VERNON -- Vermonter ratepayers are set to reap the benefits of record high electricity prices in New England as part of an agreement with the operator of the Vermont Yankee nuclear plant.
Entergy Corp. will give Green Mountain Power, the state's largest utility, a check for $17.8 million as part of a revenue-sharing agreement with the utility. A GMP spokeswoman said Tuesday the utility will return the money to ratepayers and is working with the Department of Public Service on rate reduction.
Entergy announced last year it would close the Vermont Yankee nuclear power plant in Vernon at the end of 2014 for economic reasons.
When Entergy purchased Vermont Yankee in 2002, it signed a revenue-sharing agreement with the state to return money by power sold above a certain price threshold after its presumptive shutdown date in 2012 to the utilities that buy power from the plant.
The price was set at $61 per megawatt hour. Revenue from power sold at prices exceeding that threshold are split between Entergy and Green Mountain Power.
And because New England ratepayers were slammed by high wholesale electricity rates this winter - prices driven by natural gas demand and insufficient transmission capacity to bring cheaper power to the grid - Entergy sold power above this threshold and is required to return half of the excess to GMP.
Chris Recchia, commissioner of the Department of Public Service, said this is the first time (and likely the last) that the agreement has returned this amount of money.
"This is very good news for Vermont ratepayers and GMP customers, but it is the result of a very unique and unusual circumstance that wasn't present in the past," Recchia said.
"Because Entergy was closing, they did not do any longer term contracts for their power, they just sold it on the market, and the market prices were extremely high this winter," he said.
These price spikes did not affect Vermont because, unlike other states where utilities purchase power from independent generators, the state's regulated utilities own many of their power sources.
"Really, the southern states are hurting with regard to the volatile energy prices," Recchia said.
The department and GMP are working out how to return the money to ratepayers.
"Our position is that this money is for customers to reduce rates," said Kristin Carlson, a spokeswoman for GMP. "It's too soon to tell what the exact numbers will be."