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The Future Of Energy: Make Deals Now

04/05/10 7:55AM By Timothy McQuiston
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(Host) This week, VPR's Commentators are taking a look at the future of energy. We start with Commentator and Vermont Business Magazine Editor Tim McQuiston, who says the time to make decisions is now:

The future of Vermont energy is going to be upon us sooner than you may think. For the last several years, we've been in a pretty cushy spot. We've had long-standing contracts with Hydro-Quebec to the north and Vermont Yankee from the southern part of the state. Those two contracts have provided about two-thirds of our electric needs.

There have also been smaller contracts at attractive rates. And when Vermont utilities have to go to the spot market, a glut of energy keeps spot market prices relatively low. Vermont recently has enjoyed the lowest electric rates in New England.

We weren't always so self-satisfied with out energy supply. It was only in 1998 following the January ice storm that the Vermont utilities were trying to get out from under what seemed at the time to be an expensive contract with Hydro-Quebec.

Just last month and after several years of fence mending with our francophone friends, Central Vermont Public Service and Green Mountain Power came to a new agreement with Hydro that would provide 225 megawatts of power until 2038. To tell you how good a deal this is, I haven't heard a single naysayer. In this current political climate that says a lot.

Vermont uses 700 to 1,000 megawatts on an ongoing basis. So while the H-Q contract is big, it's still only a quarter of the need. The utilities have cobbled together several contracts from other producers big and small, renewable and traditional, that will secure power for the next several years. Vermont looks to be in a pretty good place.

But as of right now, there is still a big hole in the future that is currently filled by Vermont Yankee. The nuclear power plant's license expires in just over two years. But neither the state nor Vermont Yankee can wait anywhere near that long to decide whether or not to extend the plant's license another 20 years.

Sometime this month, Vermont Yankee will be shut down for refueling. A refueling typically keeps the plant running for 18 months. The cost to refuel is about $50 million. In order to buy the uranium for the NEXT refueling, which would be near the end of 2011, Vermont Yankee would have to make a commitment in about one year from today. Sometime in the spring of 2011 will be their drop dead date.

Some might cavalierly say, "Yeah, drop dead." And stop wishing for a new owner to come in and save the day. It takes forever to transfer ownership of a nuclear power plant, and who would want to buy it anyway?

BUT we'll still need to find 300 megawatts of power at prices that will keep Vermont in a relatively competitive position. Maybe Hydro-Quebec will be the answer. It's possible that H-Q could be tapped for another 200 megawatts.

But whatever the answer is, we've got one year to find it.

(Host) You can find more commentaries by Tim McQuiston online at VPR-dot-net.

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Commentary series: The Future of Energy
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