VERNON — Entergy Corp. on Tuesday said it plans to close and decommission its Vermont Yankee Nuclear Power Station in Vernon. The station is expected to cease power production after its current fuel cycle and move to safe shutdown in the fourth quarter of 2014.
New Orleans-based Entergy said Vermont Yankee will remain under the oversight of the Nuclear Regulatory Commission throughout the decommissioning process.
The state of Vermont has been embroiled in a legal struggle to close the nuclear power plant for several years. On Aug. 14.the U.S. Court of Appeals for the Second Circuit affirmed a federal court decision that invalidated two Vermont statutes pertaining to continued operations of the Vermont Yankee saying that federal law oversees safety at nuclear power plants. The ruling was also in part a win for the state, because it reversed the district court’s decision that the state imposed unconstitutional restrictions on the sale of power by the plant, which meant the state would not have to pay Entergy’s legal fees.
Deb Katz of the Vermont Citizens Action Network said in a statement that her group welcomed the shutdown.
“We appreciate their commitment for planning for a safe and orderly shutdown,” Katz said in a statement. “We will remain vigilant to ensure that the decommissioning is done responsibly and in the safest way possible.”
Leo Denault, Entergy’s chairman and chief executive officer, said the decision to shut down the plant was difficult.
“This was an agonizing decision and an extremely tough call for us,” Denaultsaid in a press release issued Tuesday morning. “Vermont Yankee has an immensely talented, dedicated and loyal workforce, and a solid base of support among many in the community. We recognize that closing the plant on this schedule was not the outcome they had hoped for, but we have reluctantly concluded that it is the appropriate action for us to take under the circumstances.”
The decision to close Vermont Yankee in 2014 was based on a number of financial factors, including:
•  A natural gas market that has undergone a transformational shift in supply due to the impacts of shale gas, resulting in sustained low natural gas prices and wholesale energy prices.
•  A high cost structure for this single unit plant. Since 2002, the company has invested more than $400 million in the safe and reliable operation of the facility. In addition, the financial impact of cumulative regulation is especially challenging to a small plant in these market conditions.
•  Wholesale market design flaws that continue to result in artificially low energy and capacity prices in the region, and do not provide adequate compensation to merchant nuclear plants for the fuel diversity benefits they provide.
Making the decision now and operating through the fourth quarter of 2014 allows time to duly and properly plan for a safe and orderly shutdown and prepare filings with the NRC regarding shutdown and decommissioning. Entergy will establish a decommissioning planning organization responsible for planning and executing the safe and efficient decommissioning of the facility. Once the plant is shut down, workers will de-fuel the reactor and place the plant into SAFSTOR, a process whereby a nuclear facility is placed and maintained in a condition that allows it to be safely secured, monitored and stored.
“We are committed to the safe and reliable operation of Vermont Yankee until shutdown, followed by a safe, orderly and environmentally responsible decommissioning process,” Denault said.
Commenting on the future of nuclear power, Denault said: “Entergy remains committed to nuclear as an important long-term component of 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.”
FINANCIAL IMPLICATIONS
Entergy plans to recognize an after-tax impairment charge of approximately $181 million in the third quarter of 2013 related to the decision to shut down the plant at the end of this current operating cycle. In addition to this initial charge, Entergy expects to recognize charges totaling approximately $55 million to $60 million associated with future severance and employee retention costs through the end of next year. These charges will be classified as special items, and therefore, excluded from operational results.
The company noted that the estimated operational earnings contribution from Vermont Yankee was expected to be around breakeven in 2013, and generally declining over the next few years. As a result of this decision and based on continuing operations into fourth quarter 2014, the estimated operational earnings change, excluding these special items, is expected to be modestly accretive within two years after shutdown, and cash flow is expected to increase approximately $150 million to $200 million in total through 2017, compared to Vermont Yankee’s continued operation.
Regarding decommissioning, assuming end of operations in fourth quarter 2014, the amount required to meet the NRC minimum for decommissioning financial assurance for license termination is $566 million. The Vermont Yankee decommissioning trust had a balance of approximately $582 million as of July 31, 2013, excluding the $40 million guarantee by Entergy Corp. to satisfy NRC requirements following the 2009 review of financial assurance levels. Filings with the NRC for planned shutdown activities will determine whether any other financial assurance may be required and will specifically address funding for spent fuel management, which will be required until the federal government takes possession of the fuel and removes it from the site, per its current obligations.
Vermont Yankee, a single unit boiling water reactor, began commercial operation in 1972. Entergy acquired the plant from Vermont Yankee Nuclear Power Corporation in 2002. In March 2011, the NRC renewed the station’s operating license for an additional 20 years, until 2032.
Additional information regarding today’s announcement is available in the Frequently Asked Questions section of www.entergy.com.
Entergy Corp., which celebrates its 100th birthday this year, is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including more than 10,000 megawatts of nuclear power.