Industry mulls post-nuclear rates
ADDISON COUNTY — What will happen to power rates for Addison County residents if the Vermont Yankee nuclear power plant closes next year?
According to spokespeople at the state’s two largest utility companies — Central Vermont Public Service (CVPS) and Green Mountain Power (GMP) — not too much.
“We think that the impact will be very small if any at this point if the plant closes,” said CVPS Director of Public Affairs Steve Costello. “Natural gas prices have dropped considerably over the past two to three years and that really sets the market price of energy in New England.”
The question took on more urgency last week as a federal court heard testimony in a lawsuit in which Entergy Corp., the owner of the Vernon nuclear power plant, argued that the state of Vermont has no authority to order Yankee’s closure since the U.S. Nuclear Regulatory Commission had extended its license last spring. Vermont is unique among states in claiming its own sovereignty in granting nuclear power plant licenses and last year the Vermont Senate voted not to renew Yankee’s license after it expires next spring.
Like Costello, GMP Manager of Corporate Communications Dorothy Schnure feels that a Vermont Yankee closure would not heavily impact electric rates in the Green Mountain State since her company has already planned to buy a lot of wholesale power elsewhere.
“There are many elements that affect utility rates, but we have made some very good arrangements for long-term, stable-priced contracts well into the future,” Schnure said.
Both utilities get a substantial share of the power they sell from nuclear generators. More than 50 percent of CVPS’s power portfolio currently comes from nuclear, and Yankee power accounts for 33-40 percent of the utility’s total energy sales — depending on the circumstances — said Costello.
GMP derives 40 percent of its power from Vermont Yankee, which is currently the only nuclear plant that GMP buys power from directly, said Schnure. She also explained that 8 percent of GMP’s energy comes from mixed market purchases that include nuclear, but the exact amount from nuclear is not traceable.
This level of nuclear energy consumption, however, may plummet.
When Entergy presented utility companies in 2009 with a 6.1-cent per kilowatt-hour (kWh) rate for wholesale power — this was in negotiations over contracts to replace the ones that will expire in March 2012 — the utilities unanimously rejected the offer and began to search for other sources of power.
“We’ve been planning for a future with or without Vermont Yankee for years,” said Costello. “We’ve signed half a dozen power contracts for energy sources to reduce our reliance on Vermont Yankee and to prepare for the possibility that it wouldn’t be available at all … Our air quality emissions may be somewhat higher with other sources — we do have a lot of renewables — but we’d end up with a little bit more gas than we do now.”
Some low-carbon advocates that are critics of closing nuclear plants say that using less nuclear power will put more carbon in the air. After German Chancellor Angela Merkel recently announced that her country would shut down all nuclear power plants, the Deutsche Bank estimated that an additional 370 million metric tons of carbon dioxide (CO2) would be emitted through 2020.
Other nuclear opponents are fearful that closing Vermont Yankee might only displace nuclear power production rather than reduce it. GMP recently signed an agreement to purchase power from Nextera Energy Resources’ nuclear plant in Seabrook, N.H.
Still, GMP says that its nuclear consumption should decrease.
GMP Manager of Energy Resource Planning Douglas Smith explained in testimony to the Vermont Public Service Board that at the utility’s maximum point of nuclear consumption from the Seabrook site in 2015, Seabrook nuclear energy would account for about 24 percent of GMP’s total projected energy supply. By 2035, this level of Seabrook consumption is projected to decline to 17 percent of the company’s energy portfolio, said Smith.
Beginning in March 2012, GMP will purchase energy from Seabrook at a rate of 4.66 cents per kWh. This rate is a 5.9 percent increase from the current 4.4-cent Vermont Yankee rate, but is about 24 percent less than the Entergy proposed 6.1-cent rate after March.
Costello said that CVPS is unsure “what the percentages will be until we negotiate contracts for the final chunk of power that we still need. Whether Yankee runs or not, our reliance on nuclear will be considerably lower starting next year than it has been historically.”
If Yankee continues to run, Schnure explained that GMP would be open to negotiating a cheaper wholesale price for its energy. She also explained that the plant’s further operation could have a positive impact on rates.
For power companies, the goal is clear: Regardless of what happens to Vermont Yankee, they hope to ensure that future power rates for Addison County are stable.
“We think that there’s a very healthy and robust (energy) marketplace in Vermont right now,” said Costello.
Reporter Andrew Stein is at [email protected].