Flawed Market Leads Entergy to Close Vermont Yankee Next Year
Aug. 27, 2013—Entergy Corp. plans to close and decommission its Vermont Yankee nuclear energy facility late in 2014. The plant, a 605-megawatt boiling water reactor in Vernon, Vt., is closing based on electricity market and financial factors, including:
The sustained low price of natural gas and low wholesale electricity prices.
Wholesale market design flaws in the region that continue to result in artificially low local electricity and capacity prices, which the company said “do not provide adequate compensation to merchant nuclear plants for the fuel diversity benefits they provide.”
The high costs of operating a single reactor. Entergy has invested more than $400 million since 2002 in the safe and reliable operation of the facility and noted the “especially challenging” financial impact of cumulative federal regulations for a small single-reactor plant in these market conditions.
The Nuclear Regulatory Commission in 2011 granted Entergy a 20-year operating license extension for Vermont Yankee, and a federal appeals court earlier this month agreed that its continued operation could not be blocked by the state’s legislature (see Nuclear Energy Overview, Aug. 15). Entergy acquired the plant in 2002 from Vermont Yankee Nuclear Power Corp.
NEI President and CEO Marvin Fertel said, “This closure will be a great loss to the state of Vermont, the regional economy and consumers, and the environment. Vermont Yankee reliably produces nearly three-quarters of the electricity generated in the state while employing some 600 highly skilled professionals.
“Design flaws in wholesale markets such as New England continue to result in artificially low electricity and capacity prices. This announcement, and the retirement of Wisconsin’s high-performing Kewaunee nuclear facility earlier this year, is jarring evidence that market reform is essential to ensure that the nation maintains a diversified portfolio of electricity options. Failure to do so will jeopardize reliable electricity supplies and leave consumers vulnerable to steep or long-term electricity price swings,” he said.
Entergy said it intends to use the SAFSTOR decommissioning process, which involves placing the facility in a safe storage configuration until its dismantling and decontamination in 40 to 60 years. The company added that it has more than adequate decommissioning funds and that the reactor will remain under NRC oversight until the decommissioning process is complete.
Entergy Chairman and Chief Executive Officer Leo Denault said that while the decision on Vermont Yankee was an “extremely tough call,” the company remains committed to nuclear energy in its generating portfolio.
“Nuclear energy is safe, reliable, carbon-free and contributes to supply diversity and energy security as part of a balanced energy portfolio,” Denault said.
Entergy owns and operates 10 other nuclear reactors with a total installed capacity of more than 10,000 megawatts in Arkansas, Louisiana, Massachusetts, Michigan, Mississippi and New York.