Circles of pain around Vermont Yankee closing28 January 2015
The Vermont Yankee nuclear plant was permanently retired at the end of 2014. Meredith Angwin looks at the implications of the closure for the people working at the site, as well as the local area and the wider New England grid.
In August 2013, Entergy announced that it would close Vermont Yankee at the end of 2014.
If Vermont Yankee was to be refuelled in the third quarter of 2014 as scheduled, Entergy had to order fuel in August 2013: instead, it decided to close the plant. This announcement came as a great shock to most of the people at the plant, since Entergy had just won a series of lawsuits against the state of Vermont. Entergy had battled the state for years and kept winning, so everyone expected that the plant would keep operating. In fact, although Entergy won a major case in Federal Appeals Court on 17 August, it made its announcement about the coming shutdown on 23 August.
When it announced that the plant would close, Entergy said that it was no longer economic to operate it. It listed three reasons that Vermont Yankee had become unprofitable. First, it is a small stand-alone plant and therefore relatively expensive to operate. Second, low gas prices (from the abundance of fracked gas) made the grid prices too low for the plant to make a profit. Third, there were structural problems with pricing on the local grid.
Entergy did not mention two areas in which plant costs were high due to particular circumstances in Vermont. First, the Vermont legislature had recently passed a "generation tax" on Vermont Yankee. The tax was for plants built after 1965 that were greater than 200 MW, and Yankee is the only such plant in Vermont. The tax was $12 million a year, and 2014 was the first year it was due. Entergy was fighting this tax in court, but it looked like a long battle. When it decided to close the plant, it also agreed to pay the generation tax for the final year of operation.
A second area of Vermont-specific cost was a too-generous deal that Entergy made when it bought the plant. When Entergy bought Vermont Yankee from the local utilities, it promised to share revenue with the utilities when the price on the grid reached a certain point. The price reached that point and more last year, during the January cold period nicknamed the "Polar Vortex." Consequently, Entergy paid almost $18 million to the utilities.
In short, at a time when other plants of the same size could expect to pay about $4 million in some type of "generation tax" equivalent, Vermont Yankee paid a combination of $30 million. This makes a big difference to a small (620MW) plant.
A related issue is the way that the state continued to oppose Vermont Yankee operation. The state picked fights over water permits, imposed lawsuits and lawyer fees, and set a requirement to fund the Red Cross extravagantly ($700,000) for beds and shelters in case of an evacuation. Entergy, looking forward in Vermont, had no reason to believe that newly-devised state fees would ever end. It decided to close the plant.
It was 30 January 2014 that the "lists went up" at the plant. The lists were the names of the employees who would be laid off in January and February 2015, shortly after the plant closed, and the names of other employees who would work for another year, getting the plant ready for Safstor. Around 600 people worked at Vermont Yankee, but dozens left before the end of 2014. As reported in the local newspaper, the Keene Sentinel, plant staffing will drop from 550 employees in late 2014 to 316 at the end of January 2015. By April 2016, staffing will drop again, to 127 people. On 19 January, 234 workers' jobs ended, though 80 were transferred to other Entergy jobs in other states.
Entergy is committed to helping employees find new jobs. However, so far they have found only 100 jobs at Entergy plants, vice president Bill Mohl told the Brattleboro Reformer. Some employees will retire, and some will take comparatively low-paying jobs to stay in the Vermont area. Others are already moving to far-away plants. It's not easy for anyone, and it is especially hard on some employees who are pushing sixty and not yet in a position to retire.
Vermont Yankee's Town
Vermont Yankee is located in the town of Vernon; this town will lose a huge portion of its tax base when the plant closes. While people in town were aware that they have to cut back, it has not been easy. The most recent Vernon town meeting turned into a series of meetings in which the town decided to disband its police force. Many people were upset at this choice. The town will contract for a lower level of coverage from the state police. Now Vernon is trying to sell its police cruisers. Similar cuts are happening in the town's school budget.
As part of its shutdown deal with the state, Entergy will donate $2 million a year for five years to be used for economic development in Windham County (the location of the power plant). Vernon submitted a bid for part of this money, but the proposal was turned down by the evaluation committee. Many proposals were turned down. Some proposals were not funded even if the evaluation committee recommended them - the evaluation committee made recommendations, but the governor made the ultimate decisions. Governor Shumlin decided that most of the proposals were not worth funding and as a result only $800,000 worth of proposals will be funded this year. None of the funded proposals has anything to do with retraining or helping Vermont Yankee workers.
The larger area
Vermont Yankee is located on the Connecticut River, on the Vermont side. The 600 workers come from three states: Vermont, New Hampshire and Massachusetts.
Vermont Yankee added over $60 million to the local economy each year. In 2010, a study estimated the combination of Vermont Yankee state and local taxes at over $12 million per year. The plant also donates over $150,000 a year to local charities and some will be hard hit when that ends. Demand for services in this area may go up, but the funding will go down.
In 2014 Entergy paid $12 million in generation tax to the state of Vermont. Since Vermont Yankee will not be generating power in 2015, this tax should end. However, Entergy cut a deal with the state for a Certificate of Public Good for Vermont Yankee's final year of operation. In this agreement, Entergy will pay a $5 million "generation tax" to the state in 2015, even though has ceased to generate power.
But after 2015, the Entergy generation tax money ends. Considering that the state is facing a $30 million budget shortfall in 2014, even with the plant running, this is not small potatoes. Estimates of the 2015 budget shortfall run as high as $90 million. Nobody knows which programmes will be cut, or which taxes will be raised, to make up for the shortfall. Closing Vermont Yankee has added to this pain.
The grid reacts
Without Vermont Yankee (which made 70% of Vermont's electricity in 2014), there are too few power plants on the grid, and too many of them are fired with natural gas. In the winter, natural gas plants compete with home heating for natural gas. Home heating has priority. The New England grid is now almost 50% powered by natural gas, up from 20% just a few years ago.
During last year's Polar Vortex, as home heating ramped up in below-zero (Fahrenheit) weather, many gas-fired power plants could not import gas. Some plants can store oil and use it when gas is not available. The grid operator kept the grid working with a winter reliability programme that provided around $70 million for oil or dual-fired power plants to keep fuel on-site. The price of power on the grid soared as the oil was burned.
This winter several coal stations are closing at the same time as Vermont Yankee. Therefore, the grid operator has an even more expensive and extensive winter reliability programme this year. To prepare for their own higher payments for power, local distribution utilities are posting winter prices that are up to 50% higher than last winter's prices. According to John Howat, a senior policy analyst at the National Consumer Law Center in Boston, 30% of households will have difficulty paying these bills.
Further ahead, as coal plants retire, the Northeastern grid operators' "forward capacity auction" no longer has a surplus of bidders. The auction for 2017 is over, and capacity payments will triple in 2017. Vermont Yankee retirement has added to this problem.
The bottom line
The pain of Vermont Yankee closing starts with the people who are laid off, the businesses they patronise, the towns they live in, and tax revenues received by local and state governments.
Electricity prices will rise. With the closing of a major economic engine, local employment will drop. Eventually, every person on the New England grid will be affected.
It is comparatively easy to assess the bottom line in monetary costs. The human costs of people losing their jobs, and becoming discouraged and displaced as they are forced to move to new areas, cannot be calculated.
About the author
Meredith Angwin is physical chemist, a writer, and a former project manager at EPRI (Electric Power Research Institute). She blogs at: