A Gutsy Choice: Vermont Yankee Orders Fuel for the October Outage

By Meredith Angwin  

Vermont Yankee Nuclear Power Plant

In April, Entergy sued the State of Vermont to invalidate the state’s legislative attempt to close Vermont Yankee. As part of that suit, Entergy asked for an injunction against Vermont taking action while the lawsuit was proceeding.

On July 18, Judge Murtha ruled on the injunction: he denied it. At that point, Entergy had to make a decision on whether or not to buy fuel for the October outage. The fuel must be ordered in advance, and is designed to last for eighteen months. If Entergy loses the main lawsuit Vermont Yankee might be shut down in March, 2012, and would only use the fuel for five months.

Entergy decided to order the fuel. The decision to refuel was a $90 million dollar statement (or bet) by Entergy that they would ultimately win their case in court. As J. Wayne Leonard, Chairman and CEO of Entergy, wrote in their press release: “Our board believes both the merits of the company’s legal position and the record strongly support its decision to continue to trial scheduled to begin on Sep. 12. On that basis, the decision was made to move forward with the refueling as planned.”

Accommodate Time and Money for Refuelings

American power reactors shut down for a refueling outage every eighteen months. The main outage activity is refueling: one third of the reactor fuel is replaced, all the fuel is rearranged in the core, and the oldest third of the fuel is off-loaded to the fuel pool.

During a refueling outage, the plant is thoroughly inspected and standard maintenance tasks are performed. According to the Entergy press release, Vermont Yankee will hire 800 to 1000 skilled workers to do 5000 tasks during the refueling.

For Vermont Yankee, the cost of an outage is over $90 million dollars: $60 million for fuel and $35 million for labor and other materials. The cost of an outage is amortized over the 18 months of plant operation following the outage.

Nuclear Opponents React to the Refueling Decision

In general, nuclear opponents have reacted to Entergy’s refueling decision as William Sorrell did when he said, “I’m not surprised at all…This is just a business decision for them.”  Arnie Gundersen said that if they don’t use the fuel at Vermont Yankee, they can use it somewhere else. The Burlington Free Press quoted Gundersen as saying that “the decision to buy fuel is not necessarily a $65 million risk….the company has the option to use it at another nuclear plant.”

http://www.burlingtonfreepress.com/article/20110720/NEWS03/107200305/Vermont-Yankee-must-make-decision-buying-fuel

Meanwhile, in the New York Times, Sandy Levine of the Conservation Law Foundation claimed that Entergy would have a quick payback from the outage expense:

“The plant would take in $90 million in revenue between October and March, so the cost of the refueling would be offset even if the plant had to close next spring, [Levine] said.”

Pro-Nuclear Experts Assess the Costs Differently

Gundersen (above) claimed the fuel can be used at other Entergy plants, but people with more specialized knowledge say it won’t fit at other plants. Margaret Harding is a consultant who used to design reactor cores at General Electric. In the New York Times, she explains that reactor fuel is a “very engineered product…Pilgrim uses shorter fuel assemblies [than Vermont Yankee]…Other plants are designed for assemblies of a slightly different shape. ‘It’s not just, oops, we’re going to stick [the unused fuel] someplace else.'”

Looking at costs, I predicted that Entergy would not order fuel for the October outage. I calculated possible losses at about $60 million dollars. I considered this to be too big a risk. Vermont Yankee sells most of its power at $45 MWh (the rate set in the Memorandum of Understanding). Therefore, Vermont Yankee has an income of about $20 million a month. It cannot possibly amortize a $90 million dollars outage expense in four to five months operation.

Levine, a plant opponent, made a unrealistic statement when she said the outage expense would be “offset” by operating the plant through March. She assumed that plant has only one expense per year: the outage. The 650 employees and other expenses don’t count in her calculations. Though her statement is inaccurate, it does achieve the rhetorical effect she wants: claiming the decision to buy fuel was no big deal.

A Gutsy Decision

Entergy has made a very brave decision by ordering fuel. They have put their money where their mouth is, sure that their legal case is strong and that Vermont Yankee will keep operating past March 2012.

It’s a business decision based partially on an assessment of Entergy’s legal standing. However, the decision also has a less-business-like aspect. Ordering fuel was a statement to the world, and to employees, that Entergy plans to keep Vermont Yankee running. As Larry Smith, communications manager for Entergy, said in an article in The Commons: “Employees have been on edge for weeks…Now they can concentrate on making electricity.”