Vermont Yankee contract rejected by co-op

Vermont Electric Co-op rejects Vermont Yankee deal, spurning a 20-year power purchase agreement with Entergy as the nuclear plant faces court battles, NRC scrutiny, tritium leak concerns, and competition from cheaper, cleaner regional energy sources.

Eleven board members sat at a table and heard each side make its case. Then, like a jury, the Vermont Electric Cooperative Inc. board voted.

The verdict: No contract with Vermont Yankee.

The board of directors of the state’s third-largest electric utility voted 9-1 against signing a 20-year power purchase agreement with the 39-year-old nuclear power plant that is fighting for its life in court as the nuclear battle continues in Vermont.

“I have not heard a single member say, ‘Yes, sign this contract,’” director Mark Woodward of Johnson said.

John Ward of Newport was the lone voice on the board in support of the contract.

“We need lower-priced power to keep our jobs and maybe get some new jobs,” he said, after the board had heard that Vermont Yankee power would save the co-op $375,000 the first year of the deal. “This will save our ratepayers a lot of money.”

The board opted for the strongest message against Vermont Yankee among several choices it considered. The board could have decided not to vote at all on the deal, or to accept it pending either the state’s or the court’s permission for the plant to keep operating after next year. Co-op Chief Executive David Hallquist said the board essentially was telling the staff to cease negotiating with Vermont Yankee owner Entergy Corp., after regulators rejected an Entergy spinoff in New York, on a new power agreement.

Vermont Yankee spokesman Larry Smith said the company was disappointed in the board’s decision. “Vermont Yankee is an important resource for the New England region, producing clean, reliable electricity,” he said. “This agreement would have provided VEC’s customers with access to that resource at attractive rates.”

The Vermont Electric Cooperative board took the unusual step of hearing from a Vermont Yankee executive and a critic of the plant, giving each side 30 minutes to speak at a meeting in the truck garage at the utility’s Johnson headquarters.

“It’s a democratic process,” Hallquist said.

After failing to come to a power-purchase agreement with the state’s two largest utilities, Central Vermont Public Service Corp. and Green Mountain Power Corp., Entergy, after a missed power-deal deadline in talks, last month announced a proposed deal with Vermont Electric Cooperative. The deal would provide 10 megawatts of power starting at a below-market price of 4.9 cents per kilowatt hour, then adjusting future prices to market rate.

For Entergy, reaching a power deal would help bolster the company’s argument for gaining the state’s permission to operate the plant for another 20 years beyond March 2012, at a time when energy bills advance in the Legislature.

The Vernon plant last month won a 20-year extension from the U.S. Nuclear Regulatory Commission, but amid concerns about recent tritium leaks at the plant, the state Legislature has blocked state approval. Just recently, Entergy filed a lawsuit in federal court challenging the state’s role.

The co-op’s board hadn’t signed off on the proposed power deal, however, deciding last month to delay the decision until the April meeting.

That brought Mike Colomb, Vermont Yankee’s site vice president, to Johnson to defend the plant. He touted its reliability and the unlikelihood that the plant ever would suffer the damage that the Fukushima plant in Japan has experienced following last month’s earthquake and tsunami, even as a nuclear safety study in Westminster, Vt., is being urged locally.

The two plants are of similar design, he acknowledged, but Vermont Yankee has a low probability of facing a large earthquake, he said. It has several backup power sources to maintain cooling, including a diesel pump, upgraded battery capacity and the ability to connect to the Vernon dam, he said.

Vermont Yankee is more likely to face flooding risks, he said, but during the worst flood in history in 1936, the Connecticut River came 20 feet short of where the plant sits, he said.

Vermont Yankee has run at a capacity of 98.7 percent in 2009 and 89.9 percent in 2010, Colomb said, with its performance evaluated at the U.S. Nuclear Regulatory Commission’s highest ranking.

The board also heard from Arnie Gundersen, a former nuclear engineer from Burlington who is a critic of the plant. He said the Fukushima accident will have repercussions throughout the U.S. nuclear power industry that will drive Vermont Yankee out of business as its future appears bleak to many. He said he expects regulators to require increased safety measures that will make operating a relatively small plant such as Vermont Yankee unprofitable.

“What I’ve come to is, they’re going to shut it down in a year or two,” he said.

He said Vermont Electric Cooperative, with provides power to 34,000 members in 74 towns, would be better off locking into a long-term deal for power with another source.

That argument took hold for board member Craig Kneeland of Eden Mills.

“We need to lock in with a credible supplier,” he said. “We need to deal with a company that has the trust and support of the majority of our members. Entergy isn’t that company.”

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