Salmon releases Vermont Yankee decom fund report
BRATTLEBORO -- State Auditor Thomas Salmon has suggested several improvements for lawmakers and regulators to monitor the Vermont Yankee nuclear power plant’s decommissioning fund.
In a management report issued Tuesday, Salmon put forth recommendations to increase review times of the decommissioning trust fund, proposing to develop a supervising process to entail recurring systematic comparisons of estimates for all components of site cleanup costs.
Salmon said Entergy Corp., owner and operator of Vermont Yankee, and the state have expected controls in place for managing and monitoring more than $400 million of decommissioning trust fund assets, but the company could benefit from additional guidelines and more routine analysis of the funding status.
Opponents of the Vernon-based nuclear plant have criticized Entergy for not fully funding the decommissioning costs to pay for the reactor’s eventual dismantling and removal of radioactive components.
Cleaning the site of spent nuclear fuel and other decommissioning activities is expected to cost between $656 million to $991 million (reported in 2006 dollars). The fund value as of December 2009 was approximately $428 million.
The suggested improvements from the auditor’s office would presumably increase the likelihood of adequate assets available in the future to cover the disassembling costs, primarily through more timely and complete oversight of the fund by the Vermont Department of Public Service (DPS).
"Entergy has established a range of policies and procedures to safeguard and manage assets which you’d expect to see in a trust fund and the state has instituted processes to monitor the sufficiency of the trust fund," Salmon said. "However, we identified several points of concern and have made suggestions to provide greater assurance that the trust fund will have adequate resources in the future to pay for site cleanup as required by the state."
The cost of post-shutdown and spent-fuel management are the legal responsibility of the U.S. Department of Energy under its contract with the company to dispose of spent fuel from Vermont Yankee. Entergy is obligated to pay for radiological decommissioning and site restoration on-site with the 2007 estimated cost of $500 million to the company.
Salmon concludes the current Vermont requirement to review the adequacy of the fund to meet all cleanup obligations (every five years) is not frequent enough and recommends it change to every 2.5 years.
"Given the speed at which the financial investment markets can turn these days and the possibility that other significant changes in circumstances might occur during the period between the state’s reviews, we suggest more frequent comparisons of expected decommissioning costs and anticipated trust fund assets," Salmon said. "Regardless of where you stand on the issue of relicensing, everybody wants to be sure that the funds are being monitored properly and that the state’s monitoring of the trust fund is robust and timely."
The auditor’s office also questions if the current trust fund investment policy reflects a prudent approach and suggests implementing guidelines for investment policies of decommissioning funds.
In a letter dated Aug. 17 to Salmon, DPS Commissioner David O’Brien said his department is reviewing the suggestion to have Entergy provide updated analysis based upon certain triggering events. Those events could include a report submitted by the U.S. Nuclear Regulatory Commission indicating a funding shortfall or the value of the decommissioning fund decreases by a certain percentage.
"We are considering this recommendation and how it might be implemented. We are discussing what triggers would be most useful to the state," O’Brien said in the letter.
The department is also reviewing guidelines for investment policies of decommissioning trust funds from other states with nuclear reactors, such as Texas, New Hampshire and Arkansas.
For example, New Hampshire takes an active role in monitoring the investment advisors and utilizes a consultant hired by the nuclear plant with approval from the state treasurer to perform a quarterly review of compliance with investment guidelines, as well as an annual evaluation of investment management performance.
"I am instructing my staff to look at these states and other possibilities to ensure the three components of dismantling the plant at the end of its life (radiological decommissioning, site restoration and spend nuclear fuel management)," O’Brien added.
Entergy spokesman Larry Smith said the company cannot comment on the report until officials have had an opportunity to review it.
"However, regarding the decommissioning trust fund itself -- we believe that the decommissioning trust fund is sufficiently funded, and the NRC agrees," he said.
NRC Public Affairs Officer Neil A. Sheehan said he has not seen the report either, but concurred with Smith’s statement.
The commission requires nuclear plants to submit updates on their decommissioning funds every two years, or annually when approaching its relicensing period, like Vermont Yankee’s scheduled shut-down date of March 2012.
"At this point, we’re convinced they have sufficient funds to satisfy our decommissioning funding requirements, but obviously we are going to continue to engage them on that issue moving forward," Sheehan said.
While Entergy is not presently commenting on the report, the company’s management responded with its own evaluation of the report.
Management also concurred with the recommendation to study the costs more frequently. "Entergy would consider escalating the previous five-year estimate as just described at the two-and-one-half-year mark," according to the company’s response to the report.
State Rep. Sarah Edwards, P-Brattleboro, was part of the statewide request for the decommissioning fund report. She said it was clear to the Legislature that the state has to continually monitor Entergy’s behavior in terms of its responsibility for the funding.
"Under the best of circumstances, the legislation [that lawmakers] passed for fully funding the decommissioning fund would have happened and we wouldn’t have to have this time spent on this investigation," she said.
The release of the decommissioning report turned political in August when Democratic candidate for State Auditor Doug Hoffer of Burlington challenged Salmon, the Republican incumbent, to release the three-year-old document.
"With Vermont Yankee’s owner gearing up for a fight in the next legislative session, it is critical that legislators and the public have access to the audit," Hoffer said on Aug. 12. "In any event, nearly three years ought to be sufficient time to complete even the most complex audit. The Legislature needs the requested information and Tom Salmon should release the audit and explain why it has taken so long."
Salmon’s office said staff members spent 850 hours preparing the work and held the draft for comment to the affected entities. Typically, the office provides directly affected parties with an opportunity to review and comment on the report prior to its public release.
Chris Garofolo can be reached at firstname.lastname@example.org or 802-254-2311 ext. 275.
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