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Vermont nuclear power plant to close in 2014

Energy prices spell the end

“Simply put, this decision was based on economics,” said Bill Mohl, president of Entergy Wholesale Commodities.

Matthew Cavanaugh/associated press

“Simply put, this decision was based on economics,” said Bill Mohl, president of Entergy Wholesale Commodities.

The owner of the Vermont Yankee nuclear power plant said Tuesday it would shutter the controversial facility by the end of next year, putting hundreds of employees out of work, about a third of them from Massachusetts, and raising questions about the future of the region’s other nuclear plants.

The plant has withstood years of legal battles with the state and persistent protests about its safety, but in the end, officials at Entergy Corp. said they decided to close the aging reactor along the Connecticut River because of economics. A steep drop in natural gas prices in recent years led to plummeting wholesale electricity prices. That loss of revenue, as well as increased costs to comply with new federal and regional regulations, made it difficult to run the plant at a profit.

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“This was an agonizing decision and an extremely tough call for us,” Leo Denault, the company’s chairman and chief executive, said in a statement.

The announcement was surprising, as it came just weeks after Entergy won a federal court ruling invalidating efforts by the Vermont Legislature to close the plant. Entergy officials said the decision to close the plant in Vernon, near the border with Massachusetts, was not influenced by political pressure or the recent court decision, which did leave an opening for a Vermont regulatory board to try to force the plant to close.

Vermont Yankee is the fifth reactor whose retirement has been announced this year, and the Nuclear Regulatory Commission said the number of nuclear plants in the United States will be reduced to 99 by next year.

The viability of nuclear power has been under siege for some time, as hydraulic fracturing has slashed natural gas prices. The controversial drilling technique, called fracking, has unlocked vast domestic gas resources in shale rock formations. The increasing use of alternative energy sources such as wind and solar, which qualify for tax credits and other incentives that lower their prices compared to nuclear power, has also played a part.

“Nuclear power is in big trouble economically,” said Henry Lee, director of the environment and natural resources program at Harvard’s Kennedy School of Government.

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Entergy’s announcement brought cheers from Vermont lawmakers and environmental advocates, many of whom have been seeking for decades to close the 41-year-old plant.

“This is the right decision for Vermont and the right decision for Vermont’s energy future,” Governor Peter Shumlin said at a press conference at his office in Montpelier.

He likened the plant’s closure to a military base leaving the state. “My heart goes out to the hard-working employees,” he said.

Bill Mohl, who oversees all of Entergy’s nuclear plants in the Northeast, said that all 630 Vermont Yankee employees could ultimately lose their jobs, though some of them will remain on staff during the many years it will take to decommission the plant. As many as 250 of the employees are from Massachusetts, according to the state Executive Office of Labor and Workforce Development.

Mohl said company officials decided to close the plant, which Entergy has owned since 2002, after drafting a new business plan over recent months.

“Simply put, this decision was based on economics,” said Mohl, president of Entergy Wholesale Commodities.

He said the company has no plans to shutter Pilgrim Nuclear Power Station in Plymouth, Mass., which shares a similar design with Vermont Yankee. Both have Mark 1 boiling water reactors like those at Fukushima Daiichi nuclear facility in Japan, where radiation leaked after a massive earthquake and tsunami two years ago, prompting new safety requirements at US plants.

Mohl said Entergy plans to spend about $500 million on safety upgrades at its nuclear plants over coming years. Closing Vermont Yankee will save the company about $50 million on complying with the new regulations, he said.

“We constantly evaluate all of our assets, but I can assure you we have not made any decision to shut Pilgrim down,” Mohl said, noting that Pilgrim is a larger facility that produces about 10 percent more power than Vermont Yankee.

Shumlin, who as president pro tem of the Vermont Senate led the Legislature’s efforts to close the plant, said he would work with Entergy to try to decommission the plant as soon as possible so that its valuable transmission lines and prime location could be put to new energy production uses.

The company has two years from the date the reactor shuts down, expected in the final three months of 2014, to deliver a decommissioning plan to the Nuclear Regulatory Commission. Entergy will have 60 years to dismantle buildings, drain reactor pools, and contain spent fuel in cylinders reinforced with steel and concrete.

But state and company officials said they hope the work will be done in less than a decade.

Entergy officials said they intend to seal the plant and wait until some of the radioactivity declines and until there is more growth in the decommissioning trust fund, which has about $582 million, $16 million more than the NRC requires. Mohl said he does not know how much it will cost to decommission the plant, but said it is likely the radioactive waste will be buried at a repository in Texas.

The plant, among the oldest in the country, has sparked safety concerns in recent years, especially after a cooling tower partially collapsed in 2007. But two years ago the NRC renewed Vermont Yankee’s operating license through March 2032, and the plant had no recent performance issues that warranted penalties or additional oversight, said Neil Sheehan, an NRC spokesman.

He said it was not clear whether Vermont Yankee’s closure was a harbinger for other nuclear plants. While there are five new reactors under construction in the United States, the number of reactors has fallen from a peak of 111 in the early 1990s, Sheehan said. Plants have closed both because of economic pressures and safety problems as they aged.

Lee, at Harvard, said the loss of Vermont Yankee would not have a significant impact on electricity availability in the region, noting the plant supplies a small percentage of the power that goes into the regional power grid.

Still, the plant’s shutdown raises other concerns, increasing the region’s dependence on natural gas, said Ellen Foley, spokeswoman for the grid operator, ISO New England. “We have identified that as a risk.”

Natural gas now accounts for more than half the region’s net electricity generation, while nuclear plants produced a bit more than a quarter of the power last year.

Some said the plant’s retirement could push up electricity prices. Grid officials “seem to think that they have enough power that the lights won’t go out, but it’s not going to be cheap,” said James Hewlett, an economist who deals with nuclear issues for the US Energy Information Administration.

Others were skeptical that consumers will pay more.

“Vermont Yankee will go away, and no one will notice,” said Mark Cooper, a senior fellow for economic analysis at Vermont Law School. “There are other resources.”

Environmental advocates said the plant’s closure will make way for renewable energy projects in Vermont.

“The state has been saddled with this poorly managed, uneconomic dinosaur for far too long, enduring environmental damage and the persistent threats to public health and safety that come with operating a nuclear power plant well beyond its planned life,” said Sandra Levine, a senior attorney at the Conservation Law Foundation in Montpelier.

The question many in the region are now asking is whether other plants will follow Vermont Yankee’s path, including Seabrook in New Hampshire and Indian Point in New York. How they fare depends on natural gas and wholesale electricity prices, the structure of electricity markets, and the addition of alternative energy resources. Seabrook, commissioned in 1990, is roughly half as old as the Vermont plant, and also much bigger.

Given the unfavorable market conditions for nuclear power, New England Power Generators Association president Dan Dolan wonders how the other plants will survive.

“Who’s next?” he said.

David Abel can be reached at dabel@globe.com; Erin Ailworth can be reached at eailworth@globe.com.

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