Entergy unveils power offer
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By SUSAN SMALLHEER and DAN BARLOW Staff Writers - Published: December 19, 2009
MONTPELIER — Entergy Nuclear put a 20-year contract for electricity from its Vermont Yankee reactor on the table Friday, but it was immediately and unanimously condemned by the state's utility executives and legislative leaders alike.
The offer starts at 6.1 cents per kilowatt hour, a 52.5 percent increase from the existing 4-cent contract, and then would increase by about 3 percent annually. It would also necessitate that the state's two largest utilities, Central Vermont Public Service Corp. and Green Mountain Power, give up their claim to a 2002 revenue-sharing agreement that Entergy itself has estimated was worth $1 billion.
Jay Thayer, vice president of operations for Entergy Nuclear, said the 20-year contract would save Vermonters about $500 million over the 20 years and offer Vermonters and utilities a long-term, stable contract.
He said the company had released its best offer to show the state it was working toward a contract. The offer covers about 18 percent of the plant's output, down from current levels of 50 percent.
"Legislatively, this is not a normal discussion," Thayer said. "Everything has been overwhelmed with 'what is the price of power going to be?'"
He said Entergy was offering the Vermont utilities a below-market 20-year contract.
A new power contract has long been a missing piece in the debate on whether Vermont Yankee should get its license extended for 20 years after it expires in 2012.
Both the Vermont Legislature and the Public Service Board must approve the license extension, a unique arrangement in the country.
Sen. Peter Shumlin, the Windham Democrat who is president pro tempore of the Senate, said the big rate increase, coupled with the elimination of the $1 billion revenue-sharing fund, meant it was a bad deal for Vermonters.
Shumlin and House Speaker Shap Smith met with Thayer early Friday afternoon to be briefed about the Enexus offer, and he said both came away convinced it wasn't a good deal.
"The speaker and I share the view of Green Mountain Power and CVPS that the offer is not in the best interests of the state of Vermont," Shumlin said.
He said the proposed price is 50 percent higher than what Vermonters are paying now, and the deal doesn't address the decommissioning fund shortfall.
And, Shumlin said, the deal comes from Enexus, not Entergy. Enexus is a spin-off of Entergy, pending final approval.
"We are now being made an offer by a company that doesn't exist," he said.
Rep. Tony Klein, the East Montpelier Democrat who chairs the House Natural Resources and Energy Committee, said Vermont is only getting 115 megawatts of electricity out of the deal.
The state will have all the liability but only a fraction of the energy, Klein said, and the price is higher than what Vermont utilities would pay on the spot market today.
"I don't see anything positive here. It's a plan that benefits the company."
Thayer said the offer, which was filed with the Vermont Public Service Board, came on behalf of Enexus, and not Entergy itself. Entergy wants to create Enexus to own and operate Vermont Yankee and five other nuclear reactors, but so far the proposal hasn't won approval from Vermont or New York regulators.
Thayer said it was "possible" that if the state rejects the Enexus proposal that Entergy Nuclear would shut down Vermont Yankee when its license expires in 2012.
Thayer said he had estimated the revenue-sharing agreement to be worth $1 billion a year ago, but that power markets had changed significantly since then.
When the current 10-year contract was signed in 2002, it was over spot market prices at just less than 3 cents per kilowatt hour. Eighteen months ago, market rates had risen to the point where Vermont Yankee's contract represented a bargain for the state. Since the economic collapse, however, power prices have plummeted and the 4-cent price is again over current market rates.
The state's contract with Hydro-Quebec is at 6 cents.
Robert Young, president of CVPS, said the revenue-sharing agreement, part of the 2002 agreement in which Entergy bought the Vermont reactor from the state's utilities, was his company's insurance policy against big increases in electric rates in the future.
"Entergy's public offer is to substitute a purchase power agreement for some or all of our rights under a pre-existing revenue sharing agreement," Young said, noting the agreement kicks in when electricity prices go over 6.1 cents per kilowatt hour.
"We believe that this particular proposed swap fails to make our customers better off. Since we already have the value of the RSA if the plant is relicensed, any new arrangement must provide incremental value to our customers," Young said.
Young, saying "there are other ways to skin this cat," said the utilities and Entergy would continue negotiations.
"At the end of the day, we hope to reach a paradigm that works," Young said.
Young refused to say what exactly the Vermont utilities were seeking, saying it would be a violation of the utilities' confidentiality agreement with Entergy.
He said Entergy going public with its offer was not a violation and Entergy had told the utilities it planned the filing.
"We're still very anxious to continue to talk to them. But this proposal is not one that we can accept," Young said.
Mary Powell, president and CEO of Green Mountain Power, said the contract offer did not provide "sufficient value for our customers."
"We see our job as getting a power contract that provides value beyond what is already in place," said Powell. "Today's offer does not add meaningful value to what we already have," she said.
Powell said she hoped that with Entergy going public, "this conversation will lead to a reasonable conclusion that supports the relicensing of Vermont Yankee."
Opponents of the plant were also critical of the offer.
"It's no wonder the utilities haven't signed off with Entergy, because this deal, quite frankly, is a horrible deal for Vermont. Entergy testified that the Revenue Sharing Agreement was a billion-dollar boon to Vermont, which it wasn't, but have now taken it off the table," said Bob Stannard, a Statehouse lobbyist for Citizens Awareness Network, an anti-nuclear group.
Stannard that Entergy's claim that the deal would save Vermonters $500 million was false, since electricity is selling for much less than the 6.1 cent offered by Entergy.
And Stannard, echoing the legislators, said that while Vermont would get about 20 percent of the plant's production, Vermont would be left with "100 percent of the high-level radioactive nuclear waste."
"There is nothing in this offer stating that they will be immediately putting up additional monies to appropriately decommission the plant," he said.
susan.smallheer@rutlandherald.com
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