{"id":125,"date":"2013-02-12T06:19:46","date_gmt":"2013-02-12T11:19:46","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/2013\/02\/vermont-yankee-may-be-next-nuke-to-close.html"},"modified":"2013-02-12T06:19:46","modified_gmt":"2013-02-12T11:19:46","slug":"vermont-yankee-may-be-next-nuke-to-close","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2013\/02\/vermont-yankee-may-be-next-nuke-to-close.html","title":{"rendered":"Vermont Yankee may be next nuke to close"},"content":{"rendered":"

\n\n<\/a>\nUBS predicts Entergy will close its Vermont Yankee nuclear power plant soon:\nthat’s the same Entergythat couldn’t keep the power on during the SuperBowl\nand that\n\ncan’t keep Pilgrim 1 nuclear reactor up in Massachusetts during a winter storm<\/a>\n(down 3 days now, for the third downtime in a month).\nA few days later, UBS\nset Entergy up on a quarterly earnings call to mention that\nVermont Yankee had already been taken off the New England energy\ncapacity auction, which would make it easy to replace.\n\nSan Onofre still down<\/a> in California,\n\nDominion Power closing Kewaunee<\/a> in Wisconsin,\n\nNRC terminated Calvert Cliffs<\/a> in Maryland,\n\nDuke closing Crystal River<\/a> in Florida,\nand maybe Vermont Yankee next?\nHow about\n\nwe pass HB 267 to stop Georgia Power charging for cost overruns<\/a>\nfor Vogtle 3 and 4 and see how long before Southern Company stops that project?\n<\/p>\n

\nAndrew Stein wrote for vtdigger 6 February 2013 (updated 7 Feb),\n\nIn report, financial firm forecasts that Entergy may close Vermont Yankee<\/a>,\n<\/p>\n

\n

\nIn an investment research letter, the Swiss financial services\ncompany UBS Securities anticipates Entergy Corp. will retire one of\nits nuclear power plants in 2013, and it cites \u201cVermont Yankee\nas the most tenuously positioned plant.\u201d\n<\/p>\n

\n\n<\/a>\nUBS representatives met with Entergy’s new leadership team on Feb.\n1, the same day Leo Denault became CEO and chair of the board for\nthe Louisiana-based company that operates the Vermont Yankee nuclear\npower plant.\n<\/p>\n<\/blockquote>\n

\nAnd that’s how a clean-broom new CEO often signals his intentions:\nby bringing in outside experts to provide him cover for what he\nalready intends to do anyway.\nAnd this new-broom CEO\n\nis Entergy’s former Chief Financial Officer<\/a>\nwho as CFO has repeated fiddled with Vermont Yankee to try to\nmake it less unprofitable.\nWhat did those experts say?\n<\/p>\n\n\n

\n

\nOn Monday, UBS released a report (see below) that details fiscal\nportents \u201csuggesting real retirement risk for units such as\nVermont Yankee and (New York’s) Fitzpatrick in ’13; we see\n(increased) focus on the (decommissioning) process.\u201d\n<\/p>\n

\nThis analysis comes a month after UBS released a report, which\nproject that Entergy \u201cis unlikely to generate any meaningful\ncash\u201d from wholesale commodities in 2013 and 2014. UBS also\nexpects the corporation to experience deficits in 2015 and 2016 if\nthe company does not retire older, lower capacity units, like\nVermont Yankee.\n<\/p>\n

\n\n\"Vermont<\/a>\nThe February UBS report shows that Vermont Yankee is the lowest\ncapacity plant Entergy operates, at 605 megawatts.\n<\/p>\n

\nAll of this information comes as Entergy and the state of Vermont\nare embroiled in legal disputes over whether Vermont Yankee should\ncontinue to operate. One case is pending before the U.S. Court of\nAppeals and Entergy has appealed Vermont Public Service Board\ndecisions to the Vermont Supreme Court.\n<\/p>\n<\/blockquote>\n

\nThe story continues with a rote recital of rosy prospects for nukes\nby an Entergy spokesman.\nThat’s also part of the corporate ritual.\nAnd so is this, a quarterly earnings call teleconference,\n\nEntergy Corp ETR\nQ4 2012 Earnings Call Transcript<\/a>, 8 February 2013:\n<\/p>\n

\n

\n\n<\/a>\n\nJulien Dumoulin-Smith – UBS<\/strong>: Then just turning to the EWC\nsegment for a quick second, obviously the New England results came out\nthe other day. Can you indicate whether you committed Vermont Yankee\ninto that auction and whether it cleared by chance?\n<\/p>\n<\/blockquote>\n

\nWhat auction?\nThe annual energy capacity auction for the six New England states.\nScott DiSavino wrote for Reuters 10 December 2012,\n\nNew England grid can function without Vermont Yankee reactor<\/a>,\n<\/p>\n

\n

\nISO New England told Reuters the grid operator decided to let\nVermont Yankee out of auction 4 in May 2012 and auction 5 in\nNovember 2012.\n<\/p>\n

\nNow that the ISO has accepted Entergy’s request to keep the reactor\nout of the auctions, Entergy could lose millions in guaranteed\nfuture revenue. But the company would not be on the hook for\nproviding capacity in the event that the state was successful in its\nefforts to shut the reactor.\n<\/p>\n<\/blockquote>\n

\nSo Entergy can close Vermont Yankee without suffering some financial\nconsequences.\n<\/p>\n

\nBack to the earnings call:\n<\/p>\n

\n

\n\nLeo P. Denault – Chairman and CEO<\/strong>: Bill?\n<\/p>\n

\n\nJulien Dumoulin-Smith – UBS<\/strong>: I tried.\n<\/p>\n

\n\nBill Mohl – President, Entergy Wholesale Commodities<\/strong>:\n\n<\/a>\nJulien,\nthis is Bill. We did actually commit VY and it did clear and you may ask\na question why did we do that as we haven’t in the past, but now that\nunit has been delisted it’s not considered a reliability must run unit\nthat takes away a lot of our relicensing risk, because it relates to the\nCPG issues, so that in the event that we would encounter any problems,\nwe could replace it with a fungible product.\n<\/p>\n<\/blockquote>\n

\nUBS, the same company that just released that report,\nlobbed the first questions in the quarterly earnings call,\nleading up to an answer that\nEntergy is ready to ditch Vermont Yankee and replace it with\n“a fungible product”: some other energy source whose output is more easily tradeable on markets.\n<\/p>\n

\nA CPG is a Certificate of Public Good,\nas in the petition filed by Entergy with the Vermont Public Service Board\n\nthe same day as the earnings call,<\/a>\nfor “operation of the\nVermont Yankee Nuclear Power Station, including the\nstorage of spent nuclear fuel.”\n<\/p>\n

\nSure, Entergy is still going through the motions of fighting\nthe various court cases, which include the state of Vermont\nwanting to close it, as related\nearlier in that same earnings call:<\/a>\n<\/p>\n
\n
\n

\nRegarding Vermont Yankee, oral argument at the Second Circuit Court\nof Appeals was held on January 14th, before a three judge panel. As\na reminder this case involves the state of Vermont’s appeal that the\nJanuary 2012 Federal District Court ruling invalidating certain\nstate laws regarding continued operation and borrowing the state\nfrom requiring a below market PPA as a condition for continued\noperation. A decision could come by mid-year. Two days later we\nparticipated in hearing at the Vermont Supreme Court. The state\ncourt hearing concerned a claim by an intervener group that Vermont\nYankee was operating in violation of past Vermont Public Service\nBoard orders. Next steps will be established by the state court.\n<\/p>\n

\nHowever, given the Federal District Court rulings and the absence of\nany state ruling prohibiting operation, we will continue to operate\nuntil final decisions are reached in the federal case and in the\ncertificate of public good proceeding before the VPSB.\n<\/p>\n

\nOur right to continue operating is supported by representations to\nthe Federal District Court by the Vermont Attorney General. Also at\nthe state level, hearings on direct testimony in the CPG proceeding\nwill be held next week. Additional testimony hearings and briefings\nare scheduled through August of this year. A Board decision is\nexpected by year-end.\n<\/p>\n<\/blockquote>\n<\/td><\/tr><\/table>\n

\nSure, those court cases could go for Entergy.\nBut if they don’t, Entergy is already prepared to close Vermont Yankee\nand is busily sending out signals of that closing.\n<\/p>\n

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