Entergy, the owner of Vermont Yankee, announced in August of 2013 that it would be closing the plant at the end of 2014 due to a number of financial factors, including low wholesale electricity prices that have reduced the profitability of the plant; the need to invest in significant capital costs to maintain the unit; and low prices in the regional market for electric generating capacity, which provides revenue to plant owners in addition to their revenues from electricity sales. Vermont Yankee is an independent power producer (merchant plant), and as such, the costs associated with its operation and maintenance cannot be recovered through regulated cost-of-service rates. Low natural gas prices have resulted in low wholesale electricity prices, and have made natural gas the major supplier of electricity in New England – despite its other uses.
[ii]
New England significantly increased its reliance on natural gas as a fuel for electric generation in the past few years. Natural gas provided less than
30 percent of the electricity generated in New England in 2001, but increased its reliance on natural gas generation to 52 percent a decade later. Unfortunately, transmission pipeline capacity has not kept up with the increased use for natural gas in electricity generation in New England. The lack of sufficient pipeline capacity is more pronounced in winter months, when natural gas is also used to heat homes and businesses. These infrastructure constraints have contributed to the large price spikes in spot natural gas and electricity prices in New England during the past several winters.
Source: Energy Information Administration,
Despite the economic issues noted in operating the plant, Mr. Skibniowsky, the head of the town’s planning commission, said, “I fully expected that we would continue operating for another 20 years. The plant was well maintained. It was in good condition.”
[iii]
Steps to Shutter the Plant
The cost to decommission Vermont Yankee is estimated at
$1.2 billion. Because its trust fund has only about half of that amount, the full dismantling of the plant will not begin for decades. In the meantime, its operators will cool, store, and secure its spent fuel onsite. Despite federal law requiring the government to develop a long-term storage facility for nuclear waste, the Obama Administration’s lack of funding for Yucca Mountain means that there is no active plan.
The Donahue Institute, at the University of Massachusetts,
estimated that the plant contributed almost $500 million to the regional economy in 2014, and as the plant is decommissioned, its economic contribution will fall to $13 million after 2020, and continue to drop thereafter. The plant currently employs 550 workers. Later this month, once the plant has all of the fuel removed from its reactor, employment will fall to 316. By April 2016, after the fuel has had time to cool, employment will be at 127. When the spent fuel pool is shut down around 2020, employment will fall to about 50 security personnel that are needed to monitor dry cask storage.
[iv]
Due to the economic loss from the plant’s shuttering, the town was forced to cut about $500,000 from its budget, eliminating its police department and contracting with the county sheriff.
Source:
Conclusion
The closure of Vermont Yankee will have a major impact on a three state region and the hundreds of affected employees located there. Furthermore, the closing of this low-cost, well-run, environmentally-benign facility that produced reliable electricity will most likely result in further electricity price spikes to consumers, as the demand for natural gas competes against residential heating needs, electricity generation, and manufacturing in a pipeline-constrained environment. As nuclear and coal-powered plants are shuttered in New England, the region will become even more reliant on natural gas for electricity generation. While the shale gas renaissance has produced sustained low natural gas prices and low wholesale energy prices, prudent management means that diversity of supply issues must also be considered. Without that management, the low energy and capacity prices in the Northeast have made it difficult to provide adequate compensation to merchant nuclear power plants. And despite these plants’ fuel diversity and reliability benefits, New England consumers will likely suffer from inadequate electricity generation and/or continuing spiking of electricity prices.
Brattleboro Reformer,
[ii] Vermont Yankee nuclear plant closure in 2014 will challenge New England energy markets, September 6, 2013,
Energy Information Administration,
[iii] Vermont Yankee Nuclear Plant Begins Slow Process of Closing, January 4, 2015,
New York Times,
[iv] Economic Impacts of Vermont Yankee Closure, December 2014,
UMass Donahue Institute,