(Host) Last week lawmakers questioned whether Vermont Yankee has enough money set aside to dismantle the plant.

Then lawmakers learned that Yankee wants to divert a portion of its decommissioning fund to pay for storing used radioactive fuel.

Now federal regulators say that may not be allowed.

VPR's John Dillon reports:

(Dillon) The issue is important, because Entergy - the owner of Vermont Yankee - wants to use $157 million of the decommissioning fund to move spent fuel to concrete and steel containers located at the Vernon site.

But at the same time, Entergy has acknowledged that the decommissioning fund is several hundred million dollars short to pay for dismantling the plant when its license expires in 2012.

Now the Nuclear Regulatory Commission says Entergy cannot use money set aside for decommissioning to handle spent fuel.

Diane Screnci is a NRC spokeswoman.

(Screnci) ``We haven't finished our review of the plan. But I can tell you that the regulations require that the funds be used for decommissioning purposes only.''

(Dillon) Screnci recited the NRC regulations that define decommissioning. The rules say decommissioning involves taking a plant off line and reducing the radioactivity on site.

(Screnci) ``Under the regulations, it doesn't include spent fuel management costs.''

(Dillon) But that appears to be what Yankee has proposed to do. The company argues that it is allowed to use the decommissioning money to pay for spent fuel storage - after the plant goes off line.

Yankee's license expires in 2012, but it wants to extend its license for another 20 years.

Yankee did not return calls for comment. But in a letter to the media, the company said that storing the fuel in the large steel and concrete casks is an appropriate use of the money.

The NRC is also giving the company a little wiggle room. Spokeswoman Diane Screnci:

(Screnci) ``It appears that the plan calls for the use of the funds after the plant has ceased permanent operations. And I think it is too soon to answer the question can they do what they're proposing until we have the opportunity to fully understand what it is they're proposing to do.''

(Dillon) The decommissioning fund is now worth about $423 million. But the cost of closing and de-contaminating the Vernon site is estimated to be around $800 million.

Lawmakers in Montpelier reacted to that disclosure by passing a bill that requires Yankee to top off the decommissioning fund. The bill faces a possible veto from Governor Jim Douglas

The news that the company wants to use the money for other purposes gave ammunition to plant critics. Bob Stannard is a lobbyist for Citizens Awareness Network.

(Stannard) ``Just look at the actions just in the last seven days. And I don't think there's a clearer example of why the governor needs to sign this bill, and sign it today.''

(Dillon) Stannard says not only does the NRC prohibit what Yankee wants to do, but an agreement signed in 2002 between Yankee and the state also prevents Yankee from using the decommissioning money for spent fuel storage.

For VPR News, I'm John Dillon in Montpelier.