Entergy Nuclear must provide letter of credit because of shortfalls in Vermont Yankee decommissioning fund
BRATTLEBORO — Entergy Nuclear will again be required to give the Nuclear Regulatory Commission a letter of credit of $40 million because of shortfalls in Vermont Yankee’s decommissioning trust fund.
NRC spokesman Neil Sheehan said that the $40 million financial guarantee was a preliminary figure and it was possible NRC staff assessment might require a higher figure.
According to a report on various decommissioning funds for Entergy Nuclear power plants in the Northeast, Vermont Yankee is the only plant that has such a large shortfall that it will require a guarantee from Entergy.
According to a March 29 letter Entergy officials sent to the NRC, “Entergy Corp.’s management has concluded that the amount of decommission related parent guarantees at issue is very small as compared to the balance sheet amounts.” According to the report, current estimates to decommission Vermont Yankee is $620.8 million, while its decommissioning fund was $543.2 million, a $77 million shortfall.
By comparison, Entergy’s Pilgrim nuclear power plant had $725 million in its trust fund, while decommissioning costs are estimated just slightly higher than Vermont Yankee, at $626 million.
It is the second time that the NRC has requested Entergy to provide a corporate letter of credit. In 2009, the NRC requested a $60 million letter of credit, which was eventually settled on $40 million. Since that time, the stock market and bond market, where most of Entergy’s trust fund is invested, has rebounded. Back in 2009, the apparent shortfall was $87 million.
Entergy Nuclear spokesman Robert Williams said that each of Entergy’s nuclear plants has “its own set of circumstances” when it comes to decommissioning funding.
“Each plant came into the merchant fleet with their respective decommissioning fund levels and their own set of assumptions in terms of decommissioning costs,” Williams said.
For example, according to the NRC report, Pilgrim, a nuclear plant owned by Entergy south of Boston, has $200 million more in its decommissioning fund than Vermont Yankee. The two plants are very similar in design, and their decommissioning costs are only $6 million difference.
Williams noted that after the sale in 2002 to Entergy, the decommissioning costs “are no longer the obligation of ratepayers. Such costs now are the obligation of the plant owner.” Entergy’s current plans for Vermont Yankee’s decommission is to shut the plant down in 2032, and let the plant sit idle for dozens of years while the decommissioning fund increases. Such a strategy is called SAFSTOR and has been approved by the NRC for Yankee.
“We’re still reviewing all of the submittals,” said Sheehan. “We do not know at this point which ones may need to use financial instruments, such as parent company guarantees, to meet the minimum funding requirements.” Sheehan also said it was possible that NRC staff would need additional information, including financial information from Entergy. “It would be too early to say what the exact level of any shortfall may be.” Entergy said it was providing a much smaller letter of credit, $5 million, for its Big Rock Point radioactive waste facility in Michigan.