Vermont Yankee Takes the State of Vermont to Court

by Robert Maynard

It looks like the long awaited court battle between Vermont Yankee and the Vermont state Government is finally upon us. This from Vermont Yankee:

“Entergy Corporation (NYSE: ETR) today announced that two of its subsidiaries, Entergy Nuclear Vermont Yankee, LLC (ENVY) and Entergy Nuclear Operations, Inc. (ENOI), have filed a complaint in U.S. District Court for the District of Vermont seeking a judgment to prevent the state of Vermont from forcing the Vermont Yankee nuclear power plant to cease operation on March 21, 2012.”

Of course Governor Shumlin was expecting this:

“Fortunately, we are ready for this event. The Attorney General’s Office and other state agencies have been working hard to prepare a defense and protect our state’s laws.”

it is too bad that he was not equally as prepared with an alternative to replace Vermont Yankee’s as a power source:

“I find it a bit surprising,” said Gov. Peter Shumlin, D-Vermont. “I am standing here without a plan for the other obvious option which was it be closed down on the date it was designed to be closed down.” – WCAX-TV Jan. 27 2011

“How do we in 16 months do a good job planning for a closure of a plant that we should have been planning for the past 40 years?” – WCAX-TV Jan. 27 2011

Vermont Yankee’s Richard Smith seems to have lost patience with Vermont’s political leaders:

“We have made every reasonable effort to accommodate the state of Vermont and its officials while allowing the continued operation of Vermont Yankee – an outcome that benefits all stakeholders, including Vermont consumers and the approximately 650 men and women who work at the plant,” said Richard Smith, president of Entergy Wholesale Commodities. “Despite the fact that Vermont Yankee is important to the reliability of the New England electric transmission grid, emits virtually no greenhouse gases, and provides more than $100 million in annual economic benefits to the state of Vermont, it has been made clear that state officials are singularly focused on shutting down the plant. That has left us with no other choice but to seek relief in the court system.”

Vermont Yankee argues that the rules were changed in midstream:

In 2006, the Vermont General Assembly passed a law that invalidated a key provision of a 2002 Memorandum of Understanding signed by ENVY, ENOI and Vermont officials when the company purchased Vermont Yankee. Under that provision of the MOU, Entergy’s two subsidiaries had agreed to seek a certificate of public good from the Vermont Public Service Board if it sought to operate the plant beyond March 21, 2012. This was in accordance with the process and standard for securing the state certificate in effect at that time. As the complaint alleges, Vermont repudiated the MOU, breaching that agreement and excusing the two Entergy subsidiaries’ obligation to further comply with that specific provision.

“The 2006 state law took the decision about Vermont Yankee’s future away from the Public Service Board, a quasi-judicial expert decision-maker, independent of legislative control,” said Smith. “It instead placed Vermont Yankee’s fate in the hands of political decision-makers, namely the state General Assembly and governor who could deprive Entergy’s two subsidiaries of the opportunity to operate the Vermont Yankee plant beyond March 21, 2012, for unsupported or arbitrary reasons. This is not what we signed up for in 2002.”

Governor Shumlin blames Vermont Yankee, but does not address the claim made that the 2006 law amounted to changes in the original agreement:

“Entergy is now attempting to rewrite history, breaking its own promises and its own support of Vermont law. Instead of following Vermont law, Entergy seeks to subject the taxpayers of Vermont to an expensive legal proceeding. I am deeply concerned about this action because it flies in the face of commitments made by Entergy. When it purchased Vermont Yankee, Entergy clearly agreed that it must obtain a new state license to operate beyond March 2012, and that it would not attempt to claim preemption regarding the state’s licensing decision. The Public Service Board relied upon that promise when it allowed Entergy to purchase the plant. Later, Entergy supported the law passed by the legislature and signed by my predecessor giving the legislature a role in the state licensing process.”

Vermont Yankee argues that, while it did try to abide by the new law, it never agreed with it:

“Despite Entergy’s disagreement with the 2006 state law, the company has made considerable effort to achieve state approvals to allow the continued operation of Vermont Yankee without resorting to litigation.”

Governor Shumlin expresses a concern that: “Entergy seeks to subject the taxpayers of Vermont to an expensive legal proceeding.” The question is who is subjecting Vermont taxpayers to an “expansive legal proceeding”? Which side is actually breaking the original agreement?