Public Service Board Reviews Sale of Vermont Yankee
02/04/02 12:00AM By John Dillon
(Host) This week, some hard questions will be asked about the proposed sale of the Vermont Yankee nuclear power plant. Monday, the Public Service Board starts technical hearings on the sale. The state agency that represents ratepayers has serious reservations about the deal.
As VPR's John Dillon reports, one concern is over the corporate structure that the new owners want to establish.
(Dillon) Last summer, the Entergy Corporation of Louisiana won the bid to buy Vermont Yankee. The company owns nine other nuclear plants and says it will pay $180 million for the Vermont reactor.
The Vermont Department of Public Service represents electric customers. Department staff and consultants have studied the sale for months. They say that the deal sets up three distinct corporate layers to separate the Entergy parent company from the company that actually owns the plant.
The state says the impact of this complex corporate structure is to insulate the Entergy parent from losses of the local company. That worries state officials because the company that will owns the plant is a limited liability corporation. That means the profits flow through to the parent. But if something happens to the Vermont company, like a prolonged shutdown, its liability is limited only to what it actually owns. The corporate parent is protected from those losses.
Christine Salembier is commissioner of the Public Service Department. She says the deal as it is now structured leaves the company that will operate the plant exposed to too much financial risk. She wants the deal changed before the state can fully support it:
(Salembier) "There are reasons why we might want to sell the plant. And one of the big reasons is transferring the operating risks. So we would need to be assured that the corporate structure and the financial guarantees were sound enough to ensure that, in fact, that the operating risk was really being transferred¿. So if our concerns can be met then we can move forward and it's possible we can support a sale."
(Dillon) The state also says the Public Service Board should take a detailed look at Entergy's energy trading operations. The state's financial witness says the trading activities operate out of a joint venture that removes risk from Entergy's balance sheet. The witness said this kind of off balance sheet accounting contributed to the recent bankruptcy of the Enron Corporation.
Entergy spokesman Carl Crawford says the company wants to cooperate with the state. He says the deal will provide sufficient financial backing to the Vermont plant.
Crawford says the company will make a $70 million line of credit available. He says that level of financial support is more than what federal regulators require:
(Crawford) "There's more assurances provided to the plant under our ownership proposal than the current present owners are providing to the plant ¿. And it's really a good deal - more than what we provided to state of New York for the purchase of two nuclear plants in New York."
(Dillon) Post-September 11 security issues may also come up at the hearings. Just last week, the government told the nuclear industry to be on high alert for a possible terrorist attack.
Jim Dumont is a Middlebury lawyer who represents a group concerned about nuclear safety. He says that proponents of the sale have failed to factor in the high cost for increased security:
(Dumont) "The September 11 tragedy affects both the safety and the economics. You can't separate the two. And the economics issue is squarely in the jurisdiction of the Public Service Board. If it's going to take millions of dollars to make this plant safe in the new world in which we live, can the new owner afford to do that? Is the new owner willing to invest millions more dollars than they originally thought they had to invest in this plant to make it safer?"
(Dillon) The Vermont Yankee hearings will last all week, and then resume again at the end of next week. In the first few days of hearings, witnesses for the utilities will focus on why they think the sale is a good deal for the state.
For Vermont Public Radio, I'm John Dillon.