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Entergy to Sell Vermont Yankee Nuclear Facility

Entergy Corporation and the State of Vermont reached an agreement on the sale of Vermont Yankee in Vernon, VT to a subsidiary of NorthStar Group Services, Inc. (NorthStar). When the plant came offline for economic reasons in December 2014, Entergy estimated decommissioning and site restoration would cost $1.2 billion and take 60 years. However, NorthStar estimates decommissioning could begin as early as 2019 and take seven to nine years. NorthStar expects to finance the project via a trust that currently holds $570 million, along with cash guarantees from NorthStar ($140 million) and Entergy (up to $40 million). Supporters of NorthStar’s plan include Vermont’s attorney general, the town of Vernon, and other state and local stakeholders. Critics argue that NorthStar’s plan leaves citizens financially and environmentally vulnerable should problems arise and that NorthStar itself lacks requisite experience.

Key Details

  • The sale is subject to approval by the NRC and the Vermont Public Service Board (PSB)
  • The PSB will hold public hearings throughout 2018, and the transaction is expected to close by the end of 2018
  • NorthStar’s plan is to lead a team of companies that specialize in various areas of nuclear power plant decommissioning:
    • NorthStar – demolition and decontamination, site restoration
    • Orano USA (formerly AREVA Nuclear Materials) – reactor vessel and internals segmentation, used nuclear fuel management support, waste disposal transportation
    • Burns & McDonnell – engineering and regulatory support services
    • Waste Control Specialists (WCS) – waste management, packaging, transportation and disposal
  • NorthStar is owned by J.F. Lehman and Co, a private equity firm that also owns WCS. WCS owns a nuclear waste facility in west Texas
  • NorthStar has never decommissioned a commercial nuclear reactor. The company’s only experience has been with university test reactors

Implications

The signings of the settlement agreement and MoU are major milestones in the transaction process. NorthStar’s inexperience with commercial reactors is seen as a red flag for some stakeholders, as a mishap during site decommissioning would have a lasting negative impact on Vermont and its ratepayers. By comparison, the San Onofre Nuclear Generating Station (SONGS) decommissioning project is estimated to last 20 years and cost $4.4 billion. Primary contractors for the SONGS project are AECOM and EnergySolutions, both of whom have relevant nuclear decommissioning experience.

Vermont ratepayers are entitled to 55% of any excess of the $570 million in the decommissioning trust fund. Entergy had planned to delay starting work to let the fund grow closer to $1.2 billion. Given the smaller size of the fund and the accelerated timeline proposed by NorthStar, ratepayers may see a smaller financial payout than they would otherwise expect.

NorthStar’s experience in non-nuclear decommissioning and site cleanup as well as their own financial investment signals a commitment to the project’s success. If NorthStar can indeed succeed and restore the Vermont Yankee site by 2030, they could create a new model for site demolition and decommissioning. This model would change industry expectations for demolition and decommissioning project duration and further reduce the number and length of jobs available to rural areas, which depend on jobs related to the local nuclear power plant.

More Information

Utility Dive: Entergy Strikes Deal to Sell Vermont Yankee Nuclear Facility

World Nuclear News: Milestone agreements signed for Vermont Yankee transfer

VYDecommissioning.com: Vermont Yankee Fact Sheet

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