Will Decommissioning VY Funnel a Billion Dollars into the Local Economy?

by Meredith Angwin

In an early March press conference, Vermont Governor Peter Shumlin called decommissioning Vermont Yankee “a huge jobs issue for us.” He wanted immediate decommissioning of the plant because it would “fuel $1 billion” into the Windham County economy over the next ten years.

The jobs Shumlin is describing are not jobs for the current workers. As reported in a previous article in True North Reports, more than 80% of the plant employees would be laid off within two years of plant closure, whether or not the plant is put into SafStor. There are 650 employees at the plant now: in two years, less than 100 employees would remain.

Though plant people would be laid off, contract labor would be brought in for decommissioning. What kind of payroll would the contractors bring to the area, compared to the payroll of the plant when it is operating?

People who have lived through a local plant decommissioning say that the effect of contractors is not noticeable in the town. Bob Blagden, a selectman in Wiscasset Maine while Maine Yankee was decommissioned, said the “contractors must have picked up some people, but it wasn’t noticeable.”

A long-time resident of the town, who did not want his name used, said “They may have hired some people, but this was nothing in comparison with what we lost.”

Are these people correct? Or is Shumlin correct in thinking decommissioning is a jobs bonanza?

The residents of Wiscasset are correct. A best estimate, as described below, shows that the total salaries for contractors in the area would be about $20 million a year, while the plant has a payroll of $65 million a year. Decommissioning is a job cliff, not a job bonanza.

What is a Billion Dollars?

Before reviewing the question “would decommissioning fuel a billion dollars” for Windham County, we have to ask what “fueling a billion dollars” means. Is this money straight payroll, or does it count “multipliers”?

The “multiplier” effect is the well-known economic calculation of how many other jobs are based on a group of steady jobs. For example, two economic studies of Vermont Yankee started with the fact that there are 650 employees at Vermont Yankee, and a yearly payroll of around $65 million An IBEW study in 2008 calculated that Vermont Yankee provided 900 “multiplier effect” jobs in the state, while a separate report prepared for the Vermont legislature in 2010 claimed Vermont provided about 700 multiplier-effect jobs.

Being conservative, we could estimate that Vermont Yankee adds a total of $100 million a year to the local economy (less than a times-two multiplier effect). At that rate, VY “fuels” $1.0 billion to the local economy in ten years, and in twenty years (till 2032) it would fuel $2.0 billion dollars.

In comparison, how much money would the contract labor of a decommissioning project add to the local economy?

Decommissioning the Yankee Plants

The total expenditure for decommissioning Yankee Rowe, Connecticut Yankee, and Maine Yankee was $750 million, $500 million, and $850 million, respectively. (Data from a paper on “Lessons Learned from Decommissioning” by Wayne Norton, president of Yankee Atomic.). The projects took varying amounts of time, from 7 to 15 years, but let us assume they all took ten years, in parallel with the Shumlin time estimate. At that rate, expenditure rates on decommissioning were between $50 and $85 million a year, numbers similar to that of the Vermont Yankee payroll.

However, comparing total costs of decommissioning to payroll costs of an operating plant is an apples-to-oranges comparison. Most significantly, decommissioning a nuclear plant includes major expenditures outside of the plant locality.

Decommissioning a nuclear plant requires millions of pounds of slightly radioactive waste to be hauled to low-level waste disposal sites in the West. Maine Yankee shipped 460 million pounds of waste, and Connecticut Yankee shipped 350 million pounds. Container manufacturers, long-haul truck drivers, and waste disposal sites are the recipients of waste-disposal money, not the people in the towns near the plant.

How much money stays in the towns near the plant? We can start by looking at the probable payroll (not total cost) of decommissioning.

The Zion Explanation

We cannot ascertain the local payroll versus haulage costs for the Yankee plants, but we can look at information for a current decommissioning project. Right now, EnergySolutions is beginning to decommission the Zion Nuclear plant in Illinois. EnergySolutions has a website partially devoted to showing that this decommissioning will bring economic benefits to the region. The accompanying pie chart is on that website, and the EnergySolutions public outreach officer for the Zion project, Larry Booth, was kind enough to send me the economic report on which the chart is based.

On the pie chart, we can see that the salaries for the ten-year decommissioning process at Zion add up to $215 million dollars. In more detail, page 14 of the Zion economic report has a chart of personnel (included here). At its height, in years 2 through 5, there will be around 300 people on-site decommissioning the Zion plant. That is about half the number of people working at Vermont Yankee currently. The six other years, the staffing is much lower, down to five people in year 10. Clearly, decommissioning is not a ten-year jobs bonus for the site.

Much of the Zion economic project report is devoted to explaining the multiplier effects of the project. This is called “output” on the pie chart. In the report’s careful reasoning, $200 million in on-site salaries generates $600 million in other economic outputs over ten years. However, using that multiplier, $1.3. billion in salaries at Vermont Yankee ($65 million per year for twenty years) would add $3.9. billion in other economic benefits, for a total economic impact of $5.3 billion dollars over the next twenty years of operation.

Apples to Apples Comparison

The solid facts are that Vermont Yankee has a payroll of $65 million per year, and decommissioning Zion will be a payroll of $20 million a year. Decommissioning the Yankee plants probably had a similar payroll, since the people in town saw little economic benefit from the presence of the contractors. As one well-connected man said: “I didn’t know anyone who got a job there.”

By careful assessment of multipliers, the total economic benefit of any project can look excellent. However, comparing apples to apples (on-site salaries to on-site salaries) decommissioning a nuclear plant is not a jobs bonanza, compared to continuing operation of the plant.

Closing Vermont Yankee will push the current plant workers off a jobs cliff, as described in a previous article. It will push the local economy off a cliff also, despite the presence of contract laborers. The contract labor force can be expected to have only about a third of the payroll of the operating plant.

Shumlin says that decommissioning is a “huge jobs issue.” It is, indeed, a huge issue. Decommissioning will be a huge job loss for southern Vermont. The one clear financial beneficiary from decommissioning Vermont Yankee will be low-level waste disposal sites in the West, and long-haul truck drivers. People in southern Vermont will lose, financially.

3 thoughts on “Will Decommissioning VY Funnel a Billion Dollars into the Local Economy?

  1. Very good article. The fools in So VT are getting what they want. Wait until they realize the crippling economic effect on the area that is already in the dumper. One aspect left out is that the contract workers all live out of state and although their wages will be taxed in VT the wages themselves will be sent home to their families and the locall area will see very little benefit.

  2. The “job creation” by decommissioning is similar to those created when windows get broken, only worse. Economist and others have noted that when windows are broken due to storms or whatnot, afterwards there are jobs created in replacing the broken window glass. At least in the case of the broken windows, the work done restores the homes and business to make them usable again. In the case of Vermont Yankee, decommissioning early means destroying a useful asset. If this work were being done (at the appropriate time in the future) to prepare the “brownfield” site for a new nuclear power plant, I would have no problem with it, as it would be the necessary work before building a new and improved power plant. But this is not the case.

  3. Excellent analysis.

    Can you analyze the cost of electricity to Vermonters and the other ISO states in New England – by running VT Yankee for another 20 years vs buying and transmitting power from Canada and other sources? Thanks.

Comments are closed.