Expert: Loss of VY not economic apocalypse
BRATTLEBORO -- In its lawsuit against the state of Vermont, Entergy claims that if the Vermont Yankee nuclear power plant were closed March 21, 2012, that the business and the state would suffer severe economic losses.
Edward D. Kee, vice president at North-America Electric Reliability Corporation Economic Consulting, on behalf of Entergy, wrote that "early closure of Vermont nuclear station would mean higher electricity prices for the region." Kee also states that there would be huge job losses.
In his testimony, Seth G. Parker, vice president of Levitan & Associates, Inc., a management consulting firm specializing in the power and fuels markets, wrote that because Kee didn't conduct any original research or analysis to support his claims, he fails to properly consider any alternatives.
"Mr. Kee claims that ENVY will be harmed if not granted an injunction because the uncertainty regarding Vermont Yankee's continued operation past March 21, 2012, will limit its ability to enter into long-term electricity sale contracts," Parker wrote.
Kee claims that Entergy would receive lower contract prices because it would have to make a contract contingent on the plant's continued operation, making the contract less valuable to a buyer, Parker wrote.
"However, his analysis does not take into account the fact that the existing Power Purchase Agreement between ENVY and the Vermont Yankee Nuclear Power Corporation is similarly contingent on Vermont Yankee's operation," he wrote.
The PPA is a "unit-contingent" contract because buyers can only purchase the plant's power when it's operating.
Parker wrote that even if the plant operated past its current certificate of public good, that buyers from Yankee would still be exposed to power prices when the plant is out of service, whether for planned refueling outages or for unplanned reasons.
Last month, Entergy filed a lawsuit against the state claiming its attempt to forbid continued operation of the plant past March 21, 2012, infringes on the federal jurisdiction of the Nuclear Regulatory Commission.
In 2002, when Entergy purchased the plant, it signed a memorandum of understanding with Vermont that included a number of conditions Entergy had to agree to prior to the sale. Entergy is arguing that two of those conditions -- that the PSB has jurisdiction under current law to grant or deny approval of the plant's continued operation and that Entergy waive any claim it might have to federal preemption of any actions taken by the board -- are no longer valid due to two actions that occurred since the memorandum of understanding was signed.
The first, that the Legislature passed Act 160 in 2006, giving itself the authority to forbid the PSB from issuing a certificate of public good; and the second, that the Legislature's discussion whether to give permission to the PSB to issue the CPG was based on an area of review that is under the sole jurisdiction of the NRC -- safety of the plant.
Kee claims that the difference between the prices in a recently rejected contract between Entergy and Vermont Electric Co-operative and the new contract between Vermont utilities and Hydro-Quebec demonstrates that the company will be harmed having to incorporate a contingency in any new contract.
Parker argues that the Hydro-Quebec contact has more value than the one rejected Entergy because of the difference between providing on-peak and round-the-clock energy that the Yankee plant provides.
"ISO-NE dispatches more expensive plants during on-peak hours than during off-peak hours, and the most expensive plant dispatched in any hour sets the market energy price for all plants operating in that hour," Parker wrote. "As a result, on-peak energy prices are significantly higher than off-peak energy prices. Thus, Hydro-Quebec energy deliveries will allow Vermont utilities to avoid purchasing expensive on-peak energy, while about one-half of the Vermont Yankee energy deliveries will be during off-peak hours when the savings will be lower."
He adds that the Hydro-Quebec contract is also more valuable because it isn't unit-contingent, has lower risk of non-performance because it's government-owned and because of its ability to help state utility purchasers meet the renewable energy goals of Vermont's Sustainably Priced Energy Enterprise Development program.
Kee sums up the alleged harm as resulting from, "potentially lower electricity sale agreement prices from other buyers," Parker wrote. Using the qualifier "potentially" to indicate the lawsuits outcome could cause harm is speculative.
"It is not clear that granting a preliminary injunction would have any impact on ENVY's ability to enter into long-term contracts," he wrote. "Mr. Kee's conclusion rests on assumptions about how potential buyers will behave in light of the uncertainty regarding Vermont Yankee's ability to operate past March 21, 2012. A preliminary injunction will not remove that uncertainty, because potential buyers understand that such an injunction does not mean that the court will ultimately rule in ENVY's favor."
Parker adds that Kee's claims of job losses don't have merit because the three studies he relies on for his claim, "ignores continuing activities at Vermont Yankee and jobs that would be created by power replacement options."
While many jobs at Yankee would be lost if the plant shuts down, some would be balanced out by jobs needed to conduct a variety of on-site activities after its closure, he wrote.
"These activities could include monitoring the plant, overseeing fuel cooling, constructing dry storage casks, transferring spent fuel, expanding the spent fuel storage area, ensuring security and eventually decommissioning the plant," Parker wrote.
Mike Burns, spokesman for Entergy, declined to comment.
"Our response will be in our filing," Burns said.
Entergy is expected to file its response to the state's response before Wednesday.
Josh Stilts can be reached at email@example.com, or 802-254-2311 ext. 273.
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