, and resulting high electricity prices, during the next several winters. The loss of Vermont Yankee makes high winter prices for both electricity and natural gas more likely. The natural gas constraint is likely to be short-lived, however, and, with a return of lower winter power prices likely in the 2016 or 2017 time frame, was apparently not sufficient to keep Vermont Yankee viable for a few more years.

The State of Vermont has been trying to close Vermont Yankee, which was commissioned in 1972, for several years. The State has a strong anti-nuclear movement and Government officials had grown alarmed by several operational mishaps. In 2011, however, the Nuclear Regulatory Commission deemed the plant safe and extended its operating license, set to expire in March 2012, for an additional 20 years.  The State, which believed that it gained authority to approve license extension as part of Entergy’s 2002 purchase of the plant, tried to force a closure through the courts. See additional discussion on Entergy’s battle with Vermont here. Just last month Entergy was awarded a court decision that seemed to clear the way for continued operations.

Another legal fight may be brewing over the plant’s decommissioning plans. The company reportedly wants to put the plant in mothballs for 60 years before dismantling starts. This has the benefit of reducing the radioactivity but may not be fast enough for State officials who have been working for 3 years to become nuclear free.

Photo Credit: Nuclear Regulatory Commission

(Tags: Vermont Yankee, Nuclear Regulatory Commission, New England, Power, Electricity Prices)

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