Should Vermont Yankee be re-licensed to operate beyond 2012?

The answer is "yes," but only on the condition that the proposed Enexus spinoff is rejected, or substantial financial safeguards are put into place to protect Vermonters.

Most Vermonters don't care about where their electricity comes from, as long as the lights come on when they flip the switch. This lack of interest in turn has allowed Vermont utilities to make utterly stupid decisions about the source and cost of power, largely under the radar screen.

When Vermont utilities have been at these crossroads before, they have taken the wrong turn.

Consider for example the missed opportunities to purchase the hydroelectric generating system of dams and reservoirs on the Connecticut and Deerfield Rivers, and the proposal by former Gov. Phil Hoff to purchase hydroelectric power from the Churchill Falls Project in Labrador.

In 2003, several legislators recommended that the state purchase those dams from bankrupt PG&E to provide low cost, renewable power to help persuade manufacturers and other companies to locate or keep operations in Vermont. The dams annually generate about 133 MW at a cost of 4 cents/kwh including debt service. CVPS and GMP did not support that recommendation so a study committee was formed; the opportunity was lost; few cared.

In 1965, Gov. Hoff on behalf of the New England governors negotiated long term power purchase contracts at a cost of four tenths of a cents/kwh. CVPS and GMP did not support that proposal so a study committee was formed; the opportunity was lost; few cared.

Now Vermont is at another crossroads. At a time when we must compete directly in a world economy to create and retain jobs, the state must use every available asset, including the promise of low cost base load power, to attract and keep employers and create jobs. That's why VY must be part of the energy mix for the foreseeable future.

Against this backdrop, Entergy wants to re-license VY and spin it off to a new highly indebted subsidiary that will own five additional aging nuclear reactors. Under the latest plan, all but 115MW of its 650MW output will be sold beyond Vermont's borders, while the company pockets the profits and leaves Vermont with the potential liability for the aging reactor and its clean up.

Vermont utilities are waiting in the wings, praying that VY is relicensed for two reasons. One, they want a good deal on power.

Second, if VY stays open, a "revenue sharing" agreement with Entergy will allow Vermont utilities to share in the profits of power sold over a certain price per kwh, regardless of where the power is sold.

In the context of the planned sale to Enexus, many decommissioning questions continue to be unresolved, and they take on added significance because Enexus will be financially weaker than Entergy, with its assets pledged to creditors.

With decommissioning costs estimated at over $1 billion by the time the plant closes, the recurring question is whether a shell corporation can guarantee Vermonters won't be left holding the bag.

The discovery of tritium, a radioactive isotope in monitoring wells close to the Connecticut River, potentially increases those decommissioning costs.

In response, the Public Service Board should deny Entergy's plans to shift liability for the aging VY reactor to Enexus, particularly if the PSB finds that the move serves the primary function of shielding Entergy and its assets from responsibility for VY and its clean up.

For once, the PSB was on the right track when it recently asked VY to "… address concerns of the public about the advisability of transferring an aging Vermont nuclear plant to a company with 'junk bond' credit rating that seeks a 20-year 'license extension."

In fact, in September, Enexus filed with the U. S. Securities and Exchange Commission a list of the many expected risks, and the document reads like an indictment of the deal:

We are exposed to risks and costs related to operating and maintaining our aging nuclear power plants.

The costs associated with the storage of spent nuclear fuel, …and our ability to fully decommission our nuclear power plants could be significantly affected by the timing of the opening of a nuclear fuel storage facility.

The nuclear power plants we own will be exposed to price risk … and must compete for the advance sale of energy or accept spot prices.

Following the separation, we will have substantial indebtedness, which could negatively affect our financing options and liquidity position.

Gov. Franklin S. Billings wrote in 1912, before he became governor, that: "The State of Vermont could very wisely and profitably develop some of her neglected water powers … thereby encouraging the development of industry."

Keep Vermont Yankee open, but don't allow Entergy to strip away the assets and leave behind the waste.

And Billings ' plan of 100 years ago – to use in state renewable generation – should be pursued today as part of the energy mix as new and better technology is developed to make that possible.

Sen. Vince Illuzzi, R-Essex/Orleans, is chairman of the Senate Economic Development Housing and General Affairs Committee.