Vermont Utilities Stand to Make Millions From Yankee's Relicensure
Despite the gloom-and-doom scenarios of some supporters, if Vermont Yankee were shut down today, next week or in 2012, Vermont’s lights would not go out.
The recent concern about tritium leaking into groundwater, and eventually the Connecticut River, has raised the possibility that VY could be forced to shut down until the leak is found — or entirely, if there is sufficient concern for public health and safety.
What does that mean for power consumers? Will the lights go out? Will their power bills skyrocket? Not exactly.
Vermont Yankee’s major customers — Central Vermont Public Service and Green Mountain Power — are steadily lining up renewable alternatives that will allow them to reduce their reliance on VY by roughly half after 2012. Today, VY supplies more than one-third of Vermont’s power needs.
CVPS and GMP are in contract talks with Hydro-Québec and have actively sought bids from other regional power sources to replace VY partially — or wholly, if it goes offline.
Last year, GMP, CVPS and Vermont Electric Cooperative put out a call for bids to replace VY. The response?
“We had a massive response from all kinds of potential suppliers and have homed in on several contracts for new energy, much of it renewable, that will be announced in the next month or so,” said Steve Costello, spokesman for CVPS, the state’s largest electric utility.
“The bottom line is, we’ve been proactive in planning for future long-term power supplies with or without VY,” said Costello. “We have a legal obligation to serve our customers, and that doesn’t end with VY’s license or operation.”
Both CVPS and GMP support VY’s relicensure — but with a significant caveat.
“We’ve always said that the plant must be able to run safely and reliably,” said Dotty Schnure, GMP’s spokeswoman. “The legislature and Public Service Board are going to do what they’re going to do, and we’ll be watching closely.”
Both GMP and CVPS are also investing in renewable development of their own — GMP in wind and CVPS most notably in its farm-based methane generators, dubbed “Cow Power.”
Both utilities consider VY an affordable, carbon-friendly source of power. Plus, Yankee has been offering power at a discount: GMP and CVPS pay two-thirds of the current regional market price. That’s 4 cents per kilowatt-hour, compared with the standard 6.
If VY were to shut down in 2012 or before then, Schnure said, short-term power sources are available, because of a current regional glut of power. That power excess, she added, also means larger power producers are reticent to enter into long-term agreements right now.
Future power prices could make VY’s relicensure a great deal — or a not-so-great deal — for GMP and CVPS. Under a so-called revenue sharing agreement (RSA), the two other utilities could reap as much as $122 million from Yankee over the next 20 years. For all power sold on the market at more than 6.2 cents per kWh, the utilities get a piece of the profit.
However, a legislative consultant predicts that dollar amount could be half as much if power prices do not rise as precipitously as state regulators expect.
“It all depends on what market prices do; if they are below the 6.2-cent RSA price, there is no economic value; if they rise above that, the value rises with the market price. What we do see as a significant value is that the RSA provides a hedge or price cap of sorts if market prices rise, as they have been doing again of late,” said Costello.
Even with the RSA, Costello said Vermonters shouldn’t be shocked to see higher power prices in the near future — even if VY is relicensed.
“Vermont energy costs are likely to rise over the next several years due to market forces,” said Costello. “Because the [Vermont Yankee] and [Hydro-Québec] prices have generally been below the market prices in the region, we’ve had the benefit of prices that at times have been well below what our neighbors in surrounding states have paid.”