PSB studies Vermont Yankee re-licensing

06/01/09 5:32PM By John Dillon
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(Host) The state Public Service Board is digging deep into Vermont Yankee's request to operate for another 20 years, past 2012.

But the panel hasn't gotten much information on a key piece of the puzzle - the price that Yankee will charge for its electricity.

VPR's John Dillon takes a look at the issues that may stand in the way of a long-term power contract with Vermont utilities.

(Dillon) The Public Service Board faces a balancing act as it decides whether Vermont Yankee can extend its license. The board must weigh what Vermonters will pay for electricity against the potential downside of hosting a nuclear plant for another two decades.

So far, Yankee hasn't offered electricity at a reduced rate to help balance that equation. In recent testimony, Vermont Yankee executive Jay Thayer said the company has not yet reached a deal with Vermont utilities.

(Thayer) "I hesitate to go there, because we're now getting over into confidential discussions ... that the three companies have been having in the negotiation of a potential power contract."

(Dillon) If there is no contract, Entergy, the company that owns Yankee, says Vermont ratepayers will still get a good deal. Entergy says it will sell power to Vermont utilities at the market price.

And Entergy says it will split the revenue from power sales after 2012 with two Vermont utilities under certain conditions.

Thayer says the revenue sharing deal is worth about a billion dollars over 10 years.

If the deal is worth that much, the state questioned why Entergy doesn't just lower power costs by the same amount. Here's state lawyer John Cotter questioning Thayer before the Public Service Board.

(Cotter) "Is Entergy willing to guarantee to Vermont ratepayers one billion dollars in savings?"

Thayer: "No, we're not."

(Dillon) The negotiations on the long-term power contract have been underway since last summer. Entergy has missed deadlines set by the board to come up with a power deal.

As Thayer said, the talks are confidential. But one of the roadblocks may be that wholesale power prices are low right now. That makes it a buyer's market for utilities. And from Entergy's point of view, it's probably not a good time to lock in power prices for 10 or 20 years.

Rich Sedano is a former Vermont utility regulator who now works for a non-profit that advises governments around the world on utility issues. Sedano says regional electricity prices are lower because of new supplies of natural gas.

(Sedano) "Gas sets the market prices for power for the next few years. And that's the market that Vermont Yankee and Entergy are selling into. I don't have any inside information into the negotiations. But I can imagine that this new change of direction in the marketplace has got to be affecting the dynamic, the leverage between the sides. And it could certainly be affecting the strategy for both sides."

(Dillon) And Entergy is known as a tough negotiator. William Sherman is the former nuclear engineer for the state. He testified before the legislature this winter.

(Sherman) "There's always a lot of testimony and anxiety. It's a strategy of negotiation. Entergy in my experience are hard negotiators and they bring themselves to a great extent."

(Dillon) The Yankee hearings continue this week. And the Public Service Board may have more questions on the power deal when a utility executive takes the stand.

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

 

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