Utilities downplay Yankee deal
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By DANIEL BARLOW VERMONT PRESS BUREAU - Published: December 5, 2009
MONTPELIER – The state's top two utilities downplayed the need for a power purchase agreement in the relicensing of the Vermont Yankee nuclear power plant, saying a revenue-sharing agreement will keep rates low.
Representatives from Green Mountain Power and Central Vermont Public Service told lawmakers Friday morning that they are still negotiating with Entergy for a new power contract, while also planning for an energy future without the nuclear power plant.
Still, both companies, which bring electricity to the homes and businesses of 75 percent of Vermont, said a 2002 revenue-sharing agreement with Entergy would effectively cap prices for the state for a decade after 2012.
"Vermont can get attractive and stable long-term power from Vermont Yankee," said Bill Deehan, the vice president of power planning and regulatory affairs for CVPS. "The revenue-sharing agreement works as a cap on prices, protecting Vermont from the volatile prices of the market."
Friday's hearing by the House Natural Resources and Energy and the Senate Finance committees was the first in an expected series of meetings on New England's electrical system as the Vermont Legislature considers whether the Vernon nuclear power plant should be allowed to operate an additional 20 years past 2012.
The hearing was scheduled to consider how Vermont would look without the Vernon nuclear power plant, which supplies about one-third of the state's electricity needs, in its energy portfolio.
But the utilities dug their heels in and stressed in their testimony the need for Vermont Yankee's power beyond 2012, when its license expires, even if there is not a long-term agreement with the company over exactly how much Vermonters would pay for that energy.
CVPS and GMP both stressed that their long-term energy plans call for a better mix of small and large renewable sources, mostly wind, and a continued reduction of how much energy they take from the 37-year-old nuclear power plant.
Doug Smith, the power planner for GMP, said there is not enough in-state renewable energy developed now to replace Vermont Yankee and Hydro-Quebec, the top two energy sources whose contracts with the utilities end in 2012 and 2015.
Smith said GMP plans to purchase and build new renewable generation, but will also push for Vermont Yankee's relicensing and a new contract with Hydro-Quebec. The company has purchased some fixed-priced energy sources for 2012 to 2016 in case Vermont Yankee is not relicensed, he said.
"If all goes well, 15 percent of our energy supply will come from wind within the next five years," Smith said.
One of the stated benefits of Vermont Yankee has been the low cost of its power under a long-term contract with the utilities. But absent a new agreement, CVPS and GMP told lawmakers that the revenue-sharing agreement would keep electrical rates low between 2012 and 2022.
The revenue agreement is part of the 2002 deal that saw CVPS and GMP sell Vermont Yankee to Entergy Corp. The agreement, which only kicks in if Vermont Yankee is relicensed to operate beyond 2012, has the company share 50 cents of every dollar earned above a certain energy price with the utilities.
Deehan said that agreement would protect Vermonters by ensuring that if the nuclear power plant's energy prices are too high, the money made back as part of the sharing agreement by the utilities would essentially drive down the price of the power.
"I would compare it to having fire insurance for your home," he explained. "This protects us from the volatility of the market."
But under questioning from Rep. Sarah Edwards, a Brattleboro Progressive and a member of the House Energy Committee, the utilities admitted that the revenue-sharing agreement with Entergy only extends to them – leaving out nearly 20 other electrical utilities in Vermont, representing about 25 percent of the state.
"Why would we agree to this if there is nothing on the table?" said Rep. Jeff Young, a St. Albans Democrat. "A power purchase agreement is the payment to Vermont for running the risk of having a nuclear power plant in the most environmentally friendly state in the country."
daniel.barlow@rutlandherald.com
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