ML20153H045

Shutdown Assessment of Vermont Yankee Nuclear Power Facility, Interim Rept to State of Vt General Assembly

ML20153H045
Person / Time
Site:	Vermont Yankee
Issue date:	12/31/1987
From:	VERMONT, STATE OF
To:
Shared Package
ML20153H019	List: ML20153H033 ML20153H045 NUREG/CR-0672, Forwards NUREG/CR-0672,Addendum 3, Technology,Safety & Costs of Decommissioning Ref BWR Power Station, Estimating Decommission Costs for Plant,Per 880706 Meeting.W/O NUREG/CR-0672,Addendum 3
References
12, NUDOCS 8809090072
Download: ML20153H045 (200)

Text

.

r SHUTDOWN ASSESSMENT OFTHE

. VERMONT YANKEE NUCLEAR POWER FACILITY INTERIM REPORT TOTHE VERMONTGENERAL ASSEMBLY l

State of Vermont Department of Public Service Technical Report No.12 1 December 1987 h$090$00ck$$$$$$71 p PDC

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ACKNOWLEDGEMENTS This study was preparod by the Department of Public Service under direction of Commissioner Gerald Tarrant with assistance from various state agencies.

Contribut ing to this report within the Department were Douglas Smith, Riley Allen, Fiona Farrell, David Mullett, Christopher Owen, William Steinhurst, Richard Sedano, Phillip Paull, Stan Faryniarz, Raymond Koliander, Lawrence T. Slominski and George Mathon.

Portions of the reports were typed and prepared by Sandra Joy, Peggy Leone, Katherine Vaughan and Mary Garcia.

Others outside the Department who provided assistance to the Department in their preparation of the report include William Daley, John Pearson and Tom Bennet of Vermont Yankee, Cort Richardson of VPIRG, Earle Tennessey of Department of Taxes, Laurence Becker of the Agency of Natural Resources and, Ray McCandless of Vermont's occupational and Radiological Health Program.

Also, numerous employees of Vermont's electric utility companies contributed opinions and analytical work which assisted the Department.

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EXECUTIVE

SUMMARY

Background

In May, 1987, the Vermont General Assembly passed a bill (H.173) requesting a comprehensive impact assessment of a Vermont Yankee shutdown. With assistance from various state agencies, local officials, utilities and Vermont Yankee, the Department of Public Service has undertaken this assessment. The General Assembly requested two reports: a final report by December of 1988 and an interim report. This study provides preliminary findings of the Department's investigation into the questions raised in the legislation and some recommendations for completing the final report, , ,

The investigation was conducted using the resources available within the Department and to the agencies which assisted in preparing this report. The bill's questions covered a variety of issues ranging from the state's ability to cause a shutdown of the Vermont Yankee facility to the effects such a shutdown (state-initiated or otherwise) would have on ratepayers, local communities and state tax revenues. These questions raised novel and complex legal and economic issues involving many uncertainties. Conclusions reached in this report are, therefore, tentative assessments and generally require further research and refinement.

Conclusions The fundamental conclusions of the Department's interim analysis may be summarized as follows. Federal and state case law appear to indicate the possibility that a state effort to close an operating nuclear power plant may not be preempted if the action is not taken on safety grounds. This possible reading is, however, an extrapolation into an area where there is no precedent and is, therefore, not secure. Also, any such attempt would face further legal hurdles flowing from the Commerce and Takings Clauses of the U. S. Constitution, as well as the law of condemnation, making it exceptionally difficult to predict the outcome.

Furthermore, were Vermont Yankee to shut down, whether through state action or otherwise, the economic i analysis, so far, projects substantial immediate and long term costs to Vermont which must he weighed against any benefits.

Regardless of the answer to the state authority question, Vermont Yankee is subject to come risk of a  !

permanent or lengthy shutdown at any time for a wide (

l l

1

variety of reasons. Vermont utilities do not, in fact, -

have a specific contingency plan for such an event. Nor

) do they, as individual utilities, nave integrated, long range plans identifying and evaluating options (which would be available for use after a shutdown) in place as called for by the Department's proposed Twenty-Year Plan. Thus, it would seem that quality of planning may be a matter of more concern to Vermont than the legal authority issue. Such planning cannot be effective without a thorough understanding of the resources likely to be available. But it is not enough to understand what the resources are; we must also see how they could be accessed. Transmission systems, especially those owned by VELCO, GMP and CV must, therefore, be considered. This interim report identifies a number of questions that should be answered by Vermont utilities.

To support orderly inclusi'on in the final report, their responses should be received by May 1, 1988.

Summarized in the table below are the Department's preliminary estimates of the costs to the stato of a shutdown in the event of a state taking or a shutdown due to unspecified causes other than a forced closing by the state. The Department estimates that the costs of a forced shutdown would be roughly $569 to $612 million in present value 1988 dollars. A shutdown not due to a state action would cost Vermont roughly $343 million.

PRESENT VALUE COST TO VERMONT OF AN EARLY SHUTDOWN OF THE VERMONT YANKEE FACILITY IN 1988 (Millions of 1988 Dollars)

STATE TAKING CLOSING DUE TO CAUSES OTHER THAN A TAKING

$569-$612 $343 The difference in costs between a state-initiated shutdown and a closing due to other reasons (e.g.,

accident, federal regulation or management decision.)

follows from obligations the state might assume as the new owner in the event of a state taking. If Vermont Yankee were to close early due to reasons other than a taking, Vermont utilities would face the added costs of replacement power in addition to their present share of plant capital and other ongoing facility costs. In the event of a state taking, the state, as the new owner, would bear all those costs and might also bear the added burden of the shares of plant capital costs and ongoing l facility costs now paid by out-of-state utilities,  !

perhaps through a condemnation payment. Additionally, a state action forcing a shutdown of the facility could possibly leave the state financially exposed to claims for any "loss" due to the cost of replacing the 11

. . i I

w out-of-state share of Vermont Yankee power. These estimates do not reflect the costs of potential .

litigation, foregone benefits from power sales or.the l costs or avoided costs associated with an accident. 1 i

The Department's estimates of shutdown costs are based in large part on the expense projections supplied ,

by Vermont Yankee, which assume condemnation of the facility by the state. The difference between the two estimates in the above table is due largely to j assumptions about who bears the out-of-state shares of plant capital, ongoing facility, and replacement power costs. It ret.1.ects one possible cost scenario and could change significantly with the circuar?ances following such a closing.

H.173 Questions The first question raised in the legislation asked i what authority the state has to shut down the Vermont .

l Yankee facility. Because no state government has taken i such a step, no legal precedent exists that addresses i the precise issues which would arise from attempts by a state to force a shutdown of an operating facility.

Legal research reveals that the staue would appear to [

have the power to prevent the construction of a nuclear r power plant. One might reach a similar conclusion with i regard to a shutdown of an operating plant, but no l secure precedent exists. Were the state able to force a shutdown, however, it appears likely that the facility's i owners would be entitled to compensation.

t The second question raised in H.173 asked what authority the state has to protect the public safety, i health and welfare when the Vermont Yankee nuclear facility is shut down. The state would continue to exercise its authority over aspects of the facility not ,

including radiological health and safety. Included in this authority would be certain economic regulation of  ;

the facility, state control over environmental j discharges, occupational safety, emergency preparedness, i and authority over "low-level" wastes.

l The General Assembly's third question was what <

, financial exposure the state would have when the I facility shuts down. Interpreting "state" to mean state government and the taxpayers (as opposed to Vermont utilities and ratepayers), we have concluded that if i Vermont Yankee were to close as a result of either a federal regulatory agency ruling, an accident, or some 1 other unspecified internal decision by its owners or -

i management, then the state would not have any direct j l

financial exposure other than lost tax revenues. l

( Vermont utilities, however, would continue to be liable l l \

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for their share of plant capital and ongoing facility costs, as well as any new costs arising from the reason for the shutdown. What portion of these expenses would flow through to Vermont ratepayers would depend on the factual circumstances and subsequent regulatory ,

decisions.

If a state action, however, caused a premature closing of the facility through eminent domain or other comparable action, then the state would likely be obligated'to assume those costs and to compensate che owners of the facility. Other possible obligations to the state following a state taking and shutdown of Vermont Yankee, if that path were followed, would include ongoing facility costs until decommissiening, costs of compensating out-of-state ratepayers for -

replacement power, and any unfunded balance of the facility's decommissioning costs. ,

Alternative methods of establishing a condemnation payment to compensate Vermont Yankee's owners could be considered by the courts. The available guidance in the law appears to favor the establishment of compensation at the "book value" of the facility. In 1986, Vermont Yankte reported this figure to be $230 million. An alternative method would be a "capitalized value" of an expected earnings stream. In a regulated utility, the income earned is based on the undepreciated portion of its capital investment, leading again to the conclusion that compensation should be equal to book value.

The fourth question raised by the General Assembly concerned the adequacy of planning for replacement power and the ability to cover the costs of shutdown and decommissioning whenever the facility shuts down.

Specific plans to address decommissioning the facility, including provisions for funding, have been made and appear to meet federal standards for adequacy.

! Approximately $11 million of the estimated $128 million required (in 1987) has been collected by Vermont Yankee and placed in a separate fund. The contract between Vermont. Yankee and its owners appears to establish a clear obligation on the part of the owners to cover all costs associated with decommissioning except in the event of a taking of the facility by eminent domain or other similar proceeding, in which case. future ratepayers could be exposed to significant unfunded portions of decommissioning costs.

Although no detailed replacement power plans exist i

for the event of a Vermont Yankee shutdown, there appear to be a number of alternative power sources available.

This environment could change, however, and many difficult issues would confront the state in the event iv

b of an early shutdown, including possible over-dependence on a few large suppliers, significant rate impacts, and environmental impacts associated with in-state sources of replacement power. In addition, planning for replacement power cannot be adequate without an understanding of both generation and transmission. A determination of whether mechanisms exist or are needed to ensure adequate power specifically for the event of an early shutdown of Vermont Yankee will depend on information supplied to the Department by the utilities in response to questions raised in this report.

The fifth question posed by the Legislature inquires as to the appropriate economic criterion for deciding whether the state should shut down Vermont

. Yankee. The Department believes that a social cost-benefit approach might yield an appropriate economic basis for such a decision. Based on its prelir". nary calculation of the costs and benefits of a state -;nitiated shutdown of Vermont Yankee, the

• Department's interim estimated cost to the state for such a shutdown has a present value equivalent of roughly $569 to $612 million in 1988 dollars. Other major elements of the costs and benefits et a shutdown that could not be quantified include reduced risk associated with a potential accident, litigation expenses and foregone benefits from sale of power from Vermont 'lankee or sources used to replace it. A shutdown of Verr.nnt Yankee would also impose certain costs and benefits to the strategic mix of power that ensures adequata power for the future at reasonable prices.

The bill's final

• question asked for an assessment of the effects of a shutdown and decommissioning upon Vermont ratepayers, and state and local revenues. The impacts on ratepayers will depend largely on the circumstances of the shutdown and the costs that are incorporated into the rates by the Public Service Board. Vermont relies on Vermont Yankee for up to a third of its power. Assuming a state taking with all major elements of costs borne by ratepayers, power rates to Vermont customers could increase by an average of roughly 10 percent. The distribution of these rate impacts could vary between utilities in the state and among customer classes. As noted in the report, a number of as yet unquantified factors could alter this estimate significantly.

The greatest impacta of a shutdown of the vermonc Yankee facility would probably be felt by the town of Vernon which relies on Vermont Yankee for about 88 percent of its tax revenue and has roughly 11 percent of its working residents employed by Vermont Yankee Nuclear V

Corporation. Roughly 57 percent of the Corporation's -

327 employees live in Vermont and, in 1906, Vermont Yankee paid about $3.2 million in taxes to the State of Vermont and approximately $2.5 million to Vernon and Brattleboro.

Open Issues There were a number of issues raised in H.173 that have been left open for the final report in December, 1988. They have been addressed to varying degrees in this interim report, but will be expanded on in the final report with the completion of the rernarch and further contributions from other state agencier and Vermont utilities. Major issues left largely untouched

. in this report include the effects o2 demand-side management and small power in reducing the burdens of replacement power costs; the effects of the recently proposed Hydro-Quebec contract on the costs of replacement power; and the impacts of rate increases on the competitiveness of state business and industry l within the state and associated impacts on employment I and profits. Many other elements of the analysis will l undergo careful review over the course of the year and I the Department looks forward to the comments and I suggestions of interested groups as we review our interim analysis and prepare a final report.

vi

P TABLE OF CONTENTS EXECUTIVE 'UMILARY. . . . . . . . . . . . . . . . i TABLE OF CONTENTS. . . . . . . . . . . . . . . . Vii LIST OY TABLES AND FIG'JRES . . . . . . . . . . . ix

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1. INTRODUCTION. . . . . - . . . . . . . . . . 1-1 1.1 Leg.slative '

Mandate . . . . . . . 1-1 1.2 ' Background. . . . . . . . . . . . 1-2 1.3 Scope of Study. . . . . . . . . . 1-5 g

1.4 Study Overview. . . . . . . . . . 1-5

2. A0fEORITT OF ST1TE TO 8 HUT DOWN VERMONT YANKEE. . . . . . . . . . . . . . . 2-1 2.1 Federal Preemption . . . . . . . 2-1 72 The Commerce Clause. . . . . . . 2-7 2.J The Contracts Clause . . < . . 1-9 2.4 Takings Clauses of Federal and State Constitutions. . . . 2-10 2.5 Indirect Shutdown Possibilities. 2-13 2.6 Conclusions. . . . . . . . . . . 2-14

3. AUTHORITY OF STATE TO PROTECT PUBLIC SAFETY, HEALTH AND WELFARE . . . . . 3-1 3.1 Background . . . . . . . . . . . 3-1 ,

3.2 Statutory Authority. . . . . . . 3-3

3.3 Authorit

Under 3 -9 "Agreement" Status. . . . . . .

4. FINANCIAL EXPOSURE TO THE STATE OF VERh0NT. 4-1 4.1 Compensation for Condemnation. . 4-1 4.2 Replacement Power Costs. . . . . 4-6 4.3 Other Financ.;al Exposures. . . . 4-7 4.4 Conclusionr. . . . . . . . . . . 4-7

5. ADE(. ATE PLANNING FOR REPLACEMENT POWER, 8HO4 (-  ? 'c DE ' oMMISSIONING. . . . . . . . 5-1 Repla'.~ ;.? Power Planning . . . . 5-1

!' ' w p, and Demand-Si.de lt Options . . . . . . . 5-4

..T$p.

.. t r Decommisslwiing . . . 5-7

\f/Qlji 5. -

.L 's . . . . . . . . . . . . 5-22

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6. ECONOMIC CRITERIA. . . . . . . . . . . . . 6-1 6.1 Cost-Benefit Analysis -

vs. Economic Impact . . . . . . 6-2 6.2 Cost-Benefit Analysis . . . . . . 6-2 6.3 Cost and Benefits of a vermont Yankee Shutdown . . . . 6-5 6.4 Summary of Costs and Benefits . . 6-22 6.5 Conclusions . . . .. . . . . . . 6-28

7. IMPACTS . . . . . . . . . . . . . . . . . . 7-1 7.1 Rate Impacts. . . . . . . . . . . 7-2 7.2 Employment and Income Impacts . . 7-6 7.3 Tax / General Pard Impacts. . . . . 7-11 7.4 Secondary Impacts on Employment, Income and Competitiveness. . . 7-15 7.5 other Impacts . . . . . . . .. . 7-16

8.

SUMMARY

OF OTHER STUDIES, COMMENTS AND RESPONSES . . . . . . . . . . . . . . . 8-1 d.1 Utitility Responses . . . . . . . 8-1 8.2 Town of Vernon. . . . . . . . . . 8-5 8.3 State Agencies. . . . . . . . . . 8-5

9. CONCLU8 IONS . . . . . . . . . . . . . . . . 9-1 9.1 Open Issues . . . . . . . . . . . 9-1 9.2 Iraterim Conclusions . . . . . . . 94 APPENDIC 29 Appendix A -- H.173 Appendix B -- Methodology and Calculated Rate Impacts Appendix C -- History of Nuclear Reactor Decommissionings Appendix D -- Low-Leval Waste Disposal Appendix E -- Operating History Appendix F -- Vermont Yankee Opart iirig Expense Projections App 3ndix G -- Plant Capacity Factors Appendix H -- Vermont Yankee Ownership Appendix I -- Community Surrounding vermont Yankee Appendix J -- Glossary sdii

\M Ah

LIST OF TABLES AND FIGURE 8 l

Table Title Page 5-1 Summary Safety Analysis for Deconmissioning a Reference BWR . . . . . . 5-17 5-2 Decommissioning Costs . . . . . . . . . . . 5-19 6-1 Probabilistic Risk Analysis . . . . . . . . 6-4 6-2 Economic Costs and Benefits of a Vermont Yankee Shutdown . . . . . . . . . . 6-6 6-3 Vermont Yankee Nuclear Power Corporation Historical capital Additions. . . .. . . . . 6-13 6-4 Vermont Yankee Nuclear Power Corporation Projected Capital Additions . . . . . .. 6-14 6-5 Projected Capital Additions Present Value . 6 - 1 E' 6-6 Estimate of Low-Level Waste Disposal ,

Costs - HQ Penalty Surcha'Jyes . . . . . . . 6-18 6-7 Estimate of Low-Level Waste Disposal Costs - ElIH Penalty Surcharges . . . . . . 6-18 6-8 Vermont Yankee Estimates Operating Expenses 6-20 6-9 Net Cost to Vermont of a Vermont Yankee Shutdown . . . . . . . . . . . . . 6-24 4

6-10 Summary Costs and Benefits to Vermont of a Forced Shutdown. . . . . . . . . . . . 6-25 ,

7-1 Vermont Yankee Nuclear Pow 3r Corporation Employee Residences - Summary by S* ate. . . 7-7

, 7"2 Vermont Yankee Nuclear Power Co:poration J Employee Residences - Surmary by Town . . . 7-8 7-3 Vermont Yankee Tax Payments to Vermont. . . 7-13 7-4 Net Impact of a Shutdown on Vermont State and Local Tax Base. . . . . . . . . . 7-15 8-1 Cost of Replacement Power According to Uti'A lty Projections . . . . . . . . . . . . 8-1 Fiaure 7-1 Cost to Replace Vermont Share of Vermont Yankee Power, 1988-2007 . . . . . . . . . . 7-4 ,

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. 1. INTRODUCTION 1.1 Iegislative Mandate The General Assembly initiated this study of the Vermont Yankee nuclear generating station by its passage o'f H.173 during the 1987 session.1 The bill was introduced by Representatives Hockert, Batten, Lingelbach, McCormack and Potvin on January 30, 1987 and, after being amended, was approved upon voice vote by both houses May 1. Governor Madeleine Kunin signed the bill May 12.

The bill directed the Department of Public Saryico with assistance from other groups to study the state's authority and obligations in a closing of the Vermont Yankee nuclear plant. At the same time, lawmakers sought an assessment of the impacts associated with an early shutdown, including the cost of replacement power, decommissioning and changes in tax revenues. The impact on utilities and Vermont Yankee as well as state and local economies was also to be studied.

During legislative debate, it was recognized that the Vermont Yankee plant offered certain benefits to the state and its ratepayors. The plunt is the single largest supplier or generator of electricity in Vermont, providing about one-third of thu electricity censumed here. The total cost per kilowatt hour is presently in the mid-range of all of the state's electricity sources.

Additionally, the plant generates tax revenues for local and state government and is a notable employer in the Windhau County region.

Legislators recognized the plant might be closed due to technical problems, an accident or other reasons,

but they specifically sought an opinion on whether the state has legal authority to cause a premature closing r of the plant, given tne complex web of federal and state laws and regulations governing nuclear operations.

1-1 i

- l Some legislators had concerns about the continued -

operation of the nuclear facility in the wake of accidents at Three Mile Island in Pennsylvania and Chernobyl in the Soviet Union. Another concern was the issue of nuclear waste disposal. Vermont Yankee is the largest producer in the state of high-level and low-level nuclear waste. The state now has under study I a number of alternatives for disposal of low-level waste such as contaminated aleaning fluids, rubber gloves, and rags. Also, the faderal government is searching for a high-level waste (consisting mostly of spent nuclear fuel) storage site to fulfill its legal responsibility, but may not have one ready for many years.

In fact, the Legislatu.e realized that many -

significant issues required a public debate as the nuclear plant approached the mid-term of its licensed 35-year operating life. Other questions were: Would j

there be adequate replacement poder if Vermont Yankee closed for any reason? What impact would a closing have on electric rates? Will there be enough money to decommission the plant? H;w long will decommissioning take and what method will be used? The answers to these questions and others promise to have significant influence on the electric industry as well as the health dnd welfare of Vermonters and other New England I residents in decades to come.

1.2 Background

The concept of a nuclear power plant in Vermont was floated by a number of Vermont utilities in the mid-1960's not long after Governor Philip Hoff proposed the importation of electricity from the C.turchill Falls hydroelectric praject in Canada. In 1966, Vermont Yankee Nuclear Power Corporation was organized, and in 1967 it received a construction permit from the federal Atemic Energy Cosmission to build a plant in Vernon at 1-2 I

the stautheastern corner of the state, bordering New Hampshire end Massachusetts. The proposed plant was sized at 540 Megawatts compared to Vermont's total peak der.and of 340 Megawatts at the time. In 1966, 150 Megawatts of Vermont's load was met by the State of Vermont with electricity purchased from the Power Authority of the State of New York (PASNY).

The plant is a General Electric Mark 1. boiling water reactor and cost $220 million to build in 1972. ,

(In contrast, Connecticut's Millstone 3 nuclear plant was completed in 1986 at a total cost of $3.8 billion.) ,

Vermont Yankee began operation in November, 1972, and its federal license is scheduled to expire in'2007. .

Recently, company officials and owners have discussed seeking an operating extension until 2012.

Fifty-five percent of the. nuclear plant is owned by Vermont utilities and the balance is held by electric companies in other New England states. (See Appendix H for list of plant ownere and their shares.) Vermont owners include: Central Vermont Public Service l Corporation, Green Mountain Power Corporation, i Burlington Electric Light Department, Vermont Electric Cooperativo, Washington Electric Cooperative and Lyndonville 21ectric Department Seven other Vermont utilities purchase a total of 1.5% of Yankee's output '

from CVPS and GMP. They are five muricipal utilities:

Morrisville, Northfield, Stowe, Hardwick and Orleans and two private companies: Allied and Rochester.

Vermont Yankee typically produces about one-third of the electricity consumed in Vermont each year, depending on its operating performance. During its 15-year operating history, it has, on average, generated electricity at 68.7% of net rated capacity. Desp' s3 difficult period during its first two years, the ..it has had a favorable "capacity factor" relative to nuclear plants of its type. When Vermont Yankee has 1-3

e .

been unavailable, the state's utilities have had to to .

/

obtain "replacement energy" at market costs.

The plant has routinely stopped operation once a year for a period of 6-8 weeks to refuel and to perform l scheduled repair and maintenance work. Vermont Yankee intends to lengthen the time between refueling outages to improve economy, effective with the cycle commencing October, 1987. Repairs at the plant, however, have proven costly One significant project took place over a ten-year period -- from tne mid-1970's to mid-1980's '

-- (during scheduled and unscheduled outages). It involved modifying the "torus" supports (part of the ,

emergency c.coling system) at a capital cost of about $14 million. Utilities and their ratepayers incurred additional costs for power to replace Yankee's during plant outages. Another repair resulted in a nine-and-a-half-month outage beginning in September, 1985, when cracked recirculation pipes were replaced at a capital cost of about $60 million. Expectation of this work prompted the state to purchase 150 Megawatts

) from Hydro Quebec to assure a reliable supply of j replacement energy. Between 1972 and 1985, the plant i was shut down and taken "off line" 108 times: Twelve of the outages wore for routine refueling and 96 outages l

were unplanned, caused by operational problems. .The l duration of outages has ranged from less than a day to l several months.

i The sponsoring utilities are responsible by contract to continue to pay the plant's +apital costs and operating expenses even when it fails to operate. l Those companies pass along these capital costs to  !

customers along with the expected cost of replacement  :

power purchr. sed when Yankwe is off line, a practice which has, in some cases, resulted in surcharges to most Vermont ratepayers. These surcharges are not reflected i

1-4

e ,

4 - in the average price per kWh Vermont Yankee has f calculated. (See Chapter 6.)

1.3 Scope of study This study encompasses the impacts on the S-tate of Vermont, its utilities, ratepayers and residents,  !

t associated with a shutdown of the nuclear plant. There l clearly are effects on other states associated with a plant closing. A few miles or less from the plant are (

New Hampshire and Massachusetts, which would have l concerns about,the plant from the perspectives of i

]

safety, environment, employment and economics. Also,

- about 45% of Vermont Yankee's electricity is sold to l utilities in other New England states, meaning ,

j out-of-state ratepayers have a stake in the plant's continued operation. However, impacts on Vermont are the focus of the study, except to identify potential compensation to out-of-state owners of Vermont Yankes in the event the state caused the plant to close.

If further studies of nuclear power plants in the region are contemplated, other New England states should r consider participating in a coordinated study. There are eight commissioned nuclear generating plants in New f

England. The closing of any one of them has positive [

and negative implications for the entire region, not l just the host state. For instance, Vermont utilities have ownership or interest in nuclear plants in four i other New England states and an action or event closing any of them would have impacts here. ,

i 1.4 study overview H.173 c111ed for input from many sources, including l Vermont atilities, some of whea supplied their [

projections of a plant closing's impact. .roughout f

their analysed, the utilities and Vermont Yankee looked j at direct costs in considering the "economics" of  !

t i

t 1-5 l 1

f f

operating or closing the nuclear plant, i.e., only costs directly associated with the plant and with the supply of replacement power upon its closing. On these bases they have concluded that an early shutdown would be unjustifiably expensive.

The Department has chosen to take a somewhat broader view of the economic issue, recognizing that Yankee can not be viewed in isolation in matters such as state or regional power planning and health and environmental issues. In fact, any decision to close the plant or to continue its operation must examine a ,

spectrum of economic and non-economic impacts. (see Tables 6-2 and 6-10, for example.) While the Department has not been able to quantify all the costs and benefits of a shutdown, it is important to at least consider those that are only qualitative.

What are the economic considerations? When deciding to build or to continue a plant's operation, regulators cannot decide based solely on the plant's ability to produce low-cost energy. The U.S. supreme court has noted that states may not be preompted on f economic matters and that there seems to exist some state authority over such matters as economics and power planning issues, including the need for power, system reliability and diversity, and.the environment.  ;

However, that decision relates only to the construction  !

No case has been decided relating I of a nuclear plant.

to the closing of an existing nuclear plant. (See Chapter 2.)

Many power planners, for example, have concerns about relying on large, single unit generating sources, l inbarantly requiring disproportionate increases in re< capacity.2 In october, 1987, the New England

! Power Pool decided to increase electricity reserve requirements for utilities region-wide. This was done in part to reflect so-called "oparational realities" 1-6

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• related to maintenance outages of la.ge nuclear plants. l During the summer electric peaks in 1187, nuclear plants in Connecticut, Maine, Vermont (for scheduled refueling) and Massachusetts were out of service. The winter of 1987-88 has already seen outages of a nadoer of large nuclear plants in Connecticut and Massachusetts.

Ultime.tely, electric consumers pay for the reliability risk associated with these generating sources through replacement power costs and increased reserve requirements, serving as an example that the direct cost of a plant's operation may not reflect its total costs to ratepayers.

The Department was required to make certain

- assumpti9ns about the Vermont Yankee study due to the ,

broad nature of the legislative questions. The Department assumed, for example, that references to the "state" in Questions 1, 2 and 3 meant the State of Vermont and its agencies and departments. The Department asks the Legislature to clarify these and direct further study as the interim report is discussed during the 1988 session.

The fundamental conclusions of the Department's interim analysis may be summarized as follows. Federal and state .:ase law appear to indicate the possibility that a state effort t.o close an operating nuclear power plant may not be preempted, if the action is not taken on safety grounds. This possible reading is, however, l

an extrapolation into an area where there is no precedent and is, therefore, not secure. Also, any such attempt would face numerous further legal hurdles flowing from the Commerce and Takings Clauses of the U.S. Constitution, as well as the law of condamnation, l making it exceptionally difficult to predict the outcora. Furthermore, were Vermont Yankee to shut down, whether through state action or otherwise, the economic analysis so far p;ojects substantial i. mediate and long 1~7' I

, l

• I term costs to Vermont which must be weighed against any benefits.

Regardless of the answer to the state authority question, Vermont Yankee is subject to some risk cf a permanent or lengthy shutdown at any time for any of a wide variety of possible reasons. Vermont utilities do not, in fact, have a specific contingency plan for such an event. Neither do any of them have in place an integrated, long range plan identifying and evaluating options (such as would be available for use after a '

shutdown) as called for in the Department's proposed Twentv-Year Plan. Thus, it would seem that planning [

quality may be a matter of more concern to Vermont than I the legal authority issue. Such planning cannot be (

effective without a thorough understanding of the resources likely to be available. But it is not enough l to understand what the resources are; we must also see I

how they could be accessed. Transmission systems, l especially those owned by VELCO, GMP and CV must also be I considered. This interim report identifies a number of l questions that should di answerr.d by. Vermont utilities. f (see section 5.4) To svpport orderly inclusion in the {

final report, their responses should be received by May j 1, 1988. J Preparation of the interim report has been a major j undertaking. The Department aant requests for I information or assistance to approximately 38 groups, including Vermont electric distribution utilities, Vermont Yankee Nuclear Power Corporation, mun.cipalities j near the plant, state agencies, Vermont Electric Power i f

Company (VELCO) and others. (Summaries of comments by ,

these parties are found in Chapter 8.) Eight statt members from legal, engineering, planning and consumer divisions of the Department worked on the study. Five l

served as authors of the. report. Cumulatively, department staff has devoted approximately eleven man t

i 1-8 [;

r

• . months to preparing the report. Recommendations for the final report are described in Chapter 9.

Recommendations for resources for the finel report, called for in H.173, will be forwarded under separate cover. Included in this report, as noted above, are various questions that will nced to be answered for the final report.

Finally, it should be noted that this interim report, particularly as it relates to the state's legal authority to close Vermort Yankee prematurely, involves .

difficult and complex matters for which there are no ,

specific legal precedents. Perhaps the only real certainty is that both Vermont Yankee owners and the nuclear industry in general will not be hesitant to spend substantial time and money to defend their interosts, and that the resulting legal battles would be both long and expensive.

FOOTNOTES -- Chanter i 1

"An act relating to the completion of a study assessing the shutdown of the Vermont Yankee Nuclear Facility," 1987 Vt. Acts 38.

2 Y. K. Henderson, at al., Plannina for New Encland's Electricity Recuirements, Fed. Reserve Bank of Boston, Nov., 1987, p. ii.

1-9

2. AUTHORITY OF THE STATE TO SHUT DOWN VERMONT YANKEE "What authority does the state have 'o shut down the Vermont Yankee Nuclear facility?"

Analysis of the state's authority to order a shutdown of the Vermont Yankee facility involves consideration of federal law, state law, and the relationship between the two. Because no state government has taken the step of actually shutting down an operating nuclear facility, the courts have not had occasion to address the precise issues which would arise from such a shutdown or attempted shutdown. This absence of precedent makes predicting how a court would rule especially difficult (particularly as there is no specific shutdown legislation to analyze), and virtually ,

assures that any shutdown effort would give rise to protracted and expersive litigation. Because of the interim nature of this report, this section attempts primarily to introduce and highlight some of the principal issues which would be likely to arise in shutdown legislation or litigation. It is expected that more detailed analysee will be developed by the Department and will be offered in the final report.

2.1 Federal Preemption ,

! 2.1.1 U.S. Supreme Court Case There is no question but that Congress has made i many aspects of nuclear power matters of federal regulation, and that the initial question which would be raised in shutdown legislation or litigation is whether the states have been left with sufficient residual authority to permit the shutdown of an existing nuclear plant. It is well settled that congress may preempt ,

state authority either by express terms of legislation, l or by enactment of a scheme of federal regulation that is "so pervasive as to make reasonable the inference that Congress left no room for the states to supplement ,

i 2-1 y ___ _.,.---n.- - - - _ - _

t it."1 With respect to nuclear power, Congress has .

/ ,

j enacted a broad scheme which regulates "the radiological l safety aspects involved in the construction and l operation of a nuclear power plant."2 While the federal statutory scheme set forth in the 3 and subsequent legislation may j Atomic Energy Act 4

indicate a federal intent to preempt state regulation in* ,

! the area of nuclear safety, a 1983 United states supreme I

! court case suggests that the individual states retain a measure of control over non-safety related nuclear (

matters. The case, Pacific Gas and Electric connany v. j f State ynarav manources conmarvation & Davalonnant l j g,ommission," involved certain statutes passed by the California legislature in 1976. One of these statutes [

l l imposed a moratorium on the construction of nuclear f l Plants until the State Energy Resources Conservation and  !

Development Commission, a california state agency,  !

l "finds that there has been developed and that the United l

States through its authorized agency has approved and j there exists a demonstrated techrelogy or means for the l l

f disposal of high level nuclear waste."5 The statute f further defined "disposal" as "a method for the {

J permanent and terminal disposition of high-level nuclear l

! waste."' certain california utilities challenged this l l

statute, alleging, asong other things, that it was f j preempted by the federal statutory scheme for the f regulation of nuclear power.

]

j Without dissent, the United states supreme court  !

) upheld the validity of the California statute. While f indicating that "the Federal Government has occupied the

' entire field of nuclear safety concerns"7 with certain

! minor exceptions, the court held that the california j statute was based on economic considerations,'and thus

! fell within the broad responsibilities traditionally I

l held by the states in the field of public utility j regulation. The court relied on a california [

i

? l d

' i 2-2 i

[

l

. . j

)

I

- legislative report which indicated that the waste I disposal problem was "largely economic or the result of l poor planning, not safety related."s In rejecting the utilities' assertions that the statute was actually based on safety concerns, the court determined that it would be improper to look behind the avowed econovic purpose of the statute. "It would be particularly pointless for us to engage in such inquiry here when it is clear that the states have been allowed to retain authority over the need for electrical generating facilities easily sufficient to permit a State so inclined to halt the construction of new nuclear plants by refusing on economic grounds to issue certificates of public convenience in individual proceedings," wrote Justice White for the court.'

In a concurring opinion joined by Justice Stevens, Justice Blackmun stated his belief that the court's opinion did not concede enough authority to the individual states, and that a state could in fact use safety related concerns as a' basis for prohibiting the construction of nuclear power plants. In his concurring opinion (which does not represeC' the full court's views), Justice Blackmun emphasized that "states traditionally have possessed the authority to choose which technologies to rely on in meeting their energy needs",10 and that the judgment of the Nuclear Regulatory Commission that conP*ruction of plants may safely proceed does not mean that states must in fact permit utilities to build such plants. Summarizing his position, Justice Blackmun wrote:

Congress has not required States to "go nuclear," in whole or in part. The Atomic Energy Act's twin goals were to promote the development of a technology and to ensure the safety of that technology. Although that Act reserves to the NRC decisions about how to build and operate nuclear plants, the Court reads too much into the Act in suggesting that 2-3

. /  ;

it also limits the states' traditional power .

i to decide what types of electric power to ,

! utilize. Congress simply has made the nuclear option available, and a State may decline that

option for any reason. Rather than rest on -

the elusive test of legislative. motive, t 4 . therefore, I would conclude that the decision whether to build nuclear plants remains with  ;

the states. In my view, a ban on construction ,

l of nuclear power plants would be valid even if  ;

its authors were motivated by fear of core -

meltdown or other nuclear catastrophe.gg ,

The Department concludes that the majority decision f I lands support to state jurisdiction over non-safety l j -

related issues. Nevertheless, the Paelfic can case  ;

l relates only to a state's legal authority to preclude i j ,

the construction cf a nuclear plant. It must be , f i stressed that no case has been decided relating to the  !

closing of an existing nuclear plant. In a case j governed by this ruling, it would seem that allowable

! economic and power planning considerations would not be 4

! limited, one-dimensional cost factors, but rather [

j encompass both direct and indirect financial [

! implications over the short and long term, including, but.not limited to reliability, diversity of sources, l ,

environmental costs and energy costs.

l other recent cases lend support to the proposition l

j that the primary function of the Nuclear Regulatory l

' commission involves wafety matters. In union of f concerned scientists v. NRc,13 decided in 1987, the l Federal court of Appeals for the District of Columbia  !

circuit concluded'that the Atomic Energy Act precludes I the Nuclear Ragulatory commission from taking costs into account in determining and then enforcing a level of i

l "adequate (safety) protection" in the operation of

, nuclear plants. As the court noted, "(n)ot a line in

)

the legislative history accompanying the amendments i suggests that such consideration would be appropriate."I8 f

! 2-4

This understanding is reinforced by a reading of a 1984 federal Court of Appeals case involving the controversial Shoreham nuclear facility. In county of l 14 Suf folk v. Lono Island Lichtina Comoanv , the federal court of Appeals found, consistent with the Pacific Gas case, that concerns about the safety of the plant were preempted by federal law. With respect to economic i

concerns about the effect of cost overruns on' rates, I however, the court did not find that federal preemption existed.15 The Suffolk county case, like Pacific Gas, thus appears to recognize, to some exteat, the states'

right to controi non-safety aspects of nuclear power.

2.1.2 Vermont State Law Vermont, like most other states, has adopted statutes and rules which set forth a comprehensive scheme of utility regulation. In fully exercising what Justice Blackmun referred to as its "traditional police power over the manner in which (it) meets its energy needs,"1" the Vermont Legislature has enacted Title 30 of the Vermont Statutes, which, among other things, creates a Public Service Board (Sec. 3) and Dep&rtment of Public Service (Secs. 1,2), sets fotth a comprehensive scheme of rate regulation (Sees. 225-230),

imposes restrictions on abandonment of utility systems and transfer of utility assets (Secs. 109,. 231-233), and requires that strict criteria be met prior to approval of the construction of new transmission or generaticn facilities (Sec. 248). Indeed, a review of the criteria which must be met under Section 248 (which became effective in 1969, after construction of Vermont Yankee began) shows the breadth of Vermont's regulatory scheme. Before a'cartificate of public good is issued under Section 248, the Board must make findings that the proposed new facility will confer an economic benefit on the state and its residents, and will not have undue 2-5

adverse effects on such things as the stability and , /

reliability of the state's electrical system, the natural environment, historic sites, air and water purity, and human health and safety. Moreover, the Board must give due consideration to the recommendations of the regional and municipal planning commissions and municipal legislative bodies, and must determine that the need for electricity from the proposed facility could not be met in a more cost effective manner through conservation and demand side management meesures. The legislature has imposed even stricter standards with respect to nuclear fission plants; the legislature must specifically determine, prior to the issuance of h certificate of public good, that construction of such a plant will promote the general welfare.17 In this regard, the legislature has retained its oversight of nuclear plants, rather than delegate this responsibility to Vermont regulators.

2.1.3 Analysis In view of the holding of the Pacific Gas case and the language of 30 V.S.A. Sec. 248, it appears that the State could refuse to permit the construction of i additional nuclear power plants in Vermont, at least if it did so on economic or other non-safety related grounds. It is much less clear, however, how the courts ,

would interpret the law if faced with a state decision to close an operating facility. It appears that two questions would immediately emerge. First, does the l exclusive authority of the Nuclear Regulatory Commission over "the radiological safety aspects involved in the construction and operation of a nuclear plant"I'

)

conflict with a potential state determination that operation of a plant should be stopped? Second, how i

broad or narrow a reading of the "safety versus economic" distinctions should a state undertake in 2-6

- . conside'.*ing whether to allow an existing plant to continue .peration?

With respect to the both questions, the cases end statutes provide little guidance. However, the question of hag a plant should operate (clearly left to NRC jurisdiction) may be different from the question of whether a plant should continue to operate at all, at least with respect to non-safety issues. It should again be noted th'at there is no case law considering

^

this precise question, however, and that it is difficult to predict what a court woulc do when faced with it.

The second question is also a difficult one. While the Pacific can case undeniably creates a distinction

- between safety and economics, the two are intertwined it. ,

a practical sense. Perhaps all that can be said with any certalaty is that the less a statute or its legislative history is based on safety, the more likely

- that statute would be upheld. Moreover, while courts will not generally "look behind" the stated legislative purpose of a statute,1' any shutdown statute or action should be the product of careful study of economic considerations, and must not merely use an economic rationale as a pretext for dealing with safety concerns.

2.2 The commerce Clause .

Article I, section 8 clause 3 of the United States constitution grants to the United States Congress the power "to regulate commerce among the several states."

What this short phrase means has been the subject of innumerable judicial interpretations, although the Supreme court long ago recognised that the Commerce Clause does leave some room for state regulation affecting interstate commerce, provided the subject is of local concern and is not one requiring national regulation. Because Vermont Yankee "exports" some of its electricity to other states,31 and because 2-7

_ _ _ _ _ . d

. l these exports would be terminated by a state mandated , f I

shutdown of the plant, interstate commerce would be affected by the shutdown, and a Commerce Clause issue would almost certainly be raised in litigation.  :

While the courts have not had the opportunity to consider the Commerce Clause ramifications of the shutdown of an existing nuclear plant, there are numerous cases dealing with the relationships between the commerce clause, traditional state authority in the ,

regulation of utilities, and the interstate sale of electricity. The gist of these cases is that the courts ,  ;

will perform a two part test in determining if a state statute, regul'ation or adjudication can survive a Commerce Clause challenge. First, the court will look i i

to see if the challenged regulation constitutes "simple economic protectionism." If it does, it will usually be struck down without further analysis, as in the case of

, a New Hampshire Public Utilities Commission order which attempted to restrict the export of hydroelectric energy produced within New Hampshire.22 If a measure does not amount to "simple economic protectionism," but rather visits its effects equally on local and

, interstate commerce, it is then subjected to a three l

part balancing test

;

i

1) Does the statute regulate evenhandedly, with '

only incidental effects on interstate commerce; or, rather does it discriminate against l interatate commerce on its face or in practical t effect?

l

! 2) Does the statute serve a legitimate local purpose? ,

3) If the statute does serve a legitimate local

, purpose, could alternative means promote or serve the local purpose with 1

against interstate commerce? ggt discriminating ,

I  !

It appears that legislation prematurely closing Vermont Yankee might survive the above preliminary '

1 l

l l 2-8 I  !

, l i

o .

Such legislation would not constitute "simple test.

economic protectionism" for Vermont, since the effects of shutdown would be shared by both instate and out-of-state purchasers of the plant's electricity.

While meeting the second test might be more difficult, it appears that appropriate legislation would have a reasonable chance of surviving such a challenge, assuming such legislation could survive the other hurdles discussed in this report. As noted, a shutdown of the plant would appear to regulate evenhandedly and not discriminate against out-of-state purchasers, since all purchasers -- instate and out-of-state -- would lose the electricity generated by the facility.34 3 shutdown premised on legitimate economic grounds could .

conceivably serve a local purpose such as providing more reliable energy or providing lower rates over the long j term if, for example, a premature closing would be '

i cheaper than a rebuilding of the plant's containment

! system or some other major repair.25 Moreover, if the economic concerns addressed by the legislation were f

j directly related to the existence and continued operatian of the Vermont Yankee facility, and could only be truly remedied by'a shutdown, there would not appear i to be an available alternative means of serving the local purpose without burdening or discriminating ngainst interstate commerce. Under these circumstances, l

j the criteria set out by the supreme court might be met,

} especially since "modern jurisprudence has usually, i although not always, given more latitude to state-l regulation" than did an' earlier approach used by the courts.36 i

{ 2.3 The Contracts Clause l Article I, section 10, clause 1 of the United

! states constitution precludes the states from enacting any law "impairing the obligation of Contracts..."

i 2-,

l Because Vermont Yankee has contracts to sell .

I electricity, and because those contracts would undoubtedly be affected by a state mandated shutdown of the plant, it is possible that shutdown legislation or litigation would involve a claim by utilities that the Contracts Clause of the Constitution had been violated.

1 While any potential issue arising from shutdown legislation or litigation must be looked at very carefully, it appears that the Contract Clause issue might be less troublesome than the preemption and '

commerce clause issues discussed earlier. The Supreme Court has recognized that the prohibition contained in the contracts Clause is not absolute, and that it must be read to accommodate the inherent police power of the state to safeguard the vital interests of its citizens.27 Moreover, the fact that an industry has been heavily regulated in the past is relevant in determining the extent of impairment, since a person or company involved in a highly regulated industry may realistically expect further and changing regulation.2s Given the principal of judicial deference "to legislative judgment as to the necessity and reasonableness of a particular measure"29 with respect to issues of this type, carefully drafted legislation would have a reasonable chance of surviving  :

. a challenge under the contract Clause.

2.4 Takings Clauses of Federal and State Constitutions i

~

4 2.4.1 Standards for Takings Assuming that legislation prematurely closing the Vermont Yankee facility could survive the challenges

! discussed above, the question would arise as to whether i

the plant's owners must be compensated as a result of

! the shutdown. While the cases pertaining to the Takings Clause of the U.S. Constitution (prohibiting the government's taking of private property without payment 2-10 i

of just compensation) are exceptionally. difficult to interpret in a consistent fashion, it appears likely that enactment of shutdown legislation would lead to an obligation to pay Vermont Yankee's owners. Under general principles of constitutional law (both state and federal) a governmental "taking" of property, and the attendant requirement that corpensation be paid to its owners, can arise in either actual or constructive -

fashion. An actual taking would occur through a legislative enactment specifically taking or condemning 30 while a constructive taking would the facility result from legislation or litigation which so pervasively disrupts the plant owners' property rights as to require that compensation must be made.31 In either event, the plant's owners would have to be paid for their loss.

If the state were to seek to accomplish an actual taking of Vermont Yankee, it would likely do so by way of eminent domain. Under state and federal constitutional provisions, Vermont would have to show that the taking is necessary and that it is for a public use.32 Because of federal preemption in the safety area as discussed earlier, state concerns regarding the safety of the plant could not smeve as a direct basis

,for establishing the necessity of the taking. Rather, what would apparently need to be established is that the specific site the facility is on is necessary to serve the intended alternative public use. Whether the future use of the site offered as the basis for a taking would in fact qualify as a "public" one would probably be the subject of litigation. The Vermont Supreme court, in a case decided long ago, took a narrow view of what constitutes a public use, saying that "public use" and "public benefit" were not the same thing.33 More recently, however, a court in another jurisdiction has said that "public use" and "public interest" could be 9

2-11

considered synonymous for eminent domain purposes.34 .

The result of any potential litigation over the public use question will, of course, be largely dependent on the nature of the public use selected.

2.4.2 Need For Compensation Under most circumstances, the owner of real or 35 property which is taken by the state personal (either in actual or constructive fashion) is entitled to just compensation for that property.38 The principal exception to the rule that compensation must ,

be paid arises when property is taken or affected pursuant to other, non-eminent domain aspects of the government's police power. Whereas eminent domain involves a taking of property because it is useful to the public, these other exercises of the police power involve regulation of use of property, or impairment of rights in property, on the ground that the free exercise of those rights is contrary to the public interest.37 Examples include abatement of a nuisance,38 destruction of an unlawful substance, forfeiture of property (such as an automobile) used in illegal transactions,.and destruction of property where necessary to avert imminent danger (such as the

. spreading of a fire).33 In the case of a state forced shutdown of Vermont Yankee, it appears that it would be difficult for the state to avoid payment of compensation to the plant's owners, since use of the police power to shut down the plant might well not pass muster with a court. A declaration that the plant was a nuisance would probably not be sufficient, since the health and safety concerns normally associated with a nuisance are in this case preempted by federal regulation, as noted earlier. The plant is not illegal in and of itself, and is not an instrumentality used in the commission of illegal acts.

2-12

- . . . . . _ _________ _ _------.----- --- _- - -.__-. b

., A claim that a premature closing is necessary to prevent imminent danger, whether valid or not, also appears to be preempted by the federal regulatory scheme. Since these traditional police power functions cannot be used to justify a closing, it appears quite likely that 1 - compensation would have to be paid.4' Questions as to g

the amount of that compensation are addressed in Chaptnis 4 and 6.

2.5 Indirect Shutdown Possibilities .

j As noted in the introduction to this section of the 3

report, the analysis performed herein has attempted to address the ramifications of a legislative effort to close Vermont Yankee. If the entire pictur'e is to be .

j seen accurately, however, it must be recognized that there are other ways in which the state might work to l

! bring about a shutdown if one is deemed appropriate.

2.5.1 Federal congressional Action 4 The difficult federal preemption questions which j have been noted in this report exist because of the j com. plex relationship between the federal nuclear scheme 5 and the traditional d,eference accorded the states in matters of utility regulation. Just as congress was i free to create the federal structure and federal j statutes as they now exist, so it is free to change them, and to permit states to fully consider health and j safety factors in making any and all decisions regarding i nuclear power. Congress also may' confer upon the states the ability that they would not otherwise enjoy to restrict the flow of interstate commerce,41 and j federal legislation permitting state mandated shutdowns j of nuclear plants might well pass constitutional muster, l particularly if it were conditioned on payment of I compensation. The Vermont legislature could certainly work to promote passage of federal legislation of this l

1 1

2-13

type if it desired to expand state control over nuclear ,

/

plants. This would likely be a long and very difficult approach, given the federal government's historic role in promoting and overseeing nuclear power.

2.5.2 Traditional Utility Regulation Under the provision of Title 30 of the Vermont statutes, the Public Service Board has broad regulatory power over the Vermont electric utilities which own a substantial portion of Vermont Yankee. When those utilities seek an adjustment in their rates, the coat of service data which they must supply includes costs and expenses associated with Vermont Yankee. The Public  :

Service Board may deny recovery of any costs and expenses which have been imprudently or unreasonably incurred. Moreover, both the Public Service Board and the Department of Public Service enjoy broad authority examine the books, papers, and records of utilities, j

and to investigate utility transactions which affect the interests of Vermonters.42 Even if it is assumed that these state regulatory tools could not be used directly to bring about a shut down of the plant, they 1) give the state some opportunity to make informed judgments about the utilities' wisdom in continuing to incur nuclear-related costs and expenses, and 2) provide the types of checks and balances which may aid the utilities in making their own evaluations about whether the plant continues to be truly economic, t

2.6 Conclusions While absence of legal precadent makes it difficult to predict what the result of shutdown related legislation or litigation would be, carefully drafted legislation may have a reasonable chance of surviving challenges based on federal preemption and the Commerce and contracts Clauses of the U.S. Constitution. If a i 2-14

o .

i i

• . shutdown were enacted via a taking, it appears likely that the facility's owners would be entitled to I compensation for the taking. ,

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-,,__.,.m_. ._ . _ _ _ . . _ _ . _ _ _ _ _ _ _ _ _ . . , . _ _ _ _ , , _ _ _ _ . . . , , _ _ _ - , , _ _ , _ , - ~ . , _ _ - , _ , _ . . _ . .

. l<

l FOOTMOTEs -- chanter 2 i Fidelity Federal Savinas & Loan Ass'n v.

DeLacuesta, 458 U.S. 141, 153 (1982).

'2 Pacific Gas and Electric Co. v. State Enerav Resources Conservation and Develoement Commission, 461 U.S. 190, 206 (1983).

3 42 U.S.C. Sec.'2011 et seq.

4 461 U.S. 190 (1983).

5 Cal. Pub. Res. Code Ann. Sec. 25524.2 (West 1977 and Supp. 1983). .

6 Cal. Pub. Res. Code Ann. Sec. 25524.2 (a) (c) .

. 7 461 U.S. at 212 (emphasis added). ,

8 Reassessment of Nuclear Enerav in Californiat A Policy Analysis of Procosition 15 and its Alternatives, p. 18 (1976). This report is discussed at 461 U.S. 213-14.

9 461 U.S. at 216. It shculd be noted that Vermont Yankee did not receive a certificate of public good ,

pursuant to 30 V.S.A. 248, since its construction preceded enactment of that statute. Vermont Yankee did receive a construction permit from the AEC in

. 1967.

10 Id2 at 224.

11 Id2 at 229.

12 824 F.2d 108 (1987).

13 Idx at 115.

14 728 F.2d 52 (2d Cir. 1984).

15 Idx at 60-61.

16 Pacific Gas, 461 U.S. at 225 (Blackmun, J., I concurring).  !

17 30 V.S.A. Sec. 248(e).  ;

18 Pacific Gas, 461 U.S. at 205.

1 19 Ida at 216.

2-16

30 coolev v. Board of Wardens. 53 U.S. 299 (1851).

31 Electricity is a commodity subject to the commerce Clause. See New Enaland Power Co. v. New Hamnghir,g, 455 U.S. 331 (1982).

33 Id.

33 Pika v. Bruce church. Inc., 397 U.S. 137 (1970).

34 This assumes, of course, that the legislation is not drafted in such a way as to provide compensation or some other form of favoritism only to Vermont owners or purchasers. .

'38 These examples are offered for illustrative purposes only. Analysis,of the economics of a '

, shutdown is contained in later sections of this report.

36 gag Middle South Enarav. Inc. v. Arkansas Public l Service Comm., 772 F.2d 404 (8th Cir. 1985), for an excellent analysis of tests to be applied in Commerce Clause cases.

37 Mona alda. & Loan Assn. v. Blaindall, 290 U.S. 398 (1934).

38 333 Enarav Raservan Groun v. Kansas Power J Licht, 459 U.S. 400, 412.

39 Id. at 413.

30 Vermont Hydroalactrie Corn. v. DuBD, 95 Vt. 144 (1921).

31 Loretto v. Te193goanter Manhattan cATV Corn., 458 U.S. 419 (1982).

33 In re Petition of Town of Snrinafield, 143 Vt. 483

. (1983).

i 33 Daarfield River Co. v. Wilminaten Power and Panar GAA, 83 Vt. 548 (1910).

(

34 Midkiff v. Tom, 471 F. Supp. 871 (D.C. Hawaii 1979).

35 It is clear that the Takings Clause covers both real and personal property. Haldeman v. Freeman, 558 F. Supp. 514 (D.C.D.C. 1983).

2-17 G

36 U.S. v. 320 Acres of Land, More or Less. in Monroe County, State of Fla., 605 F.2d 762 (4th Circ.

1979).

37 Franco-Italian Packina Co. v. United States, 128 F.

Supp. 408 (Cd. C1. 1955).

38 Eno v. City of Burlincton, 125 Vt. 8 (1965) 39 United States v. One 1961 Cadillac Hardton Automobilq, 207 F. Supp. 693 (E.D. Tenn. S.D.

1962).

40 Like so many other, aspects of this study, this question requires a degree of research and study which has not been possible up to this point. The compensation issue will be given greater study during preparation of the final report.

41 Lewis v. BT Investment Manacers, 447 U.S. 27,- 44 (1980).

l

, 42 30 V.S.A. Sec. 18.

I 1

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2-18

3. AUTHORITY OF THE STATE TO PROTECT PUBLIC SAFETY "What authority does the state have to protect the public safety, health and welfare when ths Vermont Yankee nuclear facility is shut down?"

3 . *A Background Vermont's legal authority to protect the public safety, health and welfare upon shutdown of Vermont Yankee is found in Vermont and federal law. This chapter of the interim report surveys possible state statutory authority to protect the public. It does not

.and has not thoroughly analyzed preemption arguments with respect to each of the cited authorities. Recent and ongoing litigation concerning radiological emergency response plans for the Shoreham Nuclear plant on Long .

Island, N.Y. provides numerous illustrations of factual, political and legal responses to the amorphous nature of the relation between state and local authority to protect public safety and NRC jurisdiction over radiological safety.1 l Under the U.S. Constitution, the states are reserved all powers not delegated to the federal government.2 Among these powers is what is commonly referred to as a state's "police power." T.Te exercise of this "police power" can most vividly be seen in the recent "exercise' by state officials during a simulated catastrophe at Vermont Yankee. On December 2, 1987, state and local ifficials mobilized to practice in a simulated nuclear emergency. A state's police power, in essence, is its authority to protuct the public safety, health and welfare.

In theory, to the extent reserved to it by the U.S.

Constitution, the exercise of Vermont's police power is almost unlimited. In the Vermont Yankee and other contexts, that power may be limited by the effect of its i

exercise on other states.

3-1

(

1

E i .

i In the Vermont Yankee context, important .

constraints on the state's police power are imposed by the federal government's exercisa of its Commerce Clause power. The federal government, through passage of the Atomic Energy Act, has to a large extent preempted the states' ability to regulate issues of radiological safety by giving exclusive jurisdiction over radiological safety aspects of nuclear plant operation and construction to the NRC.4 The scope of federal preemption of a state's efforts to regul. ate a nuclear plant after shutdown has not been litigated. At present only two things are clear. The state is not absolutely preempted from any conceivable exercise of its authority that might affect a nuclear plant.5 There are areas of traditional state sovereignty affecting aspects of the plant that are not preempted." For instance, the state and local communities have retained police power to protect persons and property off the Vermont Yankee site in an emergency.7 on the other hand, the utate does not have authority to regulate Vermont Yankee as it chooses. Resolution of these uncertainties will depend on the circumstances under which particular issues arise. I In addition to statutory authority the state would retain authority to protect public health, safety and l welfare under common 'aw remedits such as negligence.

Indeed, the state would be free to award punitive damages against a utility if it were found liable in a tort case for causing a radiation injury. Such an award was argued by a utility as an impernicsible attempt to regulate nuclear safety standards. However, the U.S.

Supreme Court held that punitive damages as a means of causing potential defendants t.o exercise greater care was not preempted by the Atomic Energy Act."

3-2

In exploring state authority, except as noted, it is assumed for purposes of this interim report'that the measures taken under the following existing state statutes are not preempted.

i

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3.2 Statutory Authority The state's existing statutory authority to regulate Vermont Yankee derives from laws in several areast public safety, emergency management, land use planning, air and water quality, utility and industrial regulation. Statutes which regulate generic industrial ,

aspects of Vermont Yankee have not been detailed;  !

examples of such statutes might include industrial equipment standards and certification, workers' compensation and unemployment insurance. The existing authority would survive a Vermont Yankee shutdown, except as otherwise noted. Examples of specific statutes include the following.

Vermont Water Pollution Control Act (10 V.S.A.,

Chapter 47)

The Vermont Water Pollution Control Act authorizes the Secretary of the Agency of Natural Resources to require water discharge permits. The Act applies to l Vermon,t Yankee by defining "wante" to include "any substance or material, liquid, gaseous, solid or radioactive, including heated liquids, whether or not l

harmful or deleterious to waters."'

At present Vermont Yankee has a state waste water discharge permit for its discharges into the connecticut River. After shutdown, were the plant to produce discharges into the Connecticut River, the state might be authorized to require a permit, so long as it did not regulate radiological aspects of discharge.10 3-3

y . .

l 4

vermont Air Pollution control Act (10 V.S.A.,

Chapter 23)

The Act authorizes the Agency of Natural Resources to prevent, abate and control air pollution. These regulations would apply after shutdown to the same 11 extent as at present. The Federal Clean Air Act specifically authorizes the states to regulate ..;

radioactive air pollutants from nuclear plants.

I Act 250 (10 V.S. A. , Chapter 151) l Act 250 authorizes the Environmental Board to regulate development. Act 250 would have possible application after shutdown to improvements or construction which would not affect radiological containment and which would not affect the plant as an electrical generation or transmission facility, since I

such facilities are governed by 30 V.S.A. Sec. 248. If

! non-utility development were to occur on the Vermont Yankee site after shutdown, Act 250 may apply.

Public Service Statutes (30 V.S.A., Chapters 1, 3, 5, 7)

These statutes provide the Public Service Board

. (Board) and the Department of Public Service (Department) general supervisory authority ever public utilities including Vermont Yankee which would apply after shutdown, including:

• Financing arrangements of Vermont Yankee Nuclear Power Corporation, including issuance of securities or sales mertgages or pledges of corporate property.gg i

• Vermont Yankee's manner of business operations,theconditionaggcostsof maintenance and management

• Adutytoreportaccidentsresult}gginloss of life or incapacitating injury 3-4

• Approval, including a finding of compliance

- with the state's electrical energy plan, prior to constructing any {gplacement electrical generation facility.

• Approval of acquisition of control over another public service cggpany or of consolidation or merger shutdown by eminent domain would transfer the ownership of Vermont Yankee plant to the state, even if the plant were not generating electricity. The present public service statutes do not address regulation of a #

state-owned electrical generating facility. The Vermont Yankee Nuclear Power Corporation would continue to exist subject to Board and Department regulation as a public service company.

If a shutdown were caused by state regulation, ownership would continue in Vermont Yankee Nuclear Power Corporation. Under these circumstances, Board and Department regulation over Vermont Yankee under the pertinent statutes would continue.

Vermont Occunational Health Act (18 V.S.A., Chapter 28)

The Act authorizes the state to regulate l

occupational health regarding all aspects of Vermont Yankee, including radiological. However, pursuant to funding arrangements governed by a memorandum of understanding between Federal OSKA and the NRC, the Vermont OSHA only inspects for safety irsues arising from Vermont Yankee's operation as a large industrial plant. The present situation is likely to continue after shutdown no long as the plant remains a place of employment.

New Enaland connact On Radioloalcal Health Protection (18 V.S.A., Chapter 31)

All six New England states are party to the New Englar.d Compact on Radiological Health Protection.

3-5

Members of the compact provide mutual assistance among  ;

the party r.ta.tes in radiation incidents.17 Should a radiation incident occur after shutdown, the compact plan provides for a method of response by the state. The compact also enables the state to request assistance in the form of personnel, equipment and facilities from other party states.la Ionizine and Non-Tonizino Rndiation (18 V.S.A.,

Chapter 32)

This utatute designates the Department of Health as l the state radiation control agency. The Act gives the Health Department responsibility to develop programs for the control of ionizing and non-ioniziag radiation which are compatible with federal regulatory programs for by-product, source and special nuclear materials. To the extent state programs are compatible with federal regulation, the Health Department may control by licensing and registering sources of ionizing and l non-ionizing radiation which are compatible with federal regulatory programs for by-product, source and special l nuciaar materials.1' Chapter 32 is also important as the enabling legislation for Vermont to assume "agreement state" status with the federal government.

Agreement status gives the state greatly enlarged powers and responsibilities over nuclear aaterials.20 (3,,

below for discussion of "agreement state" status.)

Chapter 32 also grants the Health Department authority to declare existence of an emergency requiring immediate action for protection of health and safety.

Radiolocical Emercency Resconst, Plan rund {LO V.S.A.

Chaptors 42, 44)

The Act requires the Emergency Management Division of the Vermont Department of Public Safety, in cooperation with other state and local agencies, to 3-6

. 1 o . . 1 create a radiological emergency response plan to protect j persons and property within the state who are throatened by their proximity to an operating nuclear reactor. The Act also requires payment of $250,000 to the State Treasury by Vermont Yankee to establish the Fund and contributions thereafter to maintain the fund level after expenses paid by the state in connection with I state, municipal or county expenditures in providing personnel, operating costs and equipment necessary for implementing the state's radiological emergency response plan. Costs inct-red by the state in its simulated emergency drills are reimbursed from this fund by Vermont Yankee.

13orace of Radioactive Material (10 V.S.A., Ch. 157)

This Vermont statute requires approvsl by the general assembly that a facility for deposit, storage, reprocessing or disposal of spent nuclear fuel elements or radioactive waste material will promote the general good of the state before such a facility may be 4

built.21 The statute exempts Vermont Yankee Nuclear i Power Corporation 22 fror approval of ite temporary storage of spent nuclear fuel or other radioactive waste on its present site.

Vermont State Nuclear Adviserv Panel (V-SNAPI (18 V.S.A.

! 1700-1702)

V-SNAP, as it is known, presently consists of the Commissioners of the Departments of Health and Public

Servt

e, the Secretary of Natural Resources, one member I of the House of Representatives, one senator and two members of the public.23 The panel has several advisory duties. It discusses issues relating to l

nuclear power and the presence of a nuclear plant in the state, impaces on state agencies, and changes in nuclear plant operation. It prepares technical data, 3-7 1

I

. l communicates with plant operators, and and acts as a , /

liaison with the NRC.24 After shutdown V-SNAP would likely continue with its advisory, communication and liaison duties.

Vermont Advisory Commission on Low-Level Radioactive Waste (10 V.S.A. 6510-6512)

This commission was established to advise the governor and the legislature on matters relating to low-level radioactive waste (waste) and to develop a management plan for the waste generated in the state.25 The commission consists of 11 members from state agencies, the legislature, organizations holding licenses for the use of radioactive materials, one environmental organization,-municipal government and the general public.

With public input, the commission is charged with developing a management plan relating to generation, transportation and storage of waste. The plan among ,

other matters advises on Vermont membership in a waste compact; plans if no facility will be able to accept waste genurated in Vermont; and reviews the impacts of the federal mandate that Vermont take possession and ownership of Vermont generated wasta.26 The statute creates a waste management fund of $150,000 to staff and defray costs of developing the low-level waste management plan. The fund consists of fees assessed on low-level radioactive waste generated in Vermont.27 Waste Manaaement Act (10 V.S.A., Chapter 159)

The Act's definitions of "harardouu waste" excludes all special nuclear, source or by-product material as defined by 42 U.S.C. 2014. In general terms special nuclear, source or by-product material includes uranium or thorium, ores containing these materials or plutonium or isotope 233 or 235 enriched uranium or material made 3-8

i . .

radioactive in making or using the above listed materials.28 If low-level radioactive wastos present l a hazard to the health of persons or the environment, the state has various powers to order preventive, corrective, removal, abatement, cessation or restorative agasures.29 Examples of low-level radioactive waste which would be governed by the Act might include waste garments, tools and cleaning resins.

The Act authorizes the commissioner of the Health Department to implement and enforce the waste management statutes, and rules and regulations of the hazardous wasta management program concerning the generation, transportation, treatment, storage, and disposal of "low-level" radioactive wastes.30 In aummary, under the state's present status, Vermont's authority to regulate would fall into two areas: first, the regulatory areas listed above; and second, indirect authority exercised through participation in NRC proceedings on licensing and decommissioning. The state would not be the ultimate decision maker in NRC proceedings.

3.3. A'ithority Under "Agreement" status Vermont law authorizes the governor to enter into agreements with the federal government "providing for discontinuance of certain of the federal government's responsibilities with respect to by-product, source and special nuclear materials (nuclear materials), and the assumption thereof by the state of Vermont."31 32 Section 274(b) of the Atomic Energy Act provides that states may enter into agreements with the NRC to assume state responsibility for low-level nuclear i

materials. An agreement entered into pursuant to these statutes would give the state authority to regulate health, safety and welfare issues arising from radiological wastes at the plant.

3-9

.__.J

. l At anytime before or after shutdown, Vermont hao , /

two choices: ,The first would be to maintain current status as a non-agreement state. The second would be to enter into an agreement with the NRC to assume responsibility for by-product, source and specici nuclear materials. If the state were to enter into such an agreement, under existing legislation the Department of Health would assume responsibility for licensing by-products, source, special nuclear materials or devices or equipment utilizing such materials.38 .The state would also have the right to enter Vermont Yankee to determine compliance with or violation of the governing statutes. However, areas of Vermont Yankee would remain under federal control and state inspection would depend on federal concurrence.

3-10

FOOTNOTES - Chanter 3 1 See, Lena Island Lichtino Coreany v. County of Suffolk, 628 F. Supp. 654 (1986), and cases cited therein.

2 U.S. Const. Amend. X.

3 42 U.S.C. Sec. 2011, et seq.

15b.

5 Pacific Gas & Electric Co. v. State Enercy Resources Conservation and Develcoment Commission, 4,61 U.S. 190 (1983). -

l 6 7

See 18 V.S.A. Sec. 1655(b).

8 Silkwood v. Kerr-McGee Core., 464 U.S. 238 (1984).

I 10 V.S.A. Sec. 1251(1.2).

0 Northern States Power Cornany v. Minnesota, 447 F.2d 1143, 1149 (1971), aff'd mem., 405 U.S. 1035 (1972).

11 42 U.S.C. Sec. 7422.

2 30 V.S.A. Ch. 3, 7.

13 30 V.S.A. Ch. 5.

30 V.S.A. Sec. 207, 30 V.S.A. Sec. 207 and 248.

6 30 V.S.A. Ch. 3, 7 18 V.S.A. Sec. 1601(2).

8 18 V.S.A. Sec. 1604, 1601, and 1603.

I' 18 V.S.A. Sec. 1652 (c) (1) .

20 Sin 18 V.S.A. Sec. 1653, 42 U.S.C. Sec. 2021(a),

and Section 3.3.1 of this report.

21 10 V.S.A. Sec. 6501(a).

22 10 V.S.A. Sec. 6505.

3-11

. l 23 18 V.S.A. Sec. 1700(a). * '

24 18 V.S.A. Sec. 1701. ,

25 10 V.S.A. Sec. 6510(a).

26 10 V.S.A. Sec. 6511.

27 10 V.S.A. Sec. 6512.

I* 18 V.S.A. Sec. 1651(4) (8) and (9) ; 42 U.S.C. A. Sec.

2014.

I' 10 V.S.A. Sec. 4610a.

I' 10 V.S.A. Sec. 6608b.

31 I

18 V.S.A. Sec. 1653(a).

32 42 U.S.C. Sec. 2021(a) (1) .

33 1C V.S. A. Sec. 1653 (b) (1) . ,

3-12

l . ,

1 1 . .

4. FINANCIAL EXPOSURE TO THE STATE OF VERMONT "What financial exposure does the state have when vermont Yankee shuts down?"

Several factors affect the financial exposure to the state, given a Vermont Yankee shutdown. The circumstances surrounding a shutdown (i.e., the method of shutdown) and the way in which "the state" is defined alter the financial impact on the state. What costs are considered, and how, affects the state's financial exposure. To whom those costs arra allocated, be it to the government of the State of Vermont, Vermont's taxpayers, Vermont's ratepayers or all Vermont residents depends on the interpretation of the word "state." '

This chapter discusses one likely scenario of a shutdown by state condemnation. Other plausible shutdown scenarios do exist such as a regulatory closing, a voluntary shutdown, or a shutdown by reason of accident or technological failure. For example, it has recently been reported that GPU Nuclear Corporation will be considering shutting down its oyster Creek Nuc. lear Plant permanently due to its poor operating record and resulting low capacity factor.1 Financial exposure to the stato upon shutdown of Vermont Yankee falls into several categories. This chapter discusses possible costs of compensation for condemnation of Vermont Yankee by ominent domain and costs for replacement power, other potential impacts such as maintaining the facility, shutdown litigation, lost tax revenues, changed regulation and decommissioning are discussed in Chapters 6 and 7.

4.1 Compensation for Condemnation Costs of condemnation derive from federal and Vermont constitutional requirements of "just compensation" for governmental takings of property.2 Traditional eminent domain situations involve taking 4-1

land and buildinga, not ongoing businesses; the most .

common example is highway condemnation. The traditional measure of just compensation, accordingly, has evolved along guidelines established for valuation of real estate, not valuation of an operating regulated utility plant such as a nuclear power facility. This unique circumstance creates an added layer of complexity in our analysis.

In arriving at the most likely measure of compensation,, Vermont law offers no authoritative statements that define such mensures of compensation.

Regarding the problem of arriving at the elements of just compensation, the Vermont supreme court concluded that "(njo exact formula is available."3 The court continued by quoting Benjamin Cardozo, who said No formula vill be adequate unless its breadth of view and flexibility of adaptation are fitted and proportioned to the scheme and purpose of the inquest. The problem is one of justice between the individual proprietor on the one hand and on the other hand the sgvereign, or reprecentative of sovereign power This chapter has examined three possible methods of valuing condemnation compensation:

1) replacement or reproduction cost

2) foregone revenues or capitalized projected earnings and

3) original cost or net book value.

All three measures might possibly interact in a court or jury's calculus of determining what is "just compensation." However, legal precedent and economic reasoning provide bases for favoring original cost as the major determinant of value.

4-2

While the exact measure of compensation is inherently uncertain, opinions of the Vermont Supreme Court and orders of ti4e Vermont Public Service Board, read with prcvailing law in the majority o't jurisdictions, do provide guidance for examining possible criteris for measuring compensation to a regulated utility.

4.1.1 Original Cost For ratemaking purposes Vermont is an "original cost" jurisdiction.' What this means is that the proper rate base upon which a utility can earn a return is "aistorical or original cost plus capital improvements minus depreciation equals the net value of the property."' Applied to Vermont Yankee this cost measures $230 million as of 1986.7 Original cost as a measure of condemnation compensation value has been widely accepted in long standing precedent from some jurisdictions.8 Other states are guided by a l combination of criteria, including replacement cost.

Original cost alone may not be the solo criterion i of compensation.' The Vermont Supreme Court held it was error to use construction costs alone to vclue a road and sewer and water lines condenned by the City of Montpelier.10 This decision, however, dealt with a sale of non-regulated utility components. An original cost award might be adjusted by adding the damage incurred to property remaining or by offsetting an increase to rema'.ning property value by reason of the taking.11 f

Recent Vermont utility precedent on valuation on a non-ratemaking basis supports the conclusion that original cost would be the major, if not sole, criterion in determining compensation. The Public Service Company of New Hampshire and New Hampshire Electric Cooperative sold electric distribution facilities located in 4-3

Vermont.12 The purchase price approved by the Vermont .

Public Service Board in 1983 was determined by the not book value of the facilities at date of closing or adjusted original cost.13 Interestingly, an earlier sale of the same facilities was rejected by the Board because of the Board's primary concern that the purchaser's offer of replacement cost, when depreciated, was an amount substantially in excess of book value.14 The offer was based on the belief by the utility, rejected by the Board, that depreciated replacement cost should be used '

in computing a utility's rate base.15 With a single asset regulated utility, original cost would seem to be the most logical and equitable measure of compensation. Earnings by Vermont Yankee are tied to rate base, which is determined in part by the adjusted original cost of the plant. The Public Service Board has denied utility plant sales at greater than original cost.1" The Vermont utility plant value has been based on its criginsi cost for the purpose of both ratemaking and transfer of assets because original cos is the sole permitted rate basis upon which a Vermont utility may earn. In short, a utility's choices--to sell or to retain and make earnings, are both based, at least in Vermont, on the original cost of the plant. ,

And, unlike unregulated businesses, the net book value I

of the plant not only equals adjusted original cost but also determines its revenue stream.

In holding that Vermont is an original cost I jurisdiction the Vermont Supreme Court also rejected I setting ratas based on t?.e value of shares issued.17 Valuing a condemned public utility by looking at evidence of issuance of securities also has been held improper in other jurisdictions, because the price paid does not necessarily bear a relationship to the actual value of assets.18 For the same reason assessed 4-4

. valuation of property tax purposes is rejected as condemnation valuation.1' 4.3.2 Other Criteria of Compensation This section discusses other possible criteria which courts or regulatory commissions might use in determining just compensation.

In some jurisdictions, operating public utilities, when condemned, are valued with some consideration of evidence of income.20 Consideration of evidence of income is generally confined, however, to past ,

incoma.21 For the most part evidence of prospective earnings is excluded as too speculative.22 In a highway condemnation case the Vermont Supreme Court affirmed the trial court's conclusion that l capitalization of projected income was too speculative to be the sole critorion of value.23 In an original cost ratemaking jurisdiction, the foregone projected revenues of a regulated utility asset, 9 hen capitalized, are ideally equal to the not book value. Thus, the adjuLted original cost and foregone revenues are the same. This lands additional support to a conclusion that original cost or not book value would likely be the basis for valuing Vermont Yankee's property if it were condemned..

Another factor in assessing compensation in other jurisdictions has been repreduction cost of the facilities.24 However, nothing in Vermont i condemnation or utility law indicates approval of l reproduculon cost as a measure of compensation. The reverse is indicated by judicial and regulatory approval of original cost valuation and rejection of replacement I

cost.25 Reproduction cost is a measure of compensation which has been used, together with other factors,26 in 4-5

f .

j . .-

some other jurisdictions, and might very well be argued for by Vermont Yankee or its owners.

Two things must be noted before entertaining such arguments about use of reproduction cost. First, jurisdictions which approve its use may not be original cost jurisdictions. Second, use of reproduction cost in the Vermont Yankee context might result in excess benefits to the owners at the expense of ratepayers and taxpayers. One measure of reproduction cost might be the cost to build a coal powered generating facility of the same capacity as Vermont Yankee. This cost is estimated to be $1.15 billion (1988 $ present value).27 Replacement or reproduction cost for a new plant of the same generating capacity as Vermont Yankee would seem inappropriate in the context of this report's

! analysis of overall financial exposure to the state.

First, this report considers replacement power cost de a specific financial exposure to the state. The cost of replacement power has been calculated by including both the cost of the energy needed and its capacity cost. To add the cost of building a replacement generating facility is to add an element of double counting.

Similar problems are introduced by turning to a r 1

capitalization of foregone off-system sale profits as a j measure of compensation. In the event of condemnation j or rate treatment or when considering replacement power costs, regulatory or judicial analysis would have to make sure that the utility was not receiving the benefit of doubla counting or awarding benefits above what it would be entitled to earn under regulation.

4.2 Replacement Power Costs Replacement power costs create financial exposure to Vermont ratepayers from any type of shutdown of Vermont Yankee. Replacement power costs are the difference between the cost of power to replace that 4-6

(

i . produced by Verment Yankee and the projected price of  ;

Vermont Yankee power. Replacement power costs in the l event of a 1988 shutdown are estimated to be  !

1 approximately $1.338 billion which includes both Vermont I and out-of-state shares. However, this would be offset f against approximately $726 billion in savings in the }

cost of operating the plant, for,a not of $612 million. i The portion Vermont would be exposed to would depend on l the reason for the shutdown. (All costs are 1988 present values, see footnote 1 of Chapter 6.) .

l l

4.3 other Financial Exposures i Tor a discussion of other financial exposures to l

. the state including loss of tax base, decommissioning ,

costs, and costs of increased regulation, see Chapters 6 f l

and 7. Litigation surrounding a shutdown for any reason i might be protracted and extraordinarily expensive. On I i

the other hand, litigable issues might all be negotiated and settled in advance of shutdown with no effect on the {

time of shutdown. Costs of litigation have not been l estimated for this interim report.

I 4.4 Conclusions j The numerous variables and contingent costs envisioned by this question make it impossible to arrive l at a simple bottom line figure of what it would cost the [

State to shut down Vermont Yankee. The foregoing has j been an attempt to clarify the. areas of uncertainty and to provide some guidance of the amount certain costs might be should they occur as a result of shutdown, i

i l

4-7

l

(

roormorna - chantar 4 l

1 "GPU Nuclear May close Oyster Creek if Performance f Doesn't Improve", 9 Inside NRC No. 26, 1 (December 21, 1987)(McGraw-Hill).  ;

I

. U.S. Const. Amend. X. ,

l 3 n== men v. city of Mantnalier, 120 Vt. 380, 387 f (1938); 333 3133, New England Power company v. Town  !

of RErnat, 134 Vt. 498, 506 (1974) (hereinafter cited as Barnat II). , ,

4 Quoted in Damara, at 387.

8 gag Jn re Towna Mill Water connanv, 139 Vt. 72

'(1980).

• Ida , at 75. ,

7 Vermont Nuclear Power Corporation, Annual Report of Maior Elaetric. Utilities. Licensaan and others, (

FERC Form No.-1 (1986).  !

• 2 orgel on Egluation Under Eminant Domain (2d ed.

1953) (her ter cited as orgel), sec. 2091 8 i Nichols '.s,., Eminent Da==in (2d ed.1986) sec.

l 14A.03, 4t es e a%ter cited as Nichols).

' 390 - 391, orgel at 85, 8 Nichols Sec.

Ett Den a 14A.03, .chols sec. 19,31 (1978); see also Barnet II at 503; New Enciand Power connany v. Town of Barnet, 130 Vt. 407, 413 (1972) (hereinafter cited as Aggnet I).

I' Dumars, at 387.

• • Id., at 388.

II Petition of Public service ca=nany of New Mannahira at al., Vermont Public service Board, Docket No.

4705 (order, Mar. 18, 1983).

• • Id., at 3.

14 Petition of Public service cannany of Ned Mannshire gL 41., "truont Public service Board, Docket No.

4451, (Order August 20, 1981) 3.

15 Id., at 7.

4-8

O ,

is Id.

17 In re Towna Hill Water Cemeanv, at 75. .

l 18 5 Nichols Sec. 19.07: 2 orgel Swc. 220.

II 5 Nichols Sec. 22.1; 2 orgel Sec. 222.

to 8 Nichols sec. 14A.04: 2 orgel Sec. 218, chap. XVII,  !

XVIII (passim).

81 8 Nichols se,t. 14A.04; 2 orgel Sec. 218.

at 8 Nichols sec. 14A.04: 2 orgel sec. 218. [

83 Record v. state Miahway Board, 121 Vt. 230, 241-244(1959). j 24 For tax 2 orgel sec. 210; 8 Nichols Sec. 14A.03. I valuation purposes the Vermont Supreme court has '

said that "(o)riginal cost less depreciation may be -

a method of arriving at fair market value if it [

.so that they will in reflecte present costs. .  !

effect become present reproduction costa." Barnet i II at 505-506. t l

25 Petition of Public Service Comeany of New Hannshire I i at al, Vermont Public Service Board, Docket No. 4451 I l (order Aug. 20, 1981). L 24 8 Nichols Sec. 14A.03.

2 orgel Sec. 210  !

27- Based on the cost of constructing a coal power plant in 1990. Costs vere calculated based on j construction cost estimates found in !*EPLAN l l

Generation Task Force Assumption Report and EPRI's  ;

1986 Technical Assessment Guide discounted to 1988 [

using average cost of capital for Vermont utilities, i

}-

i r

h t

6 4-9 l i

l

e

.. 5. ADEQUATE PLANNING FOR REPLACEMENT POWER, SHUTDOWN AND DECOMMISSIONING HIs there adequate planning to provide for ,

replacement power and to cover the cost of shutdown and decommissioning, whenever Vermont Yankee shuts down?"

There are a variety of alternative power resources today that could repla:e the loss of the Vermont Yankee facility given proper planning and lead time. Despite this, additionni significant questions would need to be answered to determine whether there are adequate  !

resources for the future or if additional contingency ,

I planning measures should be adopted by the utilities to help ensure adequate replacement power in the event of an early shutdown of the Vermont Yankee facility. It is clear that early planning for a shutdown of the facility would s: Tre available replacement power and reduce the burden .s esociated costs on ratepayers. 1 Current plans for decommissioning vet.aont Yankee i appear to address most major uncertainties surrounding f the issue including funding. Probably the greatest j j concern under existing plans are that future ratepayers [

l or taxpayers may be exposed to unfunded portions of )

decommissioning in the event of an early shutdown or ta l significant cost overruns following a normal operating f life. l l

5.1 Replacement Power Planning j BecausJ of the sweeping nature of this question,  !

the Department asseseed Vermont's adequacy of planning f for replacement power by addressing the matter in three

(

parts. First, do Vermont and its utili*,ies have adequate mechanisms to plan for replacement power whenever Vermont Yankee shuts down? Second, have those l mechanisms been utilized to prepara such plans? Third, [

1 regardless of the amount of planning that has been done, j does Vermont have the supply-and demand-side options {

I 5-1 i

i

t i

l

E necessary to yield an adequate power supply in the event -

that Vermont Yankee becomes temporarily or permanently unavailable?

5.1.1 Mechanisms The Department is charged by statute with power planning responsibility for the state, and long term planning is one of its primary functions. The Twenty Year Plan, the main product of that effort, is a comprehensive planning document that projects the state's needs and analyzes Vermont's supply-and demand-side options in detail. Utility long range power planning capability is concentrated in Vermont's larger utilities, primarily Central Vermont Public Service and .

Green Mountain Power. Vermont's smaller utilities in l general have much less planning capability, although Burlington Electric has begun developing its strategfc planning capability. The Vermont Public Power Supply Authority assists in the long term planning of some municipal and cooperative utilities, although its greatest current impact is in short term planning, rate cas'e preparation, and short-term power transactions.

The Vermont Electric Power Company (VELCo) has transmission planning capabilities, recently expanded, that would play an important role.

The power planning capabilities of both the state and Vermont's distribution utilities have grown during the 1980's. These advances were forced largely by l

increased public attention stemming from past utility l failures, and the emergence in 1981 of the Department as a body responsible for power planning.

There appear to be adequate mechanisms in place to plan for some, but not all aspects of replacement power in the event of a Vermont Yankee shutdown.

Diversification of future sources and integration of demand-side management into planning are both essential 5-2

- . to sound planning. The most notable deficiencies in planning by Vermont utilities, primarily in the area of demand-side management (DSM) and its even-handed integration with supply planning, are dit,. cussed in the Twenty Year Plan.

One strength of Vermont's power planning capability is the experience of its utilities and the Department in acquiring Canadian energy, both electric and gas. Both Vermont's distribution utilities and the Department have negotiated substantial canadian electricity purchases in the recent past. Recent negotiations have culminated in a five year purchase of firm power from Ontario Hydro, and a propcsed long term contract with options to

. purchase large amounts of firm power from Hydro-Quebec. .

A process is presently taking place that may lead to increased future gas supplies for Vermont. Gas, as an economic energy source, provides the potential for significant direct energy, as well as fuel for future electric generation plants.

Also, Vermont utilities have demonstrated capability to construct instate generation, most recently the McNeil wood plant and several hydroelectric plants. However, Ver,mont's concern and awareness of environmental impacts raises questions regarding the prospect of constructing new instate generation.

5.1.2 Implementation.

While Vermont p1anners.have adaquate capability in

~

some areas and on some levels for replacement power planning, very little such planning for an early Vermont Yankee closing has actually been done. Vermont's distribution utilities have not constructed a plan identifying precisely how the sources available to the state would be used to replace Vermont Yankee in the event of an unexpected closing. However, the Department has repeatedly expressed concern about the Vermont 5-3

o .

utilities' heavy dependence on Vermont Yankee for their - '

present and future power needs, and called for action to ameliorate that risk.

It may be that a detailed contingency plan need not actually exist to deem Vermont's planning adequate.

Rather, a suitable goal for replacement power plar.ning .

might be to obtain a firm understanding of the potential, availability and limitations of each option available to Vermont, and to ensure that those options would be sufficient and flexible enough to replace Vermont Yankee in an economically and strategically acceptable way. However, based on the report submitted in response to H.173 by the utilities that own Vermont Yankee, the Department could not conclude that this lesser standard had been met. That report's consideration of the strengths and weaknesses and obstacles to implementation of the options it cited was cursory, and the list of options reviewed was short.

5.2 Power Supply and Demand-Side Management Options 5.2.1 Short Term outlook If' Vermont Yankee were to become permanently unavailable in the near future, Vermont's utilities would face sharply higher energy costs for several years and would likely be forced to purchase short term capacity at premium prices. The time needed to f

l construct new generation facilities, and lesser lead times to implement small power and DSM measures or acquire excess generating capacity from other utility systems, wc.uld limit vermont's short-term ability to replace Vermont Yankee with instate sources. Before the commissioning of Phase II of the Qu6bec-NEPOOL Interconnection in 1991, the sum of Vermont's generation and its transmission ties to New York and Quebec may not be sufficient by themselves to meet the state's needs without vermont Yankee. Capacity and energy sufficient 5-4

to meet Vermont's remaining needs could be obtained within New England, but the specific sources and the cost of that power canc.ot be identified at this time.

If planning for replacement power were to begin significantly in advance of a Vermont Yankee shutdown, the plant's capacity and energy could be replaced with a considerably more economic and sustainable set of options. First, a shutdown in the early to Lid-1990's or later would allow the completion of a substantial amount of capacity that is currently being developed, primarily small power projects and Phase II of the .

Quebec-New England Interconnection. Second, some of Vermont's cheapest options are improvements in the areas of conservation and load manegement, as well as transmission and distribution line loss reductions. A lead time of even a few years would allow a significant improvement in the level of demand-side planning by Vermont utilities, and the implementation of many DSM measures by the time of the shutdown. Finally, that lead time would enable Vermont planners to assess the potential contribution and strategic value that could be obtained from new instate generation (including small power), plants constructed elsewhere in the region, and additional Canadian imports, and to procure appropriate

. amounts of each by the time they are needed.

5.2.2 Long Term Outlook The Department expects cost-effective DSM measures to make a substantial contributior to Vermont's balance of electrical supply and demand in any foreseeable scenario of supply options and load growth. A shutdown of Vermont Yankee would greatly increase the state's need for both supply- and demand-side options. In fact, some projects might be made cost-effective by a closing of Vermont Yankee. To the extent that vermont utilities pursue their most economic options, demand-side measures 5-5

1 .

l l-will meet a substantial portion of Vermont's needs.

l l however, a great improvement of Vermont utilities' demand-side planning capability will be needed to tap the full economic benefits of DSM.

The contribution of small power projects to Vermont's future supply mix will depend strongly on the prices that producers are offered. Those prices would reflect the state's increased needs in the event of a Vermont Yankee shutdown. A goal of the Public Service Board's current small power rulemaking proceeding regarding its Rule 4.100 is to develop an appropriate , ,

balance between the price and value of small power ,

developed in Vermont, through a more efficient and i responsive small power market. Small power's potential l

also depends on the number and size of potential l projects. Most large projects under consideration today would be fueled by petroleum, natural gas, wood, or municipal waste. The Vermont Power Exchange has indicated that preliminary proposals for several hundred megawatts of small power production exist. However, the  !

practicality and economic feasibility of such new proposals are untested.

Vermont's location, along with expected surpluses l of hydroelectricity, coal generation, and gas supplies in Canada, combine to mane the importation of Canadian energy a realistic long term option. The Vermont distribution utilities' recently proposed long term agreement with Hydro-Quebec, if approved, could be an important determinant of the cost and flexibility of replacement power if Vermont Yankee were to become I unavailable.

Vermont's location also suggests the possibility of increasing access to out-of-st ate markets by adding transmission capacity. In particular, increased transfer capability to the vest could enhance the feasibility cf long term purchases from Ontario or New 5-6

York that would be limited with the present transmission

, system. '

If needed, the most immediate form of new instate generating facilities would likely be gas turbine or diesel peaking plants. These units are designed for infrequent operation, have comparatively low construction costs, and take only about three ye.ars to

, build. They have limited fuel requirements, burn cleanly, and in general have modest environmental impact.

Plants designed for basaload operation would likely ,

be more difficult to site than peaking units, because of their potential environmental. impacts and need for a reliable fuel supply and delivery infrastructure. Among the most realistic options for new baseload utility generation in Vermont are one or more gas-fired combined cycle plants sized somewhat over 200 MW, wood-fired plants of between 20 and 60 MW, and coal-fired plants of various sizes.

While only a proposal, the construction of the

' Champlain Pipeline for natural gas could greatly improve l

the potential for gas-fired electrical generation in l Vermont. Natural gas from the pipeline could l

conceivably be tapped at various locations in the state for fuel switching or to supply a gas-fired facility, and could serve as a catalyst for the development of gas-fired cogeneration projects by small power producers and Vermont industries. ,

5.3 Planning for Decommissioning The issue of planning for the shutdown and decommissioning of Vermont Yankee has attracted considerable attention in the last 10 years. In the late 70's, there were numerous public discussions on the issues of funding decommissioning. Early in this decade the Vermont General Assembly considered legislation 5-7

enabling the state to establish a program for funding ~

the shutdown and decommissioning of Vermont Yankee.

Soon after, Vermont Yankee filed pl'ans with FERC to l establish an internally funded decommissioning plan. f Existing plans for funding the decommissioning of the Vermont Yankee facility were approved by FERC in 1983 and have since been adjusted. The current 1 decommissioning plans include a technically feasible method for completing an immediate dismantlement and a '

long range funding program needed to pay for a scheduled shutdown in the year 2007.2 All shutdown and decommissioning costs are to be borne by the purchasers of Vermont Yankee po,wer.

5.3.1 Current Plans Decommissioning of a nuclear power reactor is the process of taking it from service and disposing of remaining radioactive materials. For the process to be complete, the radioactive leveln of materials remaining at the site must be brought to low enough levels to permit unrestricted access and use of the site.

The cur rent plans for decommissioning the Vermont Yankee facility call for a complete dismantlement and removal of the facility immediately following the expiration of the operating license and shutdown in the year 2007. Current estimates of the time required to achieve complete dismantlement of the facility are approximately six years at a cost of approximately $531 l

l million in the year 2007 ($128 million in 1987 l dollars).3 Existing funding provisions call for cash received from the sponsors of the Vermont Yankee facility (the owners) to be deposited in a separate fund (escrow fund) controlled by a third party. Pt.yments are made to this fund on a monthly basis. These decommissioning fund 5-8

. payments increase costs at Vermont Yankee by roughly 4%

(about $6 million per year in constant 1987 dollars).4 Vermont Yankee reports that approximately $10.9 million was deposited in the fund as of September 30, 1987.

The fund collects interest from the purchase of high grade government securities and certificates of deposits. Every four years, starting in January, 1989, the payment plan is to be reviewed and revised to reflect any differences in the assumed and actual interest rates earned and inflation rate changes. This review is to be followed by.a submission to FERC supporting any changes in the funding plan. Such filings may also include revised estimates of

. decommissioning costs. In the event the costs of ,

decommissioring differ from those provided for in the fund, the difference would be covered by the sponsors and, presumably, their ratepayers.

Current power contracts between Vermont Yankee and its owners establish a clear obligation on tie part of Vermont Yankee sponsors to cover all costs relating to the Vermont Yankee facility until decommissioning is complete, unless a state or federal government taking of the facility occurs.

5.3.2 Federal Regulations Providing for Adequate Planning and Safety There are a number of federal regulations relating to the shutdown and decommissioning of a nuclear reactor. The NRC is also expanding its regulations to prescribe specific decommissioning methods and funding approaches needed for NRC approval. Current regulations specify only general requirements.

In general, current regulations require that applicants for operating licenses establish the financial capability to meet all obligations associated with a shutdown.

5-9

Listed below are the federal regulations and , /

guidelines pertaining to federal regulation of decommissioning: ,

Part 10 CFR 50.54 -- Requires all operating licensees to take steps to obtain on-site property damage insurance to cover decontamination and cleanup following an accident.

Part l'O CFR 50.82 -- Requires licensees applying for termination of their operating license to develop procedures for disposal of radioactive materials and decontamination of materials and site.

Regulatory Guide 1.86 -- Provides guidance on how to satisfy the requirements of 10 CFR 50.82.

Part 10 CFR 51.5(b)(7) -- Provides that an environmental impact statement may be required prior to the decommissioning a nuclear facility.

5.3.3 Plans for Decommissioning Following Forced Shutdown Were the state to force a shut down of Vermont Yankee through a taking, the state as owner would likely also assume responsibility for the decommissioning. As such it would also likely assume control of previously

}

collected funds and responsibility for most or all j future payments into the fund. A 1988 shutdown, then, ]

would result in an additional obligation for the decommissioning fund of roughly $117 million dollars (in 1987 dollars).5 If the state were to force an early shutdown, the i

question remains whether the decommissioning could actually begin significantly earlier than the current scheduled shutdown date (after the scheduled and of Vermont Yankee's operating license in 2007) .

Decommissioning cannot be completed until all spent fuel has been removed and disposed of off-site. Curront federal law (Nuclear Waste Policy Act of 1982) requires the federal government to start accepting spent nuclear 5-10 1

l

e , ,

must retain that license until all radioactiv fuels, sources and components are removed from the site.

Four alternatives are considered acceptable by the NRC for retiring a facility. These are:

(1) Dismantlement (DECON) -- All radioactive components are removed from the site and the site is brought back to unrestricted use for other purposes.

(2) Mothballing (SAFSTOR) -- Mothballing consists of placing the facility in a stati c' protective storage until dismantlemer.c can take place.

(3) Entombment (ENTOMB) -- Entombment consists of sealing all radioactive components behind a containment shield.

(4) Conversion -- Under the conversion option, the-original source of steam generation is disconnected from the turbine and retired under one of the three option listed above.

The remaining facility is then operated under a new nuclear or fossil fuel system.

DECON Complete dismantlement of the Vermont Yankee facility will require all radioactive materials to be taken off-site soon after the facility schedules its shutdown. To date, there has been little experience in decommissioning a facility in this manner. Only one reactor of the same BWR type as Vermont Yankee has been completely dismantled: the Elk River facility in Minnesota. The Elk River facility was a small prototype reactor with only four years of total operating history before it was dismantled in 1974.'

The general advantages of the early dismantlement of the Vernon facility include the followings (1) Early availability of property "for alternative use -- Following the complete dismantlement, the owners of the Vernon site would be free to use it for some alternative function. Given 5-12

. e fuel for off-site disposal in 1998. The Department of .

Energy,,however, has indicated that it does not expect ,

to establish a permanent repository for the spent fuel until 2003. DOE has, however, proposed an amendment to its Mission Plan which would establish a facility to allow for interim storage of high level waste; such a facility could permit dismantlement as early as January 1998.0 Considerable question remains, however, exactly when and how such storage can take place.

Alternatively, Vermont Yankee could start the decommissioning process much earlier by dismantling the facility around an on-site spent fuel storage

- facility.7 other options for off-site disposal may exist, but ,

may be viewed as unlikely. According to a Vermont Yankee report, the use of available storage capacity at other approved nuclear power plants, for example, is not a viable option. The only two plants with similar storage facilities in the northeast, Northeast Utilities' Millstone 1 and Boston Edison's Pilgrim 1, I could only accept the spent fuel from Vermont Yankee at the expense of limiting their own storage capability.8 5.3.4 options The NRC Regulatory Guide 1.86 "Termination of operating Licenses for Nuclear Reactors," provides the

! methods and procedures considered acceptable by the NRC for termination of an operating license. Once a facility has decided to terminate its operating license it must apply for a possession-only (i.e.,

non-operating) license. Current regulations require plans for decommissioning be filed in conjunction with I an application for a possession-only license. The advantage of the possession-only license is that it l l imposes reduced surveillance requirements. The licensee j l

5-11

the strategic location of the Vernon site and the infrastructure elements in place, options include placing a new generatina plant on the same site.

In nominal dollars, early dismantlement may present the most expensive decommissioning plan; however, when one considers the lost opportunity for alternative uses of the site during a SAFSTOR or ENTOMB, early decommissioning may represent the most attractive option. The DECON option may also be most attractive from the standpoint of surrounding communities. Once the plant is no longer providing tax revenues and employment income to the Town of Vernon, it may be viewed

'as "an eyesore, a perceived hazard, or, at the least, an unp useful site."{gductive use of an otherwise (2) St.fety -- Although the overall level of occupational radiation exposure will be higher and more personnel would be required to

/.lsmantle the facility than under a delayed dismantlement, at least two safety considerations favor a prompt dismantlement.

First, the operations personnel who are most familiar with the facil.i.ty would still be available to assist in che dismantlement.

Second, immediate dismantlement would eliminate the risk of radiation leaks or exposure during the delay or safe storage period.

In general, DECON presents a greater safety hazard than the alternative options for decommissioning. Despite these hazards, the NRC reports that exposu{g can be kept reasonable under DECON.

(3) Other considerations - 'In the case of VJrmont Yankee, the single asset natorn of the company may favor an early decommissioning. Once the l facility has closed and the decommissioning fund has matured, the company will no longer be generating any revenue, except on interest earned on the fund. As a long range proposition, this could create, uncertainty over both the funding and the management t oversight during any extended delays.

5-13

SAFSTOR The SAFSTOR decommissioning option involves virtual isolation of the radioactive components of a facility until their radioactivity levels are lowered to enable less restrictive handling measures during decommissioning. Available cost data suggests that SAFSTOR may be safer and less expensive (ignoring alternative site uses) than DECON.

Cumulative constant dollar costs associated with a 100 year delayed dismantlement (of the Vermont Yankee facility) were lower than the costs of immediate dismantlement by approximately $20 million ($53 million vs. $73 million in 1981 dollars). Thirty year delayed dismantlement costs were higher than the immediate ,

dismantlement option (at $85 million); however, a present value comparison yield 5. significantly lower costs (associated with either a 30 year SAFSTOR or ENTOMB than DECON). 2 The bulk of the costs under a SAFSTc?. or ENTOMB option occur during the actual delay 3

and dismantlement, 30 to 100 years after DECON.

Although the potential for occupational exposure may increase during the delav before dismantlement (SAFSTOR), overall, SAFSTOR significantly lowers the risks of occupational exposuro to unsafe radioactive materials.by allowing the level of radioactivity to decay naturally. Even the occupational risks associated with transportation accidents would be significantly reduced in a SAFSTOR option over early dismantlement.

An NRC report estimates that transportation casualties (injuries and fatalities) would 'se reduced by approximately 79% under SAFSTOR.14 ENTOMB Total entombmant'of a facility involves the encasement of all radioactive materials behind a i biological shield. The difference between the ENTOMB ,

5-14

and SAFSTOR options is the extent to which the radioactive components are secured behind a protective shield. Like SAFSTOR,"entombment can eventually involve dismantlement, however the costs of that dismantlement would be increased by the extent of the barrier created to secure the radioactive materials. Under both the delayed SAFSTOR process and the ENTOMB process, continued security of the facility is required.

However, the extent of the security is significantly reduced under the ENTOMB option.

The advantages of the ENTOMB option are its low initial and ongoing costs. Indefinite entombment has not been ruled out by t'he NRC, but, as a practical matter, is not generally viewed as a viable 0.lternative. Indefinite entombment would render the -

site useless and require ongoing security for hundreds of years.15 Entombment in conjunction with a delayed dismantlement, however, may be desirable from both a safety and a cost standpoint.

CONVERSION Conversion of a boiling water reactor of the Vermont Yankee type is a less viable option than for other U.S. reactor ty' pes. The turbine in a BWR type reactor is exposed to radioactive steam and is contaminated. Both the source of steam and the turbines may have to be removed before another source of generation could be installed. On the other hand, cooling towers and some other non-contaminated structures could be reusable.

5.3.5 Issues The selected method of decommissioning should be technically feasible, safe, cost effective, practical and address relevant uncertainties in costs and the timing of the plans.

5-15

SAFETY .

Alternative methods for decommissioning Vermont Yankee present risks to both workers dismantling the facility and to the general public. Immediate dismantlement presents relatively high risks to the occupational workers and the general public. A delayed

• dismantlement of the Vermont Yankee facili'cy presents significantly less health risk associated with occupational exposure.18 Table 5-1 shows the risks to the general public and occupational risks associated with the different decommissioning methods. These estimates were develeped based on the conceptual decoLmissioning of a large (1155 MW) BWR reactor (more than twice the size of Vermont Yankee).

l l

l l

5-16

7.

l '.

\ .

TABLE 5-1

SUMMARY

SAFETY ANALYSIS FOR DECOMMISSIONING A REFERENCE BWR 83fety Concern Type Source Units DECON ENTOMB 8AFSTOR 10 Yr 30 Yr 50 Yr 100 Yr ruhlic_nafety

) Radiation Dose Decommissioning ar* 0.05 0.04 <0.05 <0.05 <0.05 <0.05 .

Transportation " 11 5.9 5.6 2.9 2.7 2.7 Continuing Care " --

neg. .neg. neg. neg. neg.

Total " 11.05 5.94 <5.65 <2.95 <2.75 <2.75 Occupational RAfety Serious Iniury Decommissioning No. 6.7 6.5 9.6 9.6 9.6 9.6 Transportation " 1.2 <0.8 1.5 1.5 1.5 1.5 Continuing Care " -- --

0.06 0.06 0.06 0.06 Total " 7.9 <7.3 12.16 12.16 12.16 12.16 Fatalities Decommissioning No. 0.038 <0.039 0.058 <0.058 0.058 0.058 Transportation " 0.072 <0.047 <0.087 0.087 0.087 0.087 Conti-ling Care " -- -- >0.001 >0.001 >0.001 >0.001 Toth. " 0.110 0.086 0.146 >0.146 >0.146 >0.146 e ,Eg.diation Dose Decommissioning mr 1845 1573 871 418 388 386 Transportation " 120 56 60 30 28 28 Continuing Care " 1.3 6.5 10.0 10.0 Total " 1965 1629 932.3 454.5 426 424 1

CMan-rems 5-17

The major sources of exposure and injury associated -

with the decommissioning of the facility occur during the actual dismantling operations. The most significant j reductions in public and occupational exposure would come from a 30 year passive safe storage (SAFSTOR) with delayed dismantlement. After 30 years, there is little i additional gain in exposure reduction.1' Risk of f serious injury or fatalities, however, is lower under the immediate dismantlement and entombment options.

In general, less than 10 work loss accidents are expected to result from the decommissioning under any .

plan.20 Transportation occurring during the dismantlement creates the greatest potential risks to the general public. No fatalities were expected to result from decommissioning the reference BWR that was I

roughly twice the size of Vermont Yankee.

l COSTS Existing estimates of the actual decommissioning costs appear to favor delayed dismantlement. An NRC report shows the total constant dollar costs of immediate dismantlement of the Vermont Yankee facility l to be approximately 8 to 25 percent higher than I entombment of the facility.21 Vermont Yankee's consultant estimated higher constant dollar costs associated with SAFSTOR and 30 year ENTOMB; however, a present value comparison of the alternatives yields lower costs associated with delayed dismantlement options.

In 1981, the Vermont Yankee Nuclear Power j Corporation contracted a study to estimate the ccets of l decommissioning under alternative decommissioning l

options. Table 5-2 provides a summary of the cost estimates from the contractor's report.

5-18 l

o .

TABLE 5-2 .

Decommissioning Costs (Thousands of 1981 $)22 DECON SAFSTOR ENTOMB Initial Costs $72,772 $14,116 $17,103 30 100 30 100 Years Years Years Years Dormant Period Costs -- 12,510 41,700 ' 2,550 8,500 Dismantlement 72,772 49.376 17.923 48,454 17,001 Total $72,772 $95,003 $92,174 $85,134 $53,255 Actual dismantlement of Vermont Yankee after 50 to 100 years would be less costly than immediate dismantlement due to lower costs of handling contaminated components after 50 years, when the radioactivity levels of piping and components have I decayed to unrestricted levels.23 I UNCERTAINTIES l

l Uncertainties surround estimates of the costs,

! exposure risks and technologies associated with decommissioning Vermont Yankee. Although experience with dismantling a nuclear reactor is limited, the technologies employed in the cost estimates are available. The major uncertainties associated with the estimates of costs used in the fund are (1) accident, (2) cost overruns, (3) assumptions concerning inflation rates and interest earnings, (4) fulfillment of 5-19

obligations by Stilities paying into Vermont Yankee's .

decommissionin, fund, and (5) the early shutdown.

Accident An NRC report estimates that the total costs of j decommissioning following an accident increase the costs of normal decommissioning by about 33%.24 This does not include the costs of actual clean-up which would be much higher. (See discussion in next Chapter.) on-site clean-up costs for the TMI facility were approximately i I

$1 billion.

The NRC requires reactors to carry property damage insurance in the case of an accident at the site.

Vermont Yankee currently carries $1.5 billion for on-site clean-up. The decommissioning fund itself and the continuing obligation of the owners would pay the balance of decommissioning costs associated with an early shutdown.

i Cost overruns If the costs of decommissioning Vermont Yankee exceed estimates, the sponsors of the facility would be responsible for such costs under their existing contracts. Significant unanticipated overruns, however, could flow through to ratepayers, creating a burden on future ratepayers who would not be benefitting from the facility.

Funding Uncertainties: Inflation and Interest The current funding provisions were established in 1983 and modified in 1985. They call for the fund to l earn a real rate of return of 3% and assume 7% inflation on costs. The funding provisions and assumptions are I reviewed every four years to determine whether theao assumptions are inadequate or incorrect. l 5-20

• Vermont Yankee Nuclear Power Corporation amended its current payment schedule to incorporate adj';stments ,

due to the higher costs of disposing of low level waste (FERC Docket No. EL87-22-001) .

The co9ts of burying low f level waste has recently increased from $14.34 per cubic l foot to $60.08 per cubic foot.25 Vermont Yankee I

i j

proposed and had approved a plan for increasing the current payment schedule by 13.6% to accommodate the net l

effect of the additional costs. (

Current estimates of the cost of final disposal of l

[

the facility (burial of low level wastes following the dismantlement of the facility) repressnt over 30 percent of the total costs of decommissioningi The ultimate costs associated with this component may represent the

' greatest source of uncertainty in estimating the future costs of decommissioning.

l l

Default on Payments by Sponsors Under current provisions, default on payments by one or more of the sponsor utilities could result in an added burden to other utility ratepayers and/or the taxpayers. Vermont Yankee reports that its sponsors and those of three other Yankeo companies have initiated steps to organize a captive insurance company. The insurance company would insure the Yankee conpanies against a default by one of their purchasers.

This insurance company, after receipt of one year's l advance premiums, would have sufficient assets to cover l

a default by a single small sponsor for upproximately seven months -- a period which should permit either resolution of whatever payment delinquencies might arise in bankruptcy or permit a transfer of the defaulted power contract to a new purchaser.24 Vermont Yankee expects the insurance fund to be established in early 1988.27 5-21

?

• l -

Early Shutdown ,

Unless a state taking of the Vermont Yankee facility occurs, it appears current sponsors of the Vernon facility would be liable for all costs associated with the shutdown and decommissioning of the facility, regardless of whether Vermont Yankee actually provides power. The ultimate burden of these costs would fall on the owners of Vermont Yankee, their ratepayers, or taxpayers.

5.4 conclusions Vermont utilities have adequate capability to plan i

for some aspects of replacement power in the event of a

. Vermont Yankee shutdown, while adequate planning ,

capability has not been demonstrated in other areas.

While specific contingency plans for replacing Vermont Yankee have not been constructed, it appears that such plans could be developed if a reasonable lead time were available. Adequate resources appear to be available to replace Vermont Yankee if necessary, although the acquisition of replacement power would be especially difficult and costly if the plant were closed unexpectedly. Even a, planned shutdown would be costly, and that cost would have to be weighed against the benefits. However, the feasibility and cost of many options are uncertain. To ascertain the adequacy of f

Vermont's future options and to clearly identify the obstacles to satisfactory replacement power planning, l the Department believes that the following questions l

need to be answered by Vermont utilities. l

1. If Vermont Yankee were to become unavailable, l what do Vermont's distribution utilities believe would be an appropriate proportion of replacement power to be met with small power development? Would they be able to acquire that amount within Vermont, either immediately or in the long term, and at what prices?

5-22

Do Vermont's distribution utilities have and 2.

sufficient planning capability to identify If not,' what time implement DSM initiatives?

and resources will be needed to develop that capability?

~

3. CVPS has recently suggested constructing a gas-fired combined cycle power plant in Rutland. Under what circumstances does CV or other utilities foresee the development of i

such a facility? What is the expected cost of power from such a plant, and what effects would it have on the Vermont transmission system?

' While spent fuel remains on the Vermont Yankee {

4.

site, what limitations would there be on the type and size of plant that could be l

constructed there?

5. What would be the appropriate size of, and .

likely cost and time frame needed to build, an I additional converter or converters at Highgate or elsewhere on the vermont-Canada border?

Have studies been done to analyze the effects of increased imports over such a converter (s) on the Vermont regional and inter-regional transmission systems and those of interconnecting power pools? If not, what would be needed?

l

6. Have VELCO or Vermont's distribution utilities studied the feasibility, time frame, and cost l of expanding vermont's transfer capacity with New York, either through the construction of I

additional interties south of Lake Champlain If so, or a transmission line under the lake?

VELCO and the utilities should identify the expected costs and time frames to construct such interties. If not, when could a study be completed?

7. Has the effect that losing Vermont Yankee t would have on the adequacy of the state's transmission system been studied? Besides construction of a new facility on the Vermont Yankee site, what remedies might be appropriate?

The current plans for the funding and decommissioning of the Yankee facility appear to meet federal standards for "adequacy."ta The Vermont 4

e 5-23

Yankee cost estimates and funding mechanisms address .

most of the major issues and uncertainties surrounding the issue of adequate funding for decommissioning. ,

Probably the greatest concern with the existing planning provisions is that non-benefitting ratepayers and taxpayers are exposed to potentially significant cost overruns associated with decommissioning after a normal operating life or due to added or unfunded costs of decommissioning following an early shutdown.

e 9

1 5-24

FOOTNOTES -- Chanter 5 .

1 See Department of Public Service, Twenty Year Electric Plan, 1983. In fact, some amounts of Vermont Yankee power have been transferred to out-of-state utilities. Some Vermont distribution utilities have expressed concern at least for the current level of reliance on Vermont Yankee and the sudden increase in costs when the plant is out of service for lengthy periods.

2 According to the NRC, the technology is available to decommission a large nuclear power BWR reactor with present-day technology. "Further development of special equipment such as the plasma-arc torch, the arc saw, and sophisticated remote-handling equipment could lead to reductions in both cost and occupational exposure." Experience with the large BWR type reactor is, however, limited. See discussion in Appendix on experience with decommissioning. From Technoloav. Safety and Costs of Decommissionina Reference Licht Water Reactors Followina Postulated Accidents (Washington, D.C.:

U.S. Nuclear Regulatory Commission, November 1982),

NUREV/CR-0672, p. 2-17.

3 The estimates reported were based on disposal costs at the South Carolina Barnwell facility of approximately $60 per cubic foot per figures reported by Vermont Yankee in a 1987 FERC filing, Docket No. EL87-22-001.

4 Letter from William J. Daley, Vermont Yankee, to Vermont Department of Public Service (November 6, 1987).

5 One hundred twenty-eight million less the approximately $11 million already collected.

" Office of Civilian Radioactive Waste Management, I Draft Mission Plan Amendment, U.S. Department of Energy, DOE /RW-0128.

7 Cost data supplied by the U.S. Department of Energy r

suggest that a separate dry storage facility could be used at Vermont Yankee for a cost of less than '

$20 million. This assumes spent fuel costs of approximately $60,000 per concrete cask and I approxix.cely 5 spent fuel casings per cask (for BWR reactor); the total cost of establishing an on-site ,

spent fuel storage capability (for its approximate 1500 fuel assemblies) separate from the facility would be approximately $18 million. Telephone 5-25

conversation with Chris Kouts, Office of Civilian Radioactive Waste Management, Washington, D.C., U.S. .

Department of Energy, November 22, 1987. .

8 Vermont Yankee, Vermont Yankee Scent Fuel Storace Rack Reclacement Recort, April 1986, p. 5.

' Accountants for the Public Interest, An Analysis of Decommissionina and Premature Shutdown Cost 1_of Nuclear Power Plants, New York, New York, August 1980, p. 10. l l

10 NRC, Technoloav. Safety, and Costs, p. 4-13.

'" ... studies indicate that occupational doses from decommissioning light water power reactors would be about 400 man-rem per year ... This is generally '

less than current annual doses at operating reactors." NRC, Decommissionino Criteria for Nuclear Facilities, op. cit., p. 5604.

12 Nuclear Energy Services, Inc., "Decommissioning Study of the Vermont Yankee Nuclear Power Station in Vernon, Vermont," FERC D. No. 81A0842., September 2, 1981.

13 The S531 million raised for DECON on 2007 would more than cover a 30 year delayed dismantlement as long as interest earnings on the decommissioning fund exceeded the rate of change in decommissioning costs (inflation) by more than 0.51%.

14 .Technoloav. Safety and Costs of Decommissioninc Reference Licht Water Reactor, op. cit., p. 11-28 and 11-29.

15 Anderson, Aquila, Rodbourne, Decommissionina 1

Commercial Nuclear Power Plants, Center for Urban and Regional Affairs, (Minneapolis, Minnesota, 1960), Pub. No. 80-6, p. 70.

10 l

Pacific Northwest Laboratory, Technoloov. Safety and l Costs of Decommissionina a Reference Boilina Water Reactor Power Station, (Washington, D.C. U.S.

Nuclear Regulatory Commission, June 1980),

NUREG/CR-0672-Volume I, p. 14.3.

17 Man-rems -- Average radiation exposure to the average U.S. roughly 0.1 to 0.2 man-rems per year.

The first detectable physiological impacts on humans are recognized at about 50 man-rems and an exposure dose to about 400 man-rems is a lethal dose to approximately 50% of humans.

i 5-26

c  :

.r .

l is Negligible.

19 "Based on the half-life of the critical / abundant ,

nuclide, the reduction of occupational doses beyond about 30 years would be marginally significant although a significant volume reduction in contaminated waste would result from 50 years in safe storage. It appears that DECON or 30 to 50 year SAFSTOR are reasonable options for decommissioning a light water power reactors."

Nuclear Regulatory Commission, Decommissionina Criteria,for Nuclear Facilities, Federal Register, Vol. 50, No. 28 p. 5604.

20 NRC, Technoloav. Safety. and Costs of Decommissionina a Reference Boilina Water Reactor Power Station, p. 2-16.

21 The entombment costs do'not include the cost of continued care estimated to be $40,000 per year or the cost of any subsequent dismantlement.

22 Nuclear Energy Services, Inc., Decommissionina Study of the Vermont Yankee Nuclear Power Station in Vernon. Ve rmont , FERC 70 D. No. BlA0842 (December 1981).

23 Ibid.

24 Technoloav. Safety and Costs of Decommissionina Reference Licht Water Reactors Followina Postulated Accidents, (Washington, D.C.: U.S. Nuclear Regulatory Agency, November 1982), NUREG/CR-0672, p.

17-2.

25 Vermont Yankee Nu;. ear power Corporation, Testimony of William J. Daley, Docket No. EL87-22-0001, p. 3.

26 Vermont Yankee Nuclear Power Corporation, "An Analysis of H.173: The Vermont Yankee Shutdown

. Study," October 1987.

27 Phone conversation with William Daley, Vermont Yankee, December 3, 1987.

28 NRC, "Decommiscioning Criteria for Nuclear Facilities," op. cit., p. 5600.

l

[

5-27 4

L----

r o .

6. ECONOMIC CRITERIA ,

"By what economic criteria should the state decide whether to shut down Vermont Yankee?"

This section addresses many of the relevant economic concerns associated with continued operation of the Vermont Yankee facility, plus the issue of appropriate economic criteria for evaluating a Vermont Yankee shutdown.

From its preliminary analysis of the economic issues, the Department projects that a state shutdown of the facility at tha and of 1987 would cost the state ,

approximately $569 to $612 million depending on the reason for shutdown. This figure reflects a savings of

$726 million in vermont Yankee expenses, partially offsetting the following costs. Instate replacement power costs alone would be $714 million, assuming an immediate, permanent shutdown. Total replacement power costs are projected at $1.338 billion. Approximately

$32 million would be lost in tax revenuou from out-of-state sources. The costs of compensating owners based on book value would be roughly $230 million.

Unless otherwise specified, all costs and benefits presented in this chapter are provided in present value  !

1988 dollars.1 While there are costs associated with an early shutdown, there are also benefits. The major ones are the reduced accident risks to the public associated with a shutdown of the facility and the potential avoided costs of continuing to produce power at Vermont Yankee including potential retrofits and future expenses.

Based on expense projections supplied to the Department by Vermont Yankee and assuming a defj.nitive and expeditious state shutdown and condemnation payment, the l

present value of avoided costs are estimated to be $403 million.

t 6-1 l

J

- - - - , - , , - - - - - - - - - - - - - - - - - - - , - - - - - - - - ~ - , , , ---,-.--n - _ -- -----.-e ,

o .

The Department believes a cost-benefit approach may .

provide an appropriate economic framework for evaluating the issue of a Vermont Yankee shutdown. Under such an approach, the relevant question is whether the benefits exceed the costs, after taking into account gli relevant costs and benefits. Other economic concerns relevant to the issue of a shutdown include short term cost impacts, and the distributional burdens of costs. In this chapter we present a discussion of the costs and 1

benefits of a shutdown and in the following chapter we discuss the impacts. All costs presented in this chapter reflect a shutdown due to a state taking including a condemnation payment to the owners or other similar event as described above.

6.1 Cost-Benefit Analysis vs. Economic Impact A social cost-benefit analysis provides a framework for comparing the economic costs and benefits 2 i associated with public policy alternatives. The costs and benefits measured would differ from the measurement L of broader impacts. Impact analysis reflects transitional economic considerations (i.e., short term impacts like temporary, unemployment) and distributional i f

concerns associated with burdens of costs, benefits and i 3

economic transfers (i.e., where the costs of a particular action surface). A discussion of impacts is  ;

I provided in Chapter 7.

f

I i 6.2 Cost-Benefit Analysis l

) The cost-benefit approach attempts to quantify all (

relevant tangible costs and benefits to evaluate l

! economic concerns presented by public policy decisions.

l

, Intangibles (such as the strategic value of Vermont Yankee to the state's energy portfolio) are relevant, but are not included in this interim report's estimates of costs and benefits due to problems associated with  !

i i l 6-2

)

quantifying their significance. Nor does the Department expect to be able to do so fo,r the final report. A resolution of these issues may ultimately depend on answering such questions, however.

A strict application of a pure social cost-benefit approach to the issue of closing Vermont Yankee might fail to capturc concerns associated with the flow of funds into and out of the state. A social cost-benefit approach, modified to reflect the local nature of the issue, would appear to provide an appropriata economic .

framework for analyzing the issue of a Vermont Yankee shutdown. The relevant costs and benefits might

' include, (1) real costs (e.g., replacement power costs) borne by Vermont ratepayers, taxpayers or stockholders, (2) transfer costs flowing out-of-state (e.g.,

compensation to out-of-state owners of the Vermont Yankee facility), and (3) transfer payments or foregone transfer payments flowing into Vermont (e.g., Vermont tax revenues associated with Vermont Yankee and currently being paid by out-of-state ratepayers). Such flows may reflect simple income transfers, not economic gal'ns or losses from the broe. der standpoint of society.

They do reflect, however, differences in the total wealth of the state and, so, are included in this analysis.

Despite its potential usefulness in analyzing appropriate policy based on economic concerns, the cost-benefit approach may also present subjective, inadvertent or i Serent sources of bias and error.

These problems are discussed below:

(1) Quantification and Potential Blas A cost-benefit approach permits an objective basis for discussion and analysis of issues dealing with potentially volatile concerns over jobs, health and environment. There is, however, a potential for an inherent bias associated with this approach as it relates to 6-3

issues affecting environmental and human -

health risks. The benefits of avoiding environmental damage and/or risks to human health are often difficult to quantify; therefore, estimates of the benefit-cost ratio would tend to be understated, creating an asymmetric analysis. These difficulties are typically greater for low probability events.

(2) Distributional,and Short. Tern Impacts Again, even if all costs and benefits could be quantified, the distribution of impacts are not factored into the cost-benefit framework.

The underlying impacts of such distributional -

considerations can be reduced through ,

strategies to mitigate and/or redistribute such impacts.

(3) Uncertainty in Estimates Uncertainty surrounds any estimates of costs or benefits. In the case of the analysis of a Vermont Yankee shutdown, however, the uncertainties are a particular problem in one special regard. Estimates of accident risk are based on an approach, first developed in the mid-1970s, called probabilistic risk assessment (PRA). PRA has been applied to Vermont Yankee and other nuclear facilities to estimate the risks of a containment failure ,

and radiation release. Uncertainty in these '

estimatas result from both the conservative nature of the approach and concern that it ,

fails to capture all relevant sources of accident risk. Table 6-1 summarizes the PRA approach and its associated uncertainties.

Table 6-1 .

4 PROBABILISTIC RISK ANALYSIS Arecs of Uncertainty  :

Data gn equipment failure and human error

~

• Handling dependant failurus

• Modeling all possible failures  ;

• Understanding the chemical / physical i behavior of radioactive materials  ;

l 6-4

• Modeling the response of containment .

safety sy4tems

• Weather conditions at the time of the .

accident

• Modeling dispersion of radioactive materials in various weather conditions

• Emergency response to the accident

• Understanding the relationship between dose and health effects

• Consideration of all externally initiated events (e.g., airplane accident)

In general, a cost-benefit approach provides a good basis for choosing appropriate policy based on economic considerations. Uncertainties over coct estimates and problems with quantifying their relevance compromise attempts to place dollar signs on all relevant costs and benefits. Certain elements of the decision calculus are better presented without attempting to quantify them.

However, dollar values placed on some of the driving elements of the costs and benefits are available and are presented in the following sections.

6.3 Costs and Benefits of a Vermont Yankee Shutdown The discussion of the costs and benefits procseds in three parts: First, the major cost and benefit elements relevant to the issue of a Vermont Yankee shutdown are summarized in Table 6-2. Second, the driving cost and benefit elements and the uncertalaries surrounding the available plant expense projections and benefit calculations as discussed. Finally, preliminary estimates of costs and potential savings of shutting down the Vermont Yankee facility are provided. The replacement power cost calculations presented in the summary section are based on an independent evaluation of their costs by the Department. The plant expense data used for purposes of calculating residual and 6-5

avoided plant expenses in the summary rely solely on the .

expenst 7rojection data supplied to the Department by Vermont Yankee (and assume a condemnation of the facility by the state).

Table 6-2 provides a list of the relevant costs and benefits associated with a Vermont Yankee shutdown.

Table 6-2 ECONOMIC COSTS AND BENEFITS OF A VERMONT YANKEE SHUTDOWN i

' Economic Costs

• Replacement power costs (to Vermont, possibly including replacment power costs to out-of-state ratepayers). .

• The strategic and/or portfolio value of the facility to ratepayers as protection from potential supply disruptions or energy price fluctuations.

Costs associated with risks to the environment and public health asssciated with replacement power sources.

• Costs of additional demand-side management and conservation.

• Foregone benefits from off-system sales from Vermont Yankee or sources used to replace it.

Economic Transfers (Costs)'

• Compensation to out-of-state owners from ratepayers or taxpayers.

Tax revenue losses (from out-of-state owners I and ratepayers).

• Out-of-state share of the carrying costs of ,

the facility otherwise paid by out-of-state I purchasers of Vermont Yankee power.  ;

Benefits

• Avoided cost of future capital additions at Vermont Yankee.

6-6

• Avoided costs of additional spent fuel

• disposal and low-level waste disposal.

• Avoided cost of paying Vermont Yankee's share of accident costs at other nuclear plants under the Price-Anderson Act.

• Avoided cost of paying Vermont Yankee's share of NRC program costs.

'* other avoided ongoing fixed and variable costs associated with Vermont Yankee power production.

• Avoided costs associated with' risks of nuclear accident.

-- Personal health and injury

-- Property damage

-- Replacement power

-- Clean-up and other cn-site costs

• Avoided costs of government oversight (e.g.,

environmental monitoring, emergency preparedness).

• Avoided "worry costs," or stress to local communities potentially affected by an accident.

• Avoided exposure to ratepayers of a sudden loss of Vermont Yankee power due to unexpected events.

• Reduced environmental discharge effects (e.g.,

thermal discharges).

1 Secondary impacts, such as impacts to the attractiveness of Vermont, competitiveness of Vermont industry, profits, and employment income are inappropriate to includo in the framework of a social cost-benefat r.nalysis." Exclusion of these second order impacts, however, becomes more difficult as one narrows the geographic scope to the state and local communities.7 The costs of ;itigation might also be viewed as a cost associated with a decision by the state to shut down the Vermont Yankee facility. These costs are not 6-1

. included in a cost-benefit analysis because they rely ,

largely on speculative assumptions over the legal responses of the utilities involved.' In addition, it could also be argued that a state action to force a shutdown of the facility may reduce the potential costs of litigation that would follow liability claims associated with an accident, as well as continued litigation involving expansion of the high-level waste storage, license extension, rule changes, and so on.

6.3.1 Benefits Assessment Major economic benefits of a Va.rmont Yankee shutdown to the state would include (1) the reduced risks of an accident and (2) avoided operating costs (i.e., capital expenditures, waste disposal costs, and other operating costa that could be avoided through an early shutdown of the facility). Potential for performance degradation as the plant ages would also be relevant, but has not been quantified.

ACCIDENT COSTS AND RISK REDUCTION Accident risk reduction would represent an economic benefit to Vermont from closing the Vermont Yankee facility. l In July of 1986, the General Accounting office (GAO) released a report to the U.S. Senate estimating I the costs of a nuclear accident at each of the 117 nuclear facilities in the United States that were either operating or under construction in 1982.' The purpose of these estimates was to assess the financial consequences of a nuclear reactor accident for purposes of establishing liability limits on Amendments to the Price-Anderson Act.I' '

Included are the estimates of (1) early health effects, (2) latent health effects, and (3) property damage (including economic losses and land 6-8

. contamination). Not addressed are the added on-site ,

costs of shutdown and decommissioning and the indirect economic lossed.

The GAO estimated the costs of averace off-site liability at Vermont Yankee to be approximately $1.2 billion in 1986.11 Under severe weather conditions (judged by GAO to be 100 to 1000 times less likely to occur nationally), the costs could be 10 times that amount. Not addressed in their estimates were on-site clean-up and damage costs and indirect economic losses.12 7.though the GAO estimates represent ',he most up-to-date and probably most authoritative estimates of off-site consequences to date, there are concerns over the estimates.

Concerns over the GAO estimates include the followingt

• No severe or catastrophic accident has ever occurred in the U.S. Therefore, there is no actual experience on which to draw.

• The GAO relied largely on the estimates of outcomes and probabilities developed through the use of FRA. As stated earlier, there are uncertainties associated with every stage of PRA.

On-site damage estimates should also include the costs of clean up and decommissioning that are incremental to the costs that would otherwise be incurred by the facility at the end of the operating life of the facility. An NRC sponsored study estimates the costs of immediate dismantlement after an accident to increase over the normal costs of decommissioning by roughly 33%. Depending on the severity of an accident, 1981 estimates of clean up costs for a large BWR (roughly twice the sire of the Vermont Yankee facility) range from $128 million to $421 million (roughly $156 to

$512 in 1987 dollars).13 6-9

. Other on-site costs not included in those estimates ,

include (1) replacement power costs (Vermont and out-of-state), (2) capital costs of carrying unused capital assets, and (3) the costs of any lawsuits filed by shareholders.14 Actual clean up costs could be much more expensive. The March 28, 1979 Three Mile Island, Unit 2 (TMI-2) accident cleanup was estimated to cost approximately $1 billion in 1981.15 Off site liabilities due to losses in property values and economic losses associated with testing and evacuation measures to date were estimated to be $41 million. The only health effect damage claims were associated.with the risk of future cancers rather than actual injuries.18 Not all costs associated with this accident risk, however, are covered by liability insurance. Current Price-Anderson Act limits of off-site liability are $665 million, well below the GAO estimate of even an averace accident consequence at the Vermont Yankee facility.17 Even if coverage is extended to the proposed $7.3 billion limits under new federal legislation, the public still faces the risk of uncompensated losses due to either extensive property damage or economic losses beyond the scope of those covered by Price-Anderson legislation.

RISKS OF CORE MELTDOWN OR RADIATION RELEASE There have been roughly 35 attempts using PRA to estimate the risk of a serious accident at a nuclear power plant in the U.S. Typically, the risk of a core meltdown has be;n found to be less th7n 1 in 10,000 per plant per year and the risk of fatalc j (to local residents) less than 1 in 1 million per plant per year.

GAO estimates that there is a "12 percent chance that an 6-10

accident involving melting at the reactor core will .

occur 10 .the next 20 years."18 The Vermont Yankee containment study estimated that the probability of core meltdown for the Vermont Yankee plant is about 1 in 33,333. According to Vermont Yankee's study, the probability of a large release following a containment failure was about one in 500,000.1' Again, these estimates are based on the application of a limited probabilistic risk analysis

- conducted by Vermont Yankeet there are significant uncertainties associated with the use of PRA for ,

purposes of measuring accident risk. Moreover, the estimates of accident risk at the Vermont Yankee facility failed to incorporate some externally induced ,

accidentr;.20 a

AVOIDED OPERATING COSTS FROM A SHUTDOWN OF VERMONT YANKEE In addition to the risk reduction benefits are the avoided costs of continued operation for Vermont Yankee and consequently for ratepayers that rely on Vermont j Yankee power. Continued operation costs includa (1) added capital expansion and/or retrofits necessary to assure safe and efficient operation until its operations i are ended (2) waste disposal for additional spent fuel l and any low-level wastes Janerated between now and the

, end of its operating life, and (3) other ongoing fixed and variable costs (e.g., incremental labor and fuel l costs) to keep the facility operatina and providing

! power.

l AVOIDED CAPITAL EXPENDITURES j

Recent capital additions have increased the costs of Vermont Yankaa power significantly in the last few years and have raised some concerns about the future 4

costs of providing that power. Since 1972, Vermont l

l l 6-11 l

Yankee has routinely expanded the capital base of the facility with new capital projects. Some of the major

capital additions include recirculation pipe replacement, torus and other modifications resulting from the short and long term Mark 1 programs.

Approximately 78% of capital additions at Vermont Yankee have come in the second half of its operating life, after'the THI-2 accident. Appendix E provides a summary chart showing significant outages and capital cost projects associated with those outages. The most significant outage was due to the recent pipe replacement, which extended for a period of 9 months from September, 1985, to July, 1986. Vermont Yankee estimates the capital cost of that project alone to be

$60 million, not including the cost of replacement power.

Table 6-3 shows the list of capital cost additions made from 1972 to the present. Again, the most significant capital costs additions occurred in the 1985-1986 period for projects dealing largely with the pipe retrofit. Table 6-4 reflects Vermont Yankee projections of future capital additions. Capital additions are projected by Yankee to continue at a rate of roughly 2.5 to 3.0 percent per year until 2003, near the end of its operating life.

Between 1972 and 1987, capital additior.a to the historical capital base incressed at a rate of roughly 4.7%. If these trends continue, we can expect a future capital addition of approximately $515 million over its remaining life (roughly $175 million in present value 1988 dollars).

Between 1972 and 1980, capital additions were experienced by Vermont Yankee at a lower rate of

~

approximately 2.4% of the gross plant and' retirements.

This rate reflects the much lower level of additions prior to the TMI-2 accident (which led to many l

6-12 l

1

(

. l Table 6-3  ;

VERMONT YANKEE NUCLEAR POWER CORPORATION HISTORICAL CAPITAL ADDITIONS (Millions of Nominal $)

CAPITAL EEP/

(GROSS PLANT GROSS UTILITY CAPITAL & RET.)

YEARS PLANT RETIRFMENTS EXPENDITUKEM _,[I,greent )

1986 335,057 167 25,396 8.2%

1985 309,828 3 ,,4 4 5 37,435 13.6 1984 275,839 282 12,696 4.8 1963 263,425 342 16,815 6.8 1982 246,911 87 8,674 3.6 1981 238,404 742 10,198 4.5 1980 228,948 409 15,021 7.0 1979 214,336 676 5,020 2.4 1978 209,991 653 4,389 2.1 1977 206,255 129 3,018 1.5 1976 203,366 556 7,432 3.8 1975 196,490 622 3,878 2.0 1974 193,234 0 1,723 0.9 1973 191,511 0 8,098 4.4 1972 163,413 Average (1972-1986) 4.7%

Reference Provided to the Department in letter from William J. Daley, Vermont Yankee (November 6, 1987).

6-L3

9 Table 6-4 VERMONT YANKEE NUCLEAR POWER CORPORATION PROJECTED CAPITAL ACDITIONS (Millions of Nominal $)

oRoss UTILITY CAPITAL CAPITAL mIP/

r:AAs PLawT arpswoIremas amoss PLAuf tvernent) 2007 0 -

2006 545,253 2,846 0.5%

2005 542,407 6,278 1.2 2004 53'6,129 8,479 1.6 2003 527,650 10,025 1.9 .

2002 517,62S 15,*.59 3.0 l 2001 502,466 14,332 2.9 2000 488,134 13,550 2.9 1999 474,584 12,811 2.8 1998 461,773 12,112 2.7 1997 449,661 11,451 2.6 1996 438,210 10,827 2.5 199'S 427.J83 10,236 2.5 19E4 417,147 9,678 2.4 1993 407,469 9,150 2.3 1992 398,319 9,809 2.5 1991 388,510 9,214 2.5 1990 379,236 10,012 2.7 1988 369,224 14,354 4.0 1987 354,870 19,813 5.9%

Total (1988-2007) 202,759

Reference:

Provided to t5e Department in a facsimile from William J. Daley (December 3, 1987).

l 6-14

industry-wide reactor modification programs). If Vermont Yankee continues to add to its historic capital base at only this lower rate, it would add approximately

$171 million in future capital additions (approximately

$72 million in present value 1987 dollars).

Table 6-5 provides a comparison of alternative capital addition projections. All figures are reported in present value 1988 dollars. The Department estimates of capital additions assume a rate of capital addition that diminishes near the and of the facility operating life in about 2004.

Table 6-5 .

PROJECTED CAPITAL ADDITIONS I PRESENT VALUE (Thousands of 19f5 S)

Vermont Yankee Department Projections 21 Proiections Exil 4.7%

$85,810 $72,425 $175,489 WAS'TE DISPOSAL COSTS FOR SPENT FUEL Currwnt federal law requires all owners of nuclear power reactors to pay for the ultimate disposal of spent

, nuclear fuel. The fees assessed consist of a one-time fee for waste generated prior to April 7, 1983 and ongoing fees for subsequent power genere. tion. The i

current payments required are 1 mill (one-thousandth of one dollar) per kWh of output.22 l

If no adjustments are made to the payment requirements by DOE and Vermont Yankee produces at the projected rate of roughly 3.7 million NW hours annually, then Vermont Yankee can expect to pay a total additional $74 million for its spent fuel disposal (a 1988 present value of roughly $29.6 million). The DOE currently estimates that 1.0 mill per kWh foe vill 6-15

produce sufficient revenues to cover the life-cycle ,

costs of civilian radioactive waste, nuclear electric generation and interest rate forecasts.23 In 1986, Vermont Yankee owed DOE approximately $2.1 million for the costs of spent fuel disposal based on a 2,058,426 MWH production for the year.

LOW-LEVEL WASTE DISPOSAL The costs of low-level waste disposal for Vermont Yankee may represent one of the more significant sources oi uncertainty in projecting the costs of both continued .

operations and decommissioning of the facility. Vermont Yankee produces approximately 94% of the total state low-level radionctive waste and over 99.7% of the waste measured by radiation concentration. It also produces 100% of the class B and C waste with the higher concentration of long lived radionuclides.24 Appendix D presents statewide historical data on low-level waste generated within the state for the last several years.

In 1986, Vermont Yankee spent over $581,000 on low-level waste disposal, and over $473,000 in 1987 through October.25 Between 1984 and 1987, disposal rates have increased approximately 319%.26 The current low-level waste disposal costs reflect the costs of burying waste at the South Carolina Barnwell facility, which will no longer be available for waste disposal beyond 1992. Failure to establish a plan for siting a low-level waste site well before that time will create significant uncertainties over disposal costs. Between January 1, 1988, and January 1, 1992, the state faces several' standard and penalty surcharges associated with disposal siting.

Instate disposal of the waste is currently being considered by the Advisory Commission on Low-level Radioactive Waste as a long term disposal alternative to an out-of-state compact for disposal. The 1988 6-16 l

4

o . .

deadlines for establishing an approved siting plan may ,

not be met. Tables 6-6 and 6-7 show the costs of low-level waste disposal assuming existing disposal" rates and new federal surcharges.

If a disposal site is unavailable for a time (either due to denied access to the Barnwell facility or failure to establish a receiving site by 1993, when the  ;

Barnwell facility closes), Vermont Yankee has several years of storage capacity on site.

The estimated cost of instate , disposal of Vermont Yankee low-leywl vaste from 1994 through 2013 is rough,y j

$189 million.3 Total costs cf low-level waste disposal from 1988 through 2013 are projected to be roughly $200 million. The Department estimated the '

incremental costs of disposal associated with Vermont Yankee continued operation of Vermont Yankee to be approximately $59-88 million (in constant 1988 dollars),

over and above the estimated $156 million to dispose of low-level waste during decommissioning. This increment would represent a total potential present value savings l of roughly $18-30 million.

LOW-LEVEL WASTE ASSOCIATED WITH DECOMMISSIONING Vermont Yankee's original consultant report on decommissioning incorporated a volume of low-level waste disposal of roughly 73L,000 cubic feet.34 The annual low-level waste generated at the facility represents just over 1-2% of the low-level waste disposal capacity that will be needed when the facility is finally dismantled (roughly 22-29% of the cumulative future low-level waste disposal needs over the facility's remaining life).35 The greatest costs associated with the low-level waste coming from the Vermont Yankee facility will come at the und of its operating life. At a cost of roughly

$60 per cubic foot as provided for under 1987 revisions 6-17

Table 4-6 o .

28,29 FSTIMATES OF LOW-LEVEL WASTE DISPOSAL COSTS

• HQ PENALTY SURCHARGES (1988 $)

Dry Active y (es .) 33 Waste Res as Quan $/Yr

($/cu.ft.)30($/eu.ft.) (cu.ft.) (000) 1987 $ 61.93 $126.09 10,000 - 15,000 $ 853 - 1,280 1988 71.93 136.09 "

953 - 1,380 1990 91.93 $156.09 "

1,053 - 1,480 1993+ $198-114 * " 2,140 - 2,970 Total (1988-2013) $193,777 - 195,920 Table 6-7 32 ESTIMATES OF LOW-LEVEL WASTE DISPOSAL COSTS HITH PENALTY SURCHARGES (1988 $)

Dry Active Waste Resins Quantity (est.) $/Yr

($/cu.ft.) ($/cu.ft.) feu.ft.) _(8000) 1987 $ 61.93 $126.09 10,000 - 15,000 1988 " $1,353 -

2,030 (1/1/88) 91.93 156.09 (7/1/88) 131.93 196.09 1989 " " "

1,553 -

2,330 1992 171.93 $236.09 "

1,95J - 2,930 1993+ $198-214 2,140 - 2,970 Total (1988-2013) $196,685 - 200,670 Note: Data based on information supplied from various sources l including Tom Bennet of Vermont Yankee and Laurence Becker of the j Agency of Natural Resources.

6-18 .

• to the decommissioning schedule, the low-level waste (or burial) costs of dismantlement will be roughly $44 million (roughly 34% of total estimated costs of decommissioning). If the rates increase to $214 per cubic foot, the burial costs of Vermont Yankee would increase to over $156 million, more than tripling I existing schedule provisions of approximately $44 million in 1987 dollars.3" l Low-level waste disposal associated with decommissioning will occur whether the facility is shut I

down early or after the completion of its operating license in 2007. An early shutdown could only l t

potentially reduce the disposal burden of incremental waste generated between the time of the early shutdown I and a projected shutdown date in 2007.37 AVOIDED ONGOING FIXED AND VARIABLE COSTS A shutdown of the Vermont Yankee facility would

significantly reduce the ongoing costs at the facility.

Many costs, however, such as the sunk capital costs and l

obligatory maintenance costs, could not be avoided by an '

early shutdown. Table 6-8 represents the Vermont Yankee estimates of projected ongoing costs assuming normal .

r l

operations through 2007, and assuming a shutdown by the l state in 1987 with an associated condemnation payment l l made to the owners.

I 1

I i l 1

l l

1 l

}

l 6-19 f

. o Table 6-8 VERMONT Y.TNKEE ESTIMATES OPERATING EXPENSES (Millions of Dollars)

Expenses 2007 1987 Costa Present value shutdown shutdown Difference Difference (Nominal $) (Nominal $) (Nominal $) (1988 $)

-- ======== mammmmmama =m==========

Total Direct $1,918 $263 $1,655 $499 Yankee Nuclear Service Div. 277 64 213 64 Total Variable 466 29 437 170 Total Fixed 994 259 735 256 Total Capacity 3,655 615 3,039 988 Puel 700 16 684 246 Total Operating 4,355 632 3,723 1,234 Note: Calculated from data supplied by Vermont Yankee in letters dated November 6, 1987 and November 19, 1987. (See Appendix F.)

GOVERNMENT PROGRAMS AED SERVICES The closing of Vermont Yankee would also alter requirements for certain public services, monitoring and oversight of the. facility. The overall level of savings to state and local governments associated with the shutdown of the facility are unclear. Most state agencies that monitor or provide some regulatory oversight of the facility indicate that there would be little overall reduction in their program costs if Vermont Yankee were shutdown; in the short tera, some monitoring and administrative requirements would significantly increase in conjunction with program 6-20 I

requirements related to shutdown ar.d decommissioning the facility. ,,

The Department estimates that a shutdown of the Yankee facility would ultimately reduce the need for s'ome personnel. Estimated savings to the ntate are appror.imately $72,000 per year, plus somewhat less thar.

$1,000 per year for air monitoring and water permit related expenses.

- 6.3.2 Costs Assesssent REPLACEMENT POWER The total costs of a Vermont Yankee shutdown would include both the replacement power cost's and losses due to its strategic value to Vermont ratepayers as a buffer l

' or source of protection against volatile prices for l fossil fuels. It also represents a source of instate power, free from geographic and/or political intrusions, subject only to state and federal jurisdictions.

The incremental costs of replacement power to Vermont ratepayers were estimated to be $2.25 billion cumulative nominal dollars, $1.26 billion in constant 1988 dollars and $714 million on a present value basis.

The added costs of replacement power for instate and out-of-state ratepayers combined were estimated to be roughly $4.22 billion in cumulative nominal dollars,

$2.36 billion in constant 1988 dollars and $1.338 billion in present value 1988 dollars. These costs do not include the other offsetting avoided operating costs at the Vermont Yankee facility from an early shutdown, nor the foregone benefits of resales of power used to replace Vermont Yankee. The methodology used in establishing these estimates are discussed in Appendix B. Additional discu'ssion of replacement power costs are included in the next chapter under "Rate Impacts."

6-21

COMPENSATION ,

As discussed in Chapter 4, various levels of compe'nsation may be required of the state if the state forces a shutdown of the facility. Compensation to the owners of Vermont Yankee does not represent a real economic cost of a shutdown; rather, it represents a transfer payment from taxpayers and/or ratepayers to the owners to compensate them for the unrecovered capital investment (sunk costs).

Compensation based on the book value of the facility would be approximately $230 million. As discussed in Chapter 4, the replacement cost of a -

comparably sized coal fueled generating plant would be approximately $1.15 billion (1988 $).

TAX REVENUES In 1986, Vermont Yankee paid approximacely $5.7 million in taxes to the state and local communi? !,a for their services. The uajority of these taxes were property taxes (roughly $4.4 million). The out-of-state portion of these revenues are equal to roughly $2.6 million. Present value loss of out-of-state taxes flowing into the state are about $32 million.

6.4 Summary of Costs and Benefits Table 6-9 presents the derivation of the effective costs to the State of Vermont following an early shutdown forced or unforced of the Vermont Yankee facility. The net costs or financial exposure to the state from a forced shutdown of the Vermont Yankae facility by the state is estimated to be a 1988 present value equivalent of approximately $569 - $612 million.

If a shutdown occurred due to some other reason the net costs to the state would be about $350 million.38 These estimates do not include the costs or avoided costs associated with litigation, an accident, impacts 6-22 l l

1

_ _ _ l

a .

an Vermont's power portfolio or foregone benefits of .

off-system sales of Vermont Yankee power or other sources. The estimate of $350 million relies largely on expense data provided by Vermont Yankee and assumes the owners are compensated for their investment in the facility in proportion to their share of the purchases.

The top third of Table 6-9 shows the present value estimates of net costs assuming shutdown of the Vermont Yankee facility in 2007. The middle portion of Table 4

6-9 shows the costs to Vermont of the Vermont Yankee facility in the event of a 1968 shutdown. The bottom .

third of the table shows the Department's estimates of the difference of these costs.

Table 6-10 summarizes the costs and benefits to the state of a forced shutdown of the Vermont Yankee facility assuming a state taking followed by a condemnation payment. .The table presents the incremental (differential) costs and benefits of a forced shutdown. The right-most column lists major unquantified elements of the analysis not incorporated f

in the dollar estimates of costs and benefits.

Quantified estimates of the costs and benefits are given in nominal dollar, constant dollar and present value (All costs referred to in the discussion dollar terms.

below are in present value dollars. See footnote 1 t0 this chapter.)

6.4.1 Replacement Power The Department's preliminary estimate of the cost-of replacement power following a shutdown is approximately $714 million for instate ratepayers and

$1.338 billion for both instate and out-of-state ratepayers before offsetting savings in Vermont Yankee costs. These power costs reflect the increased energy and capacity costs less the avoided costs of Vermont 6-23

~ '

TABLE 6-9 -

NET COST TO VERMONT OF A VERMONT YANKEE SHUTDOWN (Millions of 1988 Present Value Dollars)

Ouantified FORCED SHUTDOWN UNFORCED SHUTDOWN

• COSTS YY IN Instate out-of-State Instate out-of-State Replact.nent Power 0 0 0 0 Plant Capital 122 108 122 108 Carrying Costs 135 118 135 118 other Avoidable Costs 403 323 403 323 Out-of-state Tax Revenues .22 E _22 22 628 581 628 581, VY OUT Replacement Power 714 624 714 624 Plant Capital 230 0 122 100 Carrying Costs 253 0 135 118 other Avoidable Costs 0 0 0 0 out-of-state Tax Revenues 0 0 0 0 1197 624 971 850 CHANGE IN COSTS Replacement Power 714 624 714 504 Plant Capital 108 -108 0 0 Carrying Costs 118 -118 0 0 other Avoidable Costs -403 -323 -403 -323 out-of-state Tax Revenuea _.22 _22 22 .22 569 43 343 229 EEPOSURE TO YERMONT 569-612 343 0 Note

• Assumes expense projections based on Vermont Yankee data presented to the Department with condemnation payment to the owners of Vermont Yankee by the state. Also assumes that owner investment in plant capital is paid by ratepayers.

6-24

• TABLE 6-10

SUMMARY

COSTS AND BENEFITS TO VERMONT OF A FORCED SHUTDOWN (Millions of 1988 Present Value Dollars)

Quan;ifie$ Unquantified COSTS Instate Out-of-state o Portfolio / Strategic Replacement Value Power 714 624

--Protection Against Plant Capital 108 -108 Volatile Fuel Prices

--Protection Against Carrying Costs 118 -118 Supply Disruptions Lost out-of-state o Environmental Impacts Tax Revenues _11 -11 of Replacement Power Sources Totals 972 366 o Added DSM and conservation Costs o Forgone benefits frem off-system sales fren Vermont Yankee or sources used to replace it.

BENEFITS /AYOIDED COSTS other Avoided o Portfolio / Strategic operating costs tal 111 Value Totals 403 323 --Diversification of Power Supply o Avoided Risk of Catastrophic Accident

--Associated Risk to Health

--Risk to Property Damage

--Stress ("Worry costs")

WFT coPTS OVER BENEFITS 969 43 o Avoided Cost of Government Oversight &

Total Financial Services Exposure to Vermont 569 - 612 6-25 1

- - - - - _ _ - - _ - _ ]

Yankee fuel. Not included in this figure is the ,

potential for other avoided costs at Vermont Yankee.

6.4.2 Condemnation As discussed in prior Chapters, the Department believes a condemnation payment would be based on the net book value of the facility of roughly $230 million.

This equals the undepreciated portion of the plant capital account. Vermonters currontly pay for approximately 53% of shareholder invertments as they are expensed over time. Consequently, Vermonters are already obligated to repay the majority of shareholder investment. A shutdown of the facility with

, condemnation would likely obligate the state to pick up ,

as a new obligation the out-of-state share of Vermont Yankee investment of roughly $108 million.

6.4.3 Taxes The loss of Vermont Yankee would also result in I

lost tax revenues to the state from out-of-state purchasars of Vermont Yankee power. Based on data l presented by Vermont Yankee, the Department estimates that roughly $66 million would flow to the state from this sourcer roughly $3%, or approximately $34 million comes from instate ratepayers and approximately $32 million comes from outside the state.

6.4.4 Carrying Costs of the Facility i

Even af ter a shutdown of the Vermont Yankee, ratepayers will face certain ongoing costs at the facility associated with ongoing maintenance and operations until the spent fuel can be shipped off site l and the plant deconmissioned. The Vermont share of these costs are already borne by Vermont ratepayers in their rates under normal operations. A state taking of the facility would likely obligate the state to assume 6-26

f

• responsibility for 100% of the carrying costs )

associated, including the share now covered by out-of-state power purchasers. Our estimates indicate f that the additional costs associated with the i out-of-state share of these ongoing costs are $714  !

t million.

6.4.5 Costs Avoided In A Shutdown  :

The costs that would be avoided in the budget of l 1

Vermont Yankee after a shutdown represent approximately l r

an 85% reduction in projected operating costs. These i

include reduced salaries, maintenance, capital [

! additions, fuel expense, vaste disposal, and the like. f The Department estimates the costs incurred in a .  :

r shutdown to be f.pproximately $569 to $612 million.

t 6.4.6 Unquantified Elements of Costs And Benefits  !

Other major costs and benefits that were not l j quantified are presented to the right of Table 6-10. f

' The major costs not incorporated in the calculations f include litigation expense and the strategic value of j j the facility in offering protection from supply l

! disruptions from other sources and protection from l volatile fossil fuel prices, offset by uncertainties in (

plant operation. off system sales of Vermont Yankee f

1 j power or of the, sources assumed to be used in replacing l

Vermont Yankee also represent a significant cost of a f shutdown that could not be quantified well enough to be incorporated in these interim calculations. ,

)

The major benefits not quantified are the risks of  ;

1 a nuclear accident at the plant end the benefit of l l developing a less centralized power supply portfolio as new replacement power sources come on line.  ;

l The Department's estimates of the costs and  !

benefits suggest that the cost would be approximately [

] -

f I

6-27 j I

' I

, , $569 to $6 1 million (1988 present value), not of ,

l avoided cost to shut down the Vermont Yankee facility. l l However, the balance of these estimates are unce.tain as major elements of the analysis have not been quantified.

6.5 Conclusions There are uncertainties associated with almost every element of the cost and benefit estimates included l in the analysis. The issues involved require technical l analysis of many complex' issues, and major uncertainties ,

l are inherent in any attempt to accurately appraise the I 1

• I concerns that are relevant to the analysis. The l

l Department believes that specific assumptions, i calculations and even the approach should undergo l careful review during preparation of the final report.

( We caution, however, that "precise" estimates of many of the costs and benefits of a shutdown may never be i available.

l From our review of the economic l'ssues, and, l

specifically, the estimates of costs and benefits, we l have concluded that the issue of a shutdown of the (

Vermont Yankee facility may deserve further study.

Based on the information supplied to the Department, our estimates of calculated quantifiable costs would exceed l the quantifiable benefits to Vermont of a shutdown. The l Department believes, however, that the uncertainty in l these estimates is sufficiently great that a more l precise evaluation of relevant cost and benefits could ,

I alter the balance of that assessment.

i l

t 6-28 i

i 1 ,

a .

• FOOTNOTES -- Chapter 6 -

1 Present value estimates of costs are one of several ways in which costs are presented in this document. Other ways of presenting cost information include "cumulative constant dollars" and "cumu.ative nominal dollars." Nominal dollar estimates are simply the actual projected costs.

Constant dollar estimates have had a deduction made to remove the effects of projected inflation. A present value artimate is made from the projected costs by computing the effective lump sum payment that would have to be placed in an. account bearing interest at the utility's cost of capital today in order to just cover the principal and interest needed to meet projected costs.

2 An "economic" cost reflects its value in someCosts and alternative use, an "opportunity cost."

benefits in this sense reflect real changes to the efficient allocation of resources.

3 " ...if we take national viewpoint in choosing among proposed investments...we should attempt to... choose those investments to which people attach a value in excess of incremental cost. The ensuing redistribution of wealth and revaluation of assets are ' intangible' considerations which are relevant to final decisions. But these pecuniary external effects should not be totaled and incorporated into cost-gain estimates whose purpose is to show which investments are most efficient given that distribution of wealth." per Roland N.

McKean, Efficiency in Government Throuch Systens Analysis, ORSA No. 3, (John Wiley & Sons, 1958:

New York), p. 149-150. For oth9r discussions of the cost-benefit approach and discussions of the field of welfare economics, see E.J. Mishan, cost-Benefit Analysis, (New York: Praeger Publishers,);

or Tibor Scitovsky, Welfare and Coroetition (Chicago, ILt Richard D. Irwin, Inc., 1951).

4 U.S. General Accounting Office, Nuclear Reculationi Financial Consecuences of a Nuclear Power Plant Accident, GAO/RCED-86-193BR, (July 1986) , p.10.

5 Human error may include not only an inappropriate response to problems, but also procedurally correct responses to events in the face of inadequate or incomplete information, P.R. Davis and M. L.

Corr &dini, A Review of the Verront Yankee '

Containment Safety Study, October 31, 1986, p. 1-5.

6-29 i I

l

, ]

" " ... Successive Payments are undeniably gains So the recipients, and it is easy to slip into .

regarding them as not gains to the nation. But the result is a strange sort of multiple-counting....

(F) rom the standpoint of economic efficiency, they should not be recognized." per McKean, op. cit., p.

158.

7 To the extent that profits and employment are lost at Vermont Yankee, we would expect losses of wealth and income to the community surrounding the facility. Property owners suffer from lower propsrty values and employees suffer some income losses during periods of unemployment. One might expect the replacement power sources to create jobs and higher salaries, and contribute to higher property values in other areas of the state. -

Unless one knows with certainty that replacement power and/or jobs created for added DSM will replace Vermont Yankee power instate, then it is

. difficult to exclude these "cost impacts" from the benefit / cost ratio. This is particularly a problem '

when one views the employment and profit losses to state industry which may face such losses in the face of higher electric rates which compromise their competitiveness in out-of-state markets, a

Although the state should recognize that it may face a substantial legal burden associated with a State action to shut down Vermont Yankee, we.have not included such coot elements into the cost and benefit factors to consider. To include such costs would suggest that the state has obligated such a legal burden as a result of actions to force the shutdown of the f ac.lityr although Vermont Yankee could be expected to mount a substantial legal defense to protect its assets, it is still the perrogative of the owners to actually initiate this. Alco many shutdown scenarios do not include any state action as a trigger.

General Accounting Offices, op. cit.

10 The costs measured include costs associated with health effects and property damag6s. The property dL7sges represent 76-90 percent of total estimates of accident consequences, per GAO, op. cit., p.25.

11 The cost figures shown represent the costs of off-site liability. The range in estimates for different factors vary from $67 million at the Big ,

Rock Point (Michigan) facility to appro41mately

$15.3 billion at Indian Point 3 (New York) (in 1986  !

dollars). The variance in these estimates is due j 6-30 I

• largely to population density surrounding the '

facility, per GAO, op. cit., p. 25.

12 .The costs included in these estimates include latent health effects.(10-40 years after exposure to radioactive materials), per GAO, op. cit. p. 20, 13 Murphy and Holter, Technoloav. Safety and Costs of Decommissionina Reference Licht Water Reactotg Followina Postulated Accidents, NUREG/CR-2601, p.

17-2.

14 GAO, op. cit., p. 23.

15 Murphy and Helter, op. cit.

16 GAO, op. cit., p. 7.

17 The Price-Anderson Act sets limits on public liability associated with a single accident of $665 million. If total damages at a facility exceed the private coverage of $160, then Vermont Yankee would pay its share of the excess up to a maximum of $5 million per accident and $10 million per year, per P.R. Davis and M. L. Corradini, op. cit., p. 1-3.

8 GAO, op. cit. p. 25, -

Only a meltdown with a coincident break of the l'

containment structure could cause significant off-site damage. Vermont Yankee Containment Study, (September 2, 1986).

20 See PRD Consulting, A Review _.of the Vermont Yankee Containment Safe ~tv Study, (October 31, 1986).

21 Assumes capital additions at the indicated annual f percentage of gross utility plant from 1988 through 2003. The capital additions for 2004 through 2007

were cssumod to be 75%, 50%, 35% and 0% of those l

j amounts, rospectively. Capital additions for 1987 '

I were estimated at $15 million. ,

22 These fees were established under the Nuclear Waste Policy Act of 1982. Vermont Yankes is obligated to f pay DOE approximately $39 million for spent fuel i

discharged prior to April 7, 1983. This fee has been collected from the utility's sponsors and is

due .to DOE no later than its first delivery of I

nuclear fuel. FERC Form No. 1.

23 office of Civilian Radioactive Waste Management, An Assessment, U.S.

Nuclear Waste rund Adecumevt f

6-31

Department of Energy, COE/RW-0020 (June 1987), p. .

2.

24 Memorandum to the Advisory Commission on Low-Level Radioactive Waste, from Laurence Becker, Vermont Agency of Environmental Conservation, November 6, 1987. ,

25 Memorandum from William J. Daley, Vermont Yankee to DPS, November 13, 1987, 26 Based on increases of $14.34 per cubic foot to

$60.08 per cubic foot. Testimony of William J.

Daley before FERC, Docket No. EL87-22-001.

27 Access to the Barnwell facility could be denied before 1993 (as early as January 1, 1990) if Vermont has not produced a siting plan, by either providing an in-state site or a compact with other states for the long range low-level waste disposal.

28 Assumes instate disposal of low-level waste at a earth-mounded concrete bunker and immediate dismantlement of the Vermont Yankee facility following shutdown in 2007. These estimates are

, based on the DOE low-level disposal model, and assumes 850-882 thousand cubic feet of additional low-level waste generated at Vermont Yankee over its remaining operating life.

29 These estimates do not account for all of the significant uncertainties surrounding the range of costs associated with the disposal of low-level waste from 1993 to the completion of decommissioninn. Uncertainties exist because the total volume oi waste is uncertain, the site location is unsi.ecified, and eventual plans for the ultimate decommissioning may change.

30 Aasumes roughly 36.5 percent of low-level waste is from resins and 63.5 from dry active waste.

31 Includes $10/cu. ft. federal surcharge as of 7/1/86, $20/cu.ft. as of 1/1/87, and $40/cu.ft. as of 1/1/90. Penalty surcharges include an additional $10/cu.ft. as of 7/1/86 (on top of standard surcharge), an additional $20/cu.ft. as of 1/1/88, an additional $60/cu.ft. as of 7/1/88 and an additional $80/cu.ft. for 1992.

2 Based on an average cost /cu.ft. of $198-$214 as estimated assuming a 20 year operating life of a i facility disposing of approximately 882 to 955 thousand cubic feet of waste (including approxi-6-32

. l l

mately 730,000 cubic feet associated with . I decommissioning). l 33 Includes decommissioning costs of approximately

$156 million.

34 Testimony of William J. Daley, Vermont Yankee to FERC, Docket No. EL87-22-001, p. 5.

35 Based on annual dispocal needs of roughly 10 to 15 thousand cubic feet per year.

Revisions to the cost estimates assuming a cost of roughly $214/cu.ft. would increase the current

~ -ts of decommissioning (plus contingencies) from approximately $128 million to about $229 million in 1987 dollars.

37 The incremental burden of low-level waste generated between the time of the,early shutdown and the projected shutdown in 2007 would result in some waste reductions. It is unclear that the need for low-level waste disposal for Vermont Yankee would be totally eliminated unless the actual decommissioning process can start early. See discussion in Chapter 1 on early decommissioning following an early shutdown.

38 The cost numbers presented for the case of an unforced shutdown are based largely on expense projections provided by Vermont Yankee for the case of a shutdown of the facility by the state assuming compensation to the owners for the loss of their investment. These projections assume the owners of Vermont Yankee are compensated for their loss of the facility, but, in the case of an unforced shutdown, the cost of compensation is borne by in and out-of-state ratepayers or taxpayers in proportion to the ownership share of the facility.

I 6-33

~

7. IMPACTS "What will be the effects of shutdown and decommissioning upon Vermont ratepayers, the revenues of the state, the town of Vernon, and surrounding communities?"

In this Chapter, we discuss the impacts of a Vermont Yankee shutdown on electric rates for Vermonters and tax revenues, as well as other impacts associated with the shutdown on employment and income.

A shutdown of Vermont Yankee could increase electric costs statewide and reduce tax revenues to '

Vernon, Brattleboro and the state. Roughly 89% of the state's ratepayers currently rely on Vermont Yankee for up to a third of their electricity. Assuming they bear the burden of replacement power costs, condemnat.on payments and ongoing operating costs, rates could increase by approximately 10 percent. As pointed out elsewhere, however, some utilities such as Central Vermont Public Service, which rely heavily on Vermont Yankee, could see higher increases. Moreover, the increases may be distributed unevenly between customer classes. These effects could be moderated by regulatory decisions on how to phase in any rate increases.

The town of Vernon would be heavily impacted by a Vermont Yankee shutdown. Vernon currently relies on Vermont Yankee for approximately 88% of its total revenue base and spending.

An early shutdown of the Vermont Yankee facility would also create temporary unemployment and, potentially, some long term job losses in the stater the communities surrounding the facility would likely '

experience the greatest impacts. Approximately 11% of the town of Vernon is directly employed.by the Yankee facility.

As discussed in Chapter 4, there are uncertainties in the cost and essociated financial exposure to Vermont 7-1

r' taxpayers, ratepayers and stockholders following a .

shutdown of Vermont Yankee. Depending on the legal and factual circumstances leading to a Vermont Yankee shutdown, ratepayers may pay all or some portion of replacement power and carrying costs of the facility after a shutdown.

A state taking of Vermont Yankee could present financial exposure to taxpayers from a variety of costs and revenue losses including: (1) the costs of I l ccupensating Verront Yankee owners (both in and sutside l the state) for a plant takings (2) the costs of l "compensating" ratepayers for replacemest power costs; (3) the carrying costs of the facility t4); the l uncollected balance associated with the decommissioning .

of the facility; and (5) the loss of out-of-state tax revenues currently flowing into the state as a result of out-of-state power purchases from the v ankee facility.

l l 7.1 Rate Impacts l The potential costs and savings to Vermont of an l early shutdown of Vermont Yankee that have been qua'ntified consist of the cost to replace Vermont's I

share of the plant's long term output, a reduction of l capital additions and costs at the facility, a loss of state tax revenues paid by the plant's out-of-state j owners, a compensation payment to plant owners in the l l

event of a state-imposed shutdown, and compensation to I out-of-state ratepayers for their increased cost of I power. Because of legal and factual uncertainties discussed above, it is not known which of those costs would be born by Vermont electric ratepayers.

I The Department estimates that the cost to Vermont utilities to replace Vermont Yankee's power through 2007 would have a 1988 present value of $714 million. The distribution of projected replacement power costs over 4

7-2 1 -

r time is presented in Figure 7-1, and their derivation is discussed in detail in Appendix B.

Vermont ratepayers presently pay about 55% of the annual costs associated with Vermont Yankee. Based on plant expense projections by Vermont Yankee, Vermont's ,

share of future non-fuel costs is projected to be about

$660 million in present value terms. If Vermont ratenayers were to bear the cost of replacement power and Je relieved of all costs associated with the maintenance and decommissioning of V 3rmont Yankee, the not impact would be a p:esent value !acrease in retail electrical rate burden.of $54 million. The Department astimates that this would translate to roughly a 1% long term increase in average Vermont retail rates.

Plant costs at Vermont Yankee after a state-imposed shutdown would likely be much lower than those of continued operation. Presuming a separate condemnation payment to plant owners, Vermont Yankee has estimated that total continued costs of plant maintenance and decommissioning through 2007 in the event of a shutdown in 1988 would be about $203 million in present value terms. If Vermont ratepayers were to bear that cost plus the net cost of replacing Vermont's share of Vermont Yankee power, the cost of an early Vermont Yankee shutdown would rise to about $307 million in present value terms. This is estimated to be an increase of about 5% in average Vermont retail rates.

The Department believes that the present value of a condemnation payment to compensate Vermont Yankee owners for the loss of their asset and future income would be the plant's approximate net book value of $230 million.

(See Chapter 4.) It is uncertain if electric ratepayers would bear this cost, and how the payment of r,uch compensatios would be made over time. However, the estimated cost of replacement power for Vermont, the full estimated continuing cost of the facility, and a 7-3

FIQlRI7-1 -

Cost to Replace Yemnt Shm of Yemnt Yankee Powr, 1988-2997 80

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• Projected capacity and sergy costs for Yemnt' purchases EIS GARI MIS N0f IElllDI:

• Cos) of replacement Powr to out-of-state owners

• Savings inn redued optrating emnses ud avgidt d capital additions at Qemnt Yukee

• hconn.ssioning costs

• Possik,e compensat:,on to Yemnt Yankee owners e

7-4

6-condemnation payment of the plant's book value sum to a present value of $537 million. If borne entirely by ratepayers, this would represent roughly a 9% long term increase in average Vermont retail rates.

Presuming replacement power for Vermont Yankee's out-of-state purchasers were obtained at the average price faced by Vermont utilities, its long term cost is estimated to be $624 million in present value terms. If the out-of-state purchasers were compensated for their share of the plant's value and relieved of all costs of maintaining and decommissioning the facility, they would avoid estimated present valuG costs of about $581 million, for a not cost of $43 million. If this cost were borne by instate ratepayers in addition to the .

costs of instate replacement power, maintenance and decommissioning costs, and compensation of all plant owners, the present value cost of $581 million would increase Vermont's long term average rates by about 10%. (The difference between this figure and the $612 million cost given in Chapter 6 is the $32 million tax revenues lost in a forced shutdewn.)

Because rate impacts of an early shutdown of Vermont Yankee would not be evenly born by the state's ratepayers, the average retail rate changes described above are a highly simplified description of a shutdown's possible rate effects. The extent to which the direct purchasers of Vermont Yankee would bear a proportionately larger share of Vermont's total cost, and the extent to which non-purchasing utilities would suffer or benefit from a shutdown, are not clear.

Another important effect of an early shutdown would be the distribution of rate increases among customer classes, and the potentiel for one class to be inordinately burdened. The distribution of costs and benefits among utilities and customer classen are important to an understanding of hou Vermont would be l

7-5

. __ _ _ _ _ _ _ _ _ _ _ _ - - _ - - _ - _ _ _ _ _ _ _ - . - - - - - - - _ - _ - - . ~ , - . _ - - . - - . __ __ __

affected by ar sarly shutdown of Vermont Yankee, and may warrant further examination.

Rates would also be affected beneficially by optimization of short-term purchases and sales, by demand-side measures; and they could also be negatively affected by elimination of profits from off-system sales of power from Vermont Yankee or from other sources used to mest Vermont load as a result of a Vermont Yankee shutdown. It was not possible to quantify these impacts for this interim report although we suspect they are sizable.

7.2 Employment and Income Impacts closing Vermont Yankee would result in potential short and long term job and income losses. The potential short term job losses include the direct loss of jobs to Vermont Yankee employees and vendors that provide services to the facility.

The longer range impacts on jobs in Vermont are far i less certain. The impacts of a Vermont Yankee shutdown on employment and income will depend on (1) where the replacement power is generated (i.e., instate vs.

out-of-state) and (2) the magnitude of electric rate increases and the resulting potentia, secondary job losses from changes in the competitive position of Vermont industries. l In the longer term, these employment losses would be offset by new jobs created as the state expands demand-side management measures and new sources of replacement power are created. Nuclear power, in general, is not a labor intensive source of power. The employment associated with replacement power sources * '

could be significant.

l l

\

7-6 1

1 I

_ __ -- .--._ . _ _ _ _ = _. . - - - . _ .

F , ,

DIRECT EMPLOYMENT IMPACTS Vermont Yankee reported 327 full, part-time and temporary employees at the facility in 1986.1 Nineteen of these were part-time and temporary workers.

One hundred eighty-six or approximately 57%, of these employees are residents of Vermont.2 A shutdown of Vermont Yankee would eventually result in lost jobs for most of the Yankee operation and utility staff.

Table 7-1 provides a list of the state of residence of Vermont Yankee employees. Not all of these jobs, -

however, will be lost following a shutdown of the facility. Employment in the Vernon area could actually swell in the short run as the facility prepared for either a storage or early dismantlement. The employment figures presented in Table 7-1 reflect direct employment losses once the actual decommissioning process has been completed.

TABLE 7-1 VERMONT YANKEE NUCLEAR POWER CORPORATION EMPLOYEE RESIDENCES

SUMMARY

BY STATE (1986)

No. Emplovega Percent Income Percent State of

($ Million) Residence 186 57 $7.7 59 Vermont 70 21 2.6 20 Mass.

20 2.5 19 'N. H.

66 3

4 1 0.2 2 Other 326 100 $13.0 100

Reference:

Facsimile provided to the Department from Tom Bennet, Vermont Yankee (November 13, 1987).

7-7

O

• Only four towns within the state had more than to employees that work for Vermont Yankee in 1987:

Brattleboro with 70, Vernon with 60, West Brattleboro with 16 and Putney with 12. Table 7-2 provides a list of the town residences of Yankee employees who are residents of the State of Vermont.

TABLE 7-2 VERMONT YANKEE NUCLEAR POWER CORPORATION VERMONT RESIDENCES

SUMMARY

BY TOWN '

(1986)

Number Income citv/ Town .

86 $3,505,065 Brattleboro & ,

W. Brattleboro 9 422,379 Newfane 12 405,018 Putney 60 2,609,889 Vernon l

19 758,719 Other l l

Total 186 $7,701,070 l

Reference:

Facsimile provided to the Department by Tom Bennet, Vermont Yankee (November 13, 1987). Income data to the Department from William J. Daley, Vermont Yankee (November 6, 1987)..

Vermont Yankee paid approximately $6.7 million to l instate vendors' serving the Yankee facility.' Since l

l most of the vendors that supply the Vermont Yankee facility are based outside Vermont, instate employment losses would depend on the extent of their instate hiring and are expected to be moderate.

7-8

, , i 1

. l l

1

• l LOCAL EMPLOYMENT IMPACTS The communities of Brattleboro and Vernon would be hardest hit by the loss of the Vermont Yankee facility.

Once the Vermont Yankee facility has been shut down and decommissioning completed, approximately 146 jobs could be lost by residents of those two communities as a direct result of the shutdown. In addition to direct employment losses, these communities could face additional job 1osses associated with service industries that support Vermont Yankee and their employees.  ;

Vernon A shutdown of the Vermont Yankee facility would eventually result in approximately 60 direct job losses to Vernon residents, equivalent to approximately $2.6 million dollars in annual employee income. Vermont Yankee provides a substantial portion of the overall

- employment base of Vernon. The total number of Vernon residents employed inside or outside the state was 536 in 1980.5 Most of the Vernon labor force is reported to work in the town of Brattleboro (approximately 44%).

The Vernon community could face an approximate 11.2 (60/536) percent reduccion in jobs as a direct result of a shutdown.'

Brattleboro Vermont Yankee employs approximately 86 residents of Brattleboro and West Brattleboro, with a total estimated income of about $3.5 million. The Department of Employment and Training reported total employment in the Brattleboro area to be 15,600 in September 1987.

The closing of the Vernon facility may result in direct job losses to the Brattleboro area of roughly 86 workers; potentially increasing the current unemployment rate for Brattleboro about half of one percent.

l 7-9

OTHER INCOME AND SECONDARY EMPLOYMENT IMPACTS .

Vendor Services and Stockholder Dividends In addition to the potential loss of employment.

income, Vermont residents also face some potential I losses in income from vendor services and stockholder dividends. Fifty-five percent of Vermont Yankee is owned by instate distribution utilities. Vermont Yankee paid approximately $6.7 million in vendor services "i nstate and approximately $4.9 million in stockholder dividends; The long run net impacts of a shutdown on Vermont Yankee stockholders and vendors are less certain. If a state taking of the facility occurs, and the stockholders (the owners of Vermont Yankee including the instate and out-of-state utilities) are duly compensated, then they are also free to either reinvest to earn dividends from other investments or to simply pass through the returned investment to stockholders to cover all costs of debt service and their investment.

The vendor services supplied by instate suppliers will likely be replaced by other vendor services supplied to new sources of replacement power, if they are instate. .

Other Secondary Impacts Secondary employment losses (both inside and outside the state) may result from rate increases. Rate increases may compromise the competitive positions of instate industries, leading to increased costs of producing Vermont goods, price increases and lost product demand for Vermont manufactured goods.

Estimating these impacts is difficult, requiring speculative assumptions over variables such as demand elasticities (i.e., estimates of demand response to a change in price) of various industry goods and the use of regional input-output tables. Such impacts could 7-10

- create a burden on the state economy, having the -

greatest impacts to industries that rely heavily on electricity and sell in competitive out-of-state or national markets. One response to this might be a movement towards industrial cogeneration, conservation and demand-side management.

Aside from the direct income and employment losses to the local economy from a shutdown of the Vermont Yankee facility and lost business to its vendors, other secondary impacts will be experienced by the local economy as merchants experience lower demand for consumer goods like food and clothing. These changes in demand create further "ripple effects" to the local employment and income base of the local economy.

Although these ripple effects are recognized, establishing an appropriate multiplier to capture these effects is an area requiring further research.

7.3 Tax and General Fund Impacts A shutdown of the Vermont Yankee facility will create some losses in state and local sources of tax revenues. However, it is important to remember that a majority of the Vermont Yankee taxes are ultimately paid by Vermonters in any case. Some government services will be eliminated at both the state and local levelst however, the costs of those services are uncertalit. In the shorter term, a shutdown of the facility could actually create a demand for greater state and local government involvement with the shutdown and ,

decommissioning of the facility.

7.3.1 Tax Revenues Vermont Yankee pays taxes to both state and local governments. For the 1986 tax year, the Departu?.nt of Taxes reported total roughly $3.5 million in ta' revenues collected from the Yankee facility.7 Vermont 7-11

Yankee reports local government property taxes for the ,

1986 tax year to be $2.3 million to the Town of Vernon and $182,000 to the City of Brattleboro. ,

The state and local taxes paid by Vermont Yankee in 1986 were roughly $5.7 million. Roughly 45%, or $2.6 million, comes through the power purchases by out-of-state buyers. Vecmont Yankee projects payments to the state and local governments by Vermont Yankee from 1988 through the end of its operating license in 2007 to be roughly $217 million. Table 7-3 provides a summary of the taxes paid in 1986 and projected pLyments '

by Vermont Yankee for the 1988 to 2007 time period.

The roughly $3.2 million in state taxes paid by Vermont Yankee for 1986 represents less than 1 percent of the total state general revenue fund collection for FY 1987 of $446.9 million.

~

Figures reported for the Town of Vernon show that property tax revenues collected from the facility represents 88 percant of its total revenue base.

Approximately $2.60 million was collected by Vernon from Vermont Yankee for the 87/88 tax year; approximately

$2.95 million was assessed and billed through all s

revenue sources. Roughly $1.8 million of the town spending goes to school spending and $1.1 million for other general requirements including roads.

School statistics for the'1984-85 school year show the avera,2 spending per pupil (approximately $4,251 and

$3,972 for elementary and secondary education respectively) were significantly above the state average of $2,996.9 Vernon currently enjoys one of the lowest property tax rates within the state. The loss of Vermont Yankee would place a significant burden on local residents likely requiring a phase-down of existing program spending and requiring that the balance of continued I

7-12

r .

program spsnding be funded with increased local tax ,

rates.

The City of Brattleboro estimates approximately

$235,700 was collected from Vermont Yankee for taxes on land, property and buildings within the city. The total tax revenue base for Brattleboro was approximately $11.1

.million, roughly 2% of which comes from Vermont Yankee.10 Table 7-3 .

VERMONT YANKEE TAX PAYMENTS TO VERMONT '

($ Thousands) 1986 Totals (1988-2007)

State Local Annual Nominal Const. Present 1988 8 value_$

Property 1,935 2,519 4,454 168,885 93,463 51,591 Income Corporate Employee Withhold 644 644 24,413 13,514 7,460 562 562 21,326 11,793 6,510 Sales /Use Unemployment 52 52 1.978 1.091 602 Totals 3,194 2,519 5,712 216,602 119,861 66,163

Reference:

Vermont Yankee Nuclear Power Corporation, An Analysis 2f H.173 The Vermont Yankee Shutdown Study, October, 1987.

Constant dollar and present value estimates were calculated by the Department of Public Service.

7.3.2 New Obligations One of the principal burdens of a forced shutdown of the Vermont Yankee facility by the state or taxpayers may be a new obligation to compensate current vermont Yankee owners for loss of their investment. Payment to owners, if required, could come out of the state's general revenue fund or through the existing rate structure. Compensation to Vermont Yankee owners based 7-13

6

- on the net book value of the facility would add roughly ,

$230 nillion in new tax obligations.

7.3.3 Government Programs The closing of the Vermont Yankee facility would also reduce requirements for certain public services, monitoring and oversight of the facility. The savings to state and local governments associated with the shutdown of the facility is unclear. Most state agencies that monitor or provide some regulato.ry oversight of the facility indicated that they would experience overall reduction in their program costs if Vermont Yankee were' shut down.

State programs that monitor or otherwise provide ,

services that are only necessary because the Vermont Yankee facility exists include the following:

• Department of Health -- Air monitoring

• Agency of Natural Resources -- Water pollution permits -- less than $1000/yr

• Department of Public Safety -- Emergency i Response Management -- $71,642/yr

• City of Brattleboro and Town of Vernon -- i Schools, roads, water and sewer services  !

• State Emergency Management Fund -- $2 million In addition to the programs listed above, the state engages in extensive annual emergency preparedness ,

exercises thct involve the Governor, various state, local officials and Vermont Yankee staff.

7.3.4 Net Burden on Taxpayers The not burden to taxpayers of closing Vermont Yankee includes the net effect of out-of-state revenue losses, new obligations to taxpayers less government 1 programs and/or funding requirements no longer needed 4

7-14  ;

- after a shutdown. The immediate impacts of the loss of Vermont Yankee include the loss of roughly $5.7 million in tax revenues, of which 45%, or roughly $2.6 million, are collected from out-of-state purchasers of the power. The Vermont Electric Energy tax paid by Vermont Yankee to the state is peculiar to Vermont Yankee power facility; instate sources of replacement power will unlikely fully compensate the state for the loss of Vermont Yankee as a funding mechanism.

New obligations to taxpayers would be approximately

$230 million if the condemnation payment to Vermont Yankee owners is based on not book value and comes from the state general revenue fund. Table 7-4 shows the estimated range of the economic impact of a shutdown on state and local tax bases.

Table 7-4 NET IMPACT OF A SHUTDOWN ON VERMONT STATE AND LOCAL TAX BASE

($ Millions)

T21A1 Out-of-state Share New Obligations $230 $108 Lost Revenues S 66 $ 32 Govt. Programs Various Net Total $296 $140 7.4 Secondary Impacts on Employment, Income and Competitiveness Not included in the discussion above were the potential impacts to jobs, profits, taxes and income impacts due to the second order effect of higher electric rates on Vermont industry; especially instate industries that rely heavily on electricity and compete in out-of-state markets. The shutdown of the Vermont Yankee facility would increase electric rates and, 7-15

a

• l

. . i

, consequently, the costs of production in many ,

~

industries. For industries in competitive markets, the higher rates could result in losses of employment, income, and profits to the communities that serve these industries.

7.5. Other Impacts other potential impacts of a Vermont Yankee shutdown include such effects as changes to property l

values in the Vernon area, transportation risk reduction resulting from as decreased overall need to transport radioactive material, decreased demand for municipal services, road maintenance and repair, any local impacts )

. on the cost of living and local land use. Further ,

discussions of these and other impacts will be included in the Department's final report.

O l

I 7-16 I l

r FOOTNOTES -- Chanter 7 1 Vermont Yankee Nuclear Power Corporation, "Annual Report of Major Electric Utilities, Licensees and Others," FERC Form No. 1 (December 31, 1986).

2 Facsimile to DPS from Tom Bennet, Vermont Yankee (November 13, 1987).

3 Towns with less than three employees working at Vermont Yankee including Bellows Falls, Bennington, Chester, East Dover, Guilford, Malifax, Jamaica, Perkinsville, Rutland, Saxtons River, Springfield, West Dummerston, West Townsend, Williamsville.

Wilmington, Fairfax, Montpelier, and Middlebury.

4 Vermont Yankee Nuclear Power Corporation, &D

- Analysis of H.173t The Vermont Yankee Shutdown .

Study, October, 1987.

5 Vernon, Town of Vernon. Town Plan, June 5, 1986.

" Applying the estimate of 60 Vermont Yankee employees to the overall employment base of Vernon residents for 1980.

7 Memorandum from Earle E. Fennessey, Department of Taxes to Christopher Owen, Department of Public Service, September 10, 1987.

8 Phone conversation with Christine Howe, Vernon Town Treasurer, November 17, 1987.

Vermont Department of Education, 1984-1985 Financial Statisticsf Vernont School Systems (1985-1986).

10 Phone conversation with David Sickle, City of Brattleboro, November 20, 1987.

7-17

8.

SUMMARY

OF OTHER STUDIES, COMMENTS AND RESPONSES The Department of PU511c Service solicited comments ,

for this study from 38 groups, including 24 instate electric distribution utilities, the plant's operating company, state agencies, municipal governments and others. Many responded with detailed written comments f and offered their perspective concerning a shutdown of Vermont Yankee. The comments and studies are available for inspection at the Department's offices and are summarized below.

8.1 Utility Responses 8.1.1 Electric Utilities Study Nine electric utilities, which purchase most of the Vermont Yankee power consumed in this state, jointly prepared a report, which they released at an October news conference. Investor-owned utilities participating in the joint effort were Central Vermont Public Service Corporation and Green Mountain Power Corporation. Six l municipal utilities and a cooperative were also represented: Burlington, Hardwick, Lyndonville, Morrisville, Northfield, Stowe and Washington Electric cooperative.

The utilities asserted a premature shutdown would be unjustifiably expensive. They estimated the cost of replacement power from the date of an early closing I unti.l 2007 would be significant as set forth below in Table 8-1.

Table 8-1 COST OF REPLACEMENT POWER ACCORDING TO UTILITY PROJECTIONS

($ Billions)

Yankee closina Date Replacement Power Costs 1987 $3.19 1997 $2.73 6-1

The companies also projected savings in replacement power costs of $2.58 billion if the nuclear plant extends operation fron 2007 to 2012.

The utilities said the nuclear plant supplies Vermont with low-cost power when it is operating.

Whether or not the plant operates, the companies said they are obligated by contract to pay the nuclear plant's "mortgage."

Although state agencies have certain regulatory powers (e.g. safety, environmental and rate regulatory powers) related to the plant, the utilities claim those -

agencies lack authority to cause a shutdown. Moreover, according to the utility report if the Vermont Legislature passed a law authorizing a shutdown, it -

would likely be superseded by the federal Atomic Energy Act of 1954 and other federal laws.

The utilities recognize that the State of Vermont, however, does retain its traditional right to regulate

}

utilities, including Vermont Yankee, in such areas as I economic matters and plant siting. The utilities contend that if state action caused the plant to be clo' sed on economic or other, non-preempted grounds it would amount to a state condemnation of the property, requiring the state to compensate plant owners for loss I of the property. The utilities also cito Vermont Yankee's claim that a state condemnation would result in loss of tax revenues and that the cost of compensation to plant owners would be $1.44 billion.

On the issue of replacement power, the utilities said they have been studying the. matter in recent years because of uncertainty over the continued supply of power from New York and the Merrimack, N.H. coal plant.

Probable sources of replacement power are additional purchases from ontario, Quebec and New York. Other sources might be a coal- or natural gas-fired plant in 8-2 i

- - Vermont or New England and new small power producers.

l Conservatien'and demand management initiatives also '

figure into the picture, they added. .

The utilities are presently contributing to a Yankee decommissioning fund at an annual rate of $3.2 million. The companies are concerned about the decommissioning fund, noting that large rece increases might be needed if the cost of decommisr,loning is not covered by the annual contributions toward decommissioning. The companies also noted that the decommissioning fund is a matter requiring monitoring by the state and Vermont utilities purchasing Yankee power.

The companies said a premature shutdown of the plant could caune electric rates to increase. In the case of CVPS and GMP, it was estimated rates would increase 33 percent and 25 percent respectively.

Moreover, state and local governments would lose tax revenues now paid by the nuclear plant. The benefit of jobs, and the so-called "multiplier effect" of those incomes in the regional economy, would also be lost.

Based on their conclusions, the utilities recommended the final part of this two-part study, due to be delivered to the Legislature in 1988, not be undertaken.

8.1.2 Vermont Yankee Nuclear Power Corporation Study Vermont Yankee Nuclear Power Corporation concluded in its legal analysis that, under the Atomic Energy Act and by Supreme Court decisions, only the federal government has the authority to shut down the plant.

Additionally, it asserts the state lacks authority to cause a plant shutdown on economic grounds. However, it concluded the state might cause a closing if it could demonstrate a necessary public une for the Vernon site and thereby invoke its power of eminent domain. Were this to happen, the operator claims the state would be 8-3

o obligated to pay Vermont Yankee Nuclear Power ,

Corporation the fair market value of the plant, an ,

amount it estimates at $1.4 billion for a 1988. shutdown l and $1.65 billion for a 1998 shutdown. In' reaching 4

these figures, Vermont Yankee derived its estimate of j the fair market value by projecting the revenues that could be earned by selling the plant's long-term output to other utilities in the region. Additionally, the state would inherit the responsibility of operating and decommissioning the plant with attendant costs, '

according to the plant operator.

A premature shutdown of the plant would cost as t

much as $5 billion, or $9,000 per Vermont resident, if

! replacement power costs, lost tax revenues, jobs and the i

multiplier effect are added together, Yankee asserted in  ;

its report.

l The company pointed out that the nuclear plant provides vermont ratepayers with protection against I higher oil prices, and that it does not pose the '

uncertainty associated with other energy sources, such

! as small power projects or foreign energy supplies.

8.1.3 Vermont Electric Power Company (VELCO)

.VELCO, a provider of transmission services to  ;

Vermont utilities, carries electricity from the Vernon l l plant to the Vermont distribution utilities buying the power. The company said if Vermont Yankee was closed

and another power plant built in its place, no l alteration in transmission systems would be needed.  !

) Similarly, no changes are needed if power replacing '

{ Vernont Yankee entered the VELCO system in Vernon.  !

However, if alternate supplies were acquired from Canada (

or New York, significant upgrading of transmission l

l facilities would be needed, according to VELCO. The i

cost of improvements to the transmission system are j borne by electric companies, and, ultimately, by i

a 8-4 ,

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e 4

Appendix J Glossary 9

4 5

APPENDIX J - GLOSSARY ,

AVOIDED COST The total cost of energy and capaci-ty that would otherwise be incurred if a given action were not taken. )

BASE LOAD The minimum load over a given period CAPABILITY The capacity a utility must have RESPONSIBILITY to meet its peak load plus a reserve margin. The reserve requirement is a function of size, number, and location of units in a power system.

CAPACITY FACTOR The ratio of the average load on a

• machine or equipment during a '

specified time period to the capacity rating of the machine or equipment.

COGENERATION The combined production of electric-ity and useful thermal energy.

A combination of a steam turbine and COMBINED CYCLE a gas turbine in a generating plant, with the gas turbine exhaust produc-ing steam for the steam turbine.

COST OF SERVICE A pricing concept used to design electric rate schedules. This concept attempts to align utility cost curves with utility revenue curves for the various classes of usage and customers served.

CONSTANT DOLLARS Dollars that have had an adjustment made to remove the effects of projected inflation. ,

CUMULATIVE NOMINAL DOLLARS Total actual projected costs.

DEMAND The rate at which electric energy is delivered or used expressed in Watts, Volt-Amperes or other unit, at a given instant er averaged over  !

any designated period. , l DEMAND-SIDE Control of energy and capacity e ats KANAGEMENT (DSM) by modifying or controlling amt ++

or timing of use rather than ,

supply. Includes programs that influence customer use as well as J-1

1

~

• programs that increase the efficiency of transmission and distribution systems.

DISPATCHING The operating control of an inte-grated electric system involving assignment of load to specific generators or other sources for the most reliable and economical supply; control of high-voltage lines and equipment; and scheduling of energy transactions with connecting elec-tric utilities.

DISTRIBUTION Delivering electric energy from the transmission or bulk power system to consumers; also that portion of utility plant used for that purpose, or expenses relating to that plant.

EMINENT DOMAIN The right of a government to appropriate private property for public use, usually with compensation to the owner.

FERC Federal Energy Regulatory Commission HIGH-LEVEL Spent fuel from nuclear reactors and NUCLEAR WASTE the wastes directly produced in the reprocessing of spent fuel.

IONIZATION The process of exciting an atom to a higher energy state than its ground stall energy level.

IONIZING RADIATION Gamma rays and x-rays, alpha and beta particles, high speed electrons, neutrons, protons, and other nuclear particles of sufficient energy to cause ionization of atoms of as particular materials.

XILOWATT (kW) 1,000 Watts. .

XILOWATTHOUR The basic unit of electric energy (kWh) equal to one kilowatt of power supplied to or taken from an elec-'

tric circuit, steadily, for one hour, i.e., 1,000 W x 1 hour1.157407e-5 days <br />2.777778e-4 hours <br />1.653439e-6 weeks <br />3.805e-7 months <br /> = 1 kWh.

J-2

LIFE-CYCLE COST The total cost of owning and op;rct-

• ing a system, supply or demand, over -

its expected life.

LOAD FACTOR The ratio of the average load in kW '

supplied during a period to the peak load in that period.

LOSS-OF-LCAD The probability that the system load PROBABILITY will exceed available generating capacity.

LOW-LEVEL NUCLEAR WASTE Waste garments, equipment, tools, cleaning resins and similar irradiated materials.

MARGINAL COST Cost to produce one more unit.

MEGAWATT (MW) 1,000 kilowatts. ,

l l MELTDOWN A buildup of heat in the core caused by insufficient cooling which causes the fuel to melt.

P MILL One-thousandth of one dollar

($.001). .

NUCLEAR FISSION Power plants based on the principle

' of fission -- the splitting or breaking apart of a heavy atom into twc new atoms. When a heavy atom, such as uranium is split, large amounts of energy and one or more nuetrons are released.

4 i

OSHA Occupational SLfety and Health

' Administration.

PRESENT VALUE An estimate made from projectud '

costs by comput!.ng the effective lump sum payment that would have to be placed in an account bearing I interest at a utility's cost of '

capital today in order to just cover the principle and interest needed to

' meet projected costs. l PRODUCTION COST The variable cost of generation, I

! including fuel, operating labor, t

! maintenance labor and materials.

i l

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, l

[

RADIONUCLIDES A species of radioactive atom ,

j characterized by the constitution of ,

its nucleas. [

RATE BASE The value established by a regulato-  !

ry authority, upon which a utility [

~

is entitled to earn a return.

. Generally, this represents the i amount of property used and useful i in public service and may be based  !

on the following values or combina- '

t tions thereof: fair value, prudent

. investment, reproduction cost, or l l

original costr.and may include working capital, materials and- i supplies, and various deductions  :

such as depreciation. t RATE OF RETURN The ratio of allowed not income to  !

4 a specified ra'te base. . l RELIABILITY Probability that a component or  !

s system will function as planned in a i

given environment for a certain  !

, peL*iod . i RESERVE MARGIN The difference between not system 1 (Capability capability and system peak load; the  ;

Margin, Reserves) margin of capability available for  !

] scheduled maintenance, emergency I

cutages, and unforeseen loads. l 1

j REVENUE The revenue level necessary te ,

REQUIREMENT , achieve a specified rate of return i

{ and recover all authorized expenses. [

t SHUTDOWN Permanently ceasing electric power production. ,

, TRANSMISSION Transporting electricity in bulk  !

from the sources of supply to other  !

i principal parts of the system or to i other utility systeme, also that l portion of utility plant used for  !

transmiscion.  ;

WATT The electrical unit of power, equal  !

to one Ampere flowing continuously l across a potential of one Volt. One

horse-power equals about 746 Watts.

i i

i l

l J.4 l

l

. ratepayers to the extent that expenditures for those -

improvements are snown to be useful.

8.2 Town of Vernon Response The Town of,Vernon, through its Board of Selectmen, submitted a December 7, 1987 letter outlining its concerns over an early closing of the nuclear plant.

The Selectmen said an early closing would be "devastating" for the local employment market and for municipal tax revenues, since Yankee pays most of the town's taxes. One drawback of the Yankee plant is ,

increased traffic on local roads, particularly when contractors arrive for refueling outages. The town acknowledged risk of an accident at the plant and noted emergency planning exists for nuclear and non-nuclear incidents. It also said that time is needed to plan for the eventual lass of the Yankee tax revenues, and that such planning efforts would be compromised by an early plant closing'.

8.3 State Agencies 8.3.1 Department of Health.

Vermont law (18 VSA Sec. 1652 (b), and (d)'and Sec.

1654) grants authority to the Department of Health in matters related to radioactivity and protecting the public health and welfare as well as the transportation of radioactive materials. The department is also allowed to enter private property fo'r purposes of inspection. (In *,he case of Vermont Yankee, concurrence by the federal government is needed for state inspection.) In discharging its duties, the department employs the equivalent of 1.8 persons for tasks such as radiation surveillance, investigating field incidents, emergency response programs and transportation. The department deals with other users of radioactive materials, notably medical facilities. Because other 8-5

{

. i l

users exist, the department said it did not anticipate -

any significant changes in its regulatory role or operating budget if the generating plant were closed. A dismantlement of the plant, whenever it occurs, might result in a temporary doubling or tripling of current manpower to handle added surveillance and emergency preparedness work, the Health Department said.

8.3.2 Public Safety Department, Division of Emergency Management The Division of Emergency Management administers '

federal and state laws and regulations regarding "radiological emergencies." The Division has developed detailed plans on a town-by-town basis for protection of residents and for evacuatioa routes in communities near two nuclear generating facilities -- the Vernon plant and the Rowe, Mass., plant, situated near the Vermont bord.er. The Division has the equivalent of 1.5 persons to fulfill state and local emergency preparedness needs.

An annual payment by Vermont Yankee is required in the amount of $250,000 to defray emergency planning erpenses, a contribution that would cease if the plant closed, the Division said. The Division sees a responsibility to oversoe emergency planning even after a closing as long as radioactive material remains on the Vernon grounds.

0 G

8-6 m

o .

9. CONCLUSIONS i 9.1 Open Issues The study of Vermont's only nuclear power plant has raised many complex issues. The Department has endeavored to identify all major issues, and has discussed those issues in differing degrees of detail.

However, a number of issues are candidates for further investigation. Among them are the following topics.

9.1.1 Expanded Legal Acv= arch ,

i Important questions regarding federal preemption, the Commerce Clause of the U. S. Constitution and the potential need to pay compensation to the plant's owners would likely arise during the debate over shutdown j legislation and any ensuing litigetion. In view of the difficulty of these questions, and the challenge of applying existing law to a new situation, the Department recommends that any conclusive legislative or regulatory consideration of shutdown action be preceded by more exhaustive research than time and resources have permitted to date in this study. The Department will, of course, continue to expand upon and update its legal research during preparatien of the final report.

9.1.2 De: cmissioning The current plan to fund decommissioning carries

certain risks for ratepayers or taxpayers. Further j

review of this, issue is needed to determine whether i legislative action or state participation in a i proceeding before the Nuclear Regulatory Commission

. could provide the public with greater protection in this regard.

1 I Economic Impacts 9.1.3 f

The potential impacts of a Vermont Yankee closing I on the Vermont economy regarding tax revenues, electric

\'

9-1 l

rates and the job aarket hhve been reviewed in the ,

study. The impacts discussed in this report genertily reflect only the primary impacts of shutdown to the state and local communities near the facility. The potential second order impacts have been briefly discussed, yet deserve further study. Higher electric rates that may follow a plant shutdown could creato an additional cost to state industry which could compromise the competitiveness of state industries that rely l

heavily on electricity. .

l 9.1.4 Regional Impacts l About 45 percent of Yankee's output is exported to companies and their ratepayers in other states. Also, l ,

l Yankee's operation raises environmental and safety issues in vermont and elsewhere because of its proximity to other states. An analysis of regional impacts would be needed to identify all relevant concerns associated with a Yankee closing.

9.1.5 Small Power and DSM Small power production is one part of the mix of power vnich would replace Vermont Yankee, but many variables about small power remain to be decided and l l

analyzed. Expanded demand-side management potential is l likewise a large, but relatively uncharted territory.

Ideally, they could reduce the cost of replacement power more than anticipated, but more study is needed to define the potential.

9.1.6 Rate Impacts The Department has made general estimates about rate impacts, but a more precise estimate, possibly by region or utility territory, would be warranted if this issue is studied further.

9-2

9.1.7 Price-Induced Conservation '

Spontaneous initiatives for demand-side management and energy efficiency would follow any increase in electric rates caused by a Yankee closing. Any rate increase would also trigger lower demand, reducing the cost impact for replacement power. These influences on the replacement power picture warrant more detailed study. Any effect would be to lower the estimated impacts. -

9.1.8 Hydro-Quebec Contract f The Department was completing this interim report l at the same time that a number'of Vermont utilities were propos'ing a contract to import up to 500 Megawatts of ,

Hydro-Quebec power over the next 30 years. This potential source would be an 1.portant factor in determining the cost of replacing Yankee's power and needs closer examination.

9.1.9 Vermont Yankee Submissions Vermont Yankee provided substantial assistance in the Department's review of issuch raised by the legislation. However, certain elements of their costs and expense projections deserve greater scrutiny for the

' final report. The Yankee projections of capital costs, plant capacity factor and fuel costs, for ex' ample, appear to reflect optimistic assumptions for future plant operation at the plant. These questions deserve close scrutiny, 9.1.10 Low-Level Waste Costs There are substantial uncertainties ausociated with long-term, in-state disposal costs of low-level waste as they have been developed for, and used in, this report.

Further review of inherent uncertainties surrounding 9-3

estimates of in-state, low-level disposal costs may be warranted.

9.1.11 Cost-Benefit Analysis Further review of cost streams and related analytic assumptions underlying the cost / benefit analysis presented in this report will be necessary for the final report. The effects of lost off-system sales is an area particularly in need of study.

, 9.1.12 A Planned Shutdown This interim report quantifies the effects of'an i immediate shutdown of Vermont Yankee in 1988. Given a lead time of several years, Vermont utilities could potentially acquire a more economic and strategically

. desirable mix of replacement power sources than would be possible in the event of an immediate shutdown. A delayed closing also would permit more comprehensive -

planning for the method and costs of decommissioning the facility and optimizing capital additions and operating expenses to the plant's limited operating life.

The Department helieves that the costs and benefits of a Vermont Yankee shutdown cannot be adequately '

weighed without an assessment of the effects of a '

delayed shutdown and plans to address those effects in  !

its final report.  !

9.2 Interim Conclusions  !

While further study of the issues noted above is essential before firm conclusions can be reached, certain preliminary conclusions can be stated with

(

j respect to the questions posed by legislature.  !

i l

r 9-4 d

. 9.2.1 Authority of the State to Shut Down Vermont -

Yankee Because the U. S. Supreme Court has recognized that states retain significant control over those aspects of nuclear energy not related to radiological safety, thoughtful legislation or regulatory action not based on radiological safety concerns would appear to have a reasonable potential for surviving a challenge based on federal preemption. It also appears that such legislation might survive challenges under the contracts and Commerce clauses of the U. S. Constitution. -

Analysis of the law pertaining to takings suggests that the facility's owners would be entitled to compensation if the plant were prematurely closed through state action.

9.2.2 Authority of the State to Protect Public Safety, Health and Welfare When Vermont Yankee Is Shut Down Upon shutdown, the state would continue to exercise the authority it has always had over areas not related to radiological health and safety. The State would continue to maintain control over occupational safety, emergency preparedness, and environmental discharges.

The State could work to influence the NRC in matters related to decommissioning, and may increase its responsibilities at any time by becoming an "agreement state" as provided by federal law.-

9.2.3 Financial Exposure to the State of Vermont If the state were required to pay compensation to Vermont Yankee's owners as a result of a state taking of the plant, compensation would most likely be based upon the "original cost" method. In this context, this means that the not value of the plant would be determined by 9-5

taking the historical or original cost of the facility, .

adding the cost of cripital improvements, and subtracting depreciation. When this formula is applied to Vermont Yankee, it yields a 1986 figure of $230 million.

Replacemwnt power costs alwo create substantial finaneir.1 exposure to ratepayers discussed below.

9.2.4 Adequate Planning for Replacement Power, Shut-down and Decommissioning To date, the Vermont distribution utilities have not devised a plan indicating how the power sources . ,

available to the state would be used to replace Vermont Yankee if the plant shut down. Moreover, it does not appear that the advantages and limitations of options available under such circumstances have been I comprehensively studied.

If Vermont Yankee were to permanently close in the near future, the utilities would likely need to purchase ,

short term capacity at premium prices for the next several years. If planning were to commence well in advance of a shutdown measure, replacement power could be secured on more favorable terms, and there would be a greater opportunity for the implementation of demand side management measuras. In the long term, numerous opportunities for meeting Vermont's electricity tieeds on

> favorable terms may exist; these opportunities, not accounted for in this interim study, include expansion of domand side management efforts, development of small power projects and development of additional transmission capacity in ordar to increase access to out-of-state markets. Lead time for p3anning and to take the best advantage of market opportunities would be critical.

! The future decommissioning of Vermont Yankee is being funded by payments from the facility's owners into a escrow account. Current plans for decommissioning 9-6 1

-ww m-m9- - - - -

4 e ,w- _

-e, gw-- .---- - - - + - - - - - - - - - . - - - - , - -m,,,- -

--m y-

involve a complete dismantlement of the plant after 2007 (when the operating license expires), at an estimated cost of $531 million at that time. Various alternative methods of retiring a facility are considered acceptable by the NRC; these include mothballing, entombment dismantlement, and conversion to another type of system. Each'of these methods has advantages and disadvantages, and nuaerous uncertainties curround estimates of the costs, and exposure risks of the decommissioning alternatives.

9.2.5 Criteria for Deciding Whether the State Should Shut Down Va,rmont Yankee Based on analysis and expense projections supplied by Vermont Yankee, the Department's preliminary estimate of the not cost of a shutdown (including condemnation payment to the owners) is an equivalent present value of about $569 to $612 million. A cost benefit analysis may provide a reasonable framework for evaluating the appropriateness of a shutdown, although it must be recognized that a cost benefit approach may present i subjective, inadvertent or inherent sources of bias or error.

Major benefits of a shutdown include the reduced i risks of accident and the avoiding of plant operating f costs. These operating costs include capital 1 additions. An early shutdown would also lessen the i costs of waste disposal.

9.2.6 Effects of Shutdown on Vermont Ratepayers, the Revenues of the State, the Town of Vernon and the Surrounding Communities l I

Roughly 89% of Vermont ratepayers rely on Vermont

' Yankee for over a third of their electric energy. The Department's preliminary estimates is that if these  ;

ratepayers were to bear the burden of replacement power r

I I 9-7 i

,_ _ , _ . - .- ,%., , - - - . _ _ , _ . _ . - . , _ , , . _ . . _ , . _ , _ , _ _ , . _ _ _ _ _ - _ _ ., _ _ _ _ _ . _ , . . _ . _ . m , __ _ . _ , , _ _ _ _ -

. costs, condemnation payments and continuing maintenance ,

and decommissioning, rates could increase by 10 percent, not including the effect'of various items that could not be quantified for this interim report.

Vernon, which relies on Vermont Yankee for about 88% of its total revenue base and spending, would be heavily affected by a shutdown of the plant.

Approximately 11% of the town's working residents are employed there.

Of the 327 employees of Vermont Yankee, 186, or 57%, reside in Vermont; these employees have a combined income of $7.7 million. Brattleboro and West Brattleboro combined have 76 Yankee employees, and Vernon has 60. Payments to instate vendors by Vermont Yankee totaled $6.7 million in a recent year. The plant ,

l paid about $3.5 million in Vermont taxes during 1986,

$2.6 million to Vernon during the 1987/88 tax year, and

$235,700 to Brattleboro.

A shutdown of Vermont Yankee would reduce certain expenses related to state oversight and monitoring of i

the facility, including expenses relating to the State  !

Emergency Management Fund ($2 million).

e 9-8

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e 4

Appendix A H.173

No. 38. AN ACT R11ATING TO M COMP 2710N OT A STt'DY AS$tS$1NG 1HE SHtTDO.H CT M VERMCST YAME WCLEAR TACILITY.

(R.173)

It is hereby enacted by the General Assembly of the State of Vermontt Set. 1. VER.MONT YANKIE WC11AR TACILITTL $NtTDOVNg ASSESSMENT (a) The general assembly finds that a publicly conducted 6emprola.netve seenoemt of tae aspect of a Vermont Yaakee nucl est f acility shutdown is necessary. The general assembly hereby directs the departeest of public hervice, with the assistance of the nuttost advisory par.e1. and with the participation of all appropriate agencies of state government, under the direction of the governor.

and in consultatica with representatives of the Tows of Vernon and Vermont Tankee officials, to cause such assessment to be undertaken, and to report interia ! Ladings thereon to the general assessly on er before December 13, 1987, and a final report on er before December 16, 1984. The Latetta report shall include rotoreendations with respect to the resources necessary to complete the final report.

(b) The assesseent shall address, but cet be limited to, the following questicent (1) Vhat authority does the state have to shut dosi the Vermont Yankee nuclear f acility?

(2) Vhat authority does the state have to protect the public saf ety, health and welf are shes the Vermont Yaakes nuclear f acility La sous durn?

(3) What fisantial exposure r.oes the state have when Vermont

• Tankee st.uts down?

(&) !s there adeguate planning to provide for replatepent power and to cover the costs of shutdows and datosaisticatag, waemover Versomt Yankee shuts dost? t (3) ly what economic criteria shcult the state decide whether to shut drvn Verw at Ysskee?

l i

I A-1 I

s

9 ,

e

. t No. 38 Page 2 (6) What will be the effects of shutdown and deceumissioning spen Vewt ratepayers, the revenues of the state, the toen of Versea, and surroundias sessualties?

Sec. 2. D7ECT!VE S m This est shall take effect free passage.

Approved: May 12, 1987 t

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___ _ - _ _ _ . - . . . _ , . . ._,-.,m_, . ~ . _ - - . _ _ _ , _ _ - , - - . - - - . _ . _ , _ - . , . - , , _ _ , , _ _ _ _ _ _ , _

r Appendix B Methodology and calculated Rate Impacts e

o .

APPENDIX B ,

REPLACEMENT POWER COSTS: METHODOLOGY, ASSUMPTIONS, AND DISCUSSION

1. Methodology and Assumptions The goal of the analysis was to provide an estimate of the cost to replace Vermont's share of Vermont Yankee power in the event that the plant were to become permanently unavailable. It was performed on a ,

statewide basis, examining the resources, needs, and future options of the state's distribution utilities in aggregate.

1.1 Approach The costs to Vermont utilities for replar,emenu of Vermont Yankee power were estimate,d by comparing the projected revenues required to meet the state's electrical needs with the plant operating through power j year 2007 to those required if the plant were  ;

unavailable beginning in power year 1988. Present and i expected components of the state's mix were compared with projected Vermont capacity requirements, to  ;

determine the need,for additional generating capacity in each case. A set of generation sources was chosen to represer.t the cost of supply options likely to be available to Vermont. A consistent method of economic decision-making was then used to simulate the selection of future generation additions from among those options in each case.

1.2 Existing and Committed Sources The capacities of present and projected sources  !

that were modeled in all cases are summarized in Table .

B-1. Notable assumptions regarding their pricing and availability include the following (all years are power ,

years, ending Oct. 31).

l l'

VERMONT YANKEE

• Forced outage rate based on the plant's nature I operating history. ,

l I

• Maintenance schedule as projected by Vermont r

Yankee. l NYPA

[

• Current Niagara allocation available j throughout the study. ,

l l

B-1 I

• Availability based on Vt. PSB Docket 5177 assumptions.

ONTARIO HYDRO

• Capacity on the Lake Champlain submarine cable (PV-20) made available by decreasing NYPA deliveries is assumed filled by firm Ontario power through 1992. (Post-1992 assumptions are given below.) .

HIGHGATE,

• Current contracts modeled through 1990. ,

• Last 50 MW modeled same as 150 MW portion 1991-1995.

• Energy price of all 200 MW modeled at HQ/ CMP plus 4% after 1995.

SMALL POWER

• Statewide total of VPX and direct purchases

. increasing to 110 MW by 1993, as in Vt. PSB Docket 5248.

NE'RRIMACK

• Available through 1998.

NEPOOL PHASE I AND .

II

• The present Phase I and II regional contracts provide savings share revenues, and partial capability credits from 1991 to their -

expirations. They provide no direct energy for consumption in Vermont.

1.3 Energy Costs statewide energy costs were calculated using the Department's sysgen production simulation model.

Starting values of fuel prices were based on August, 1987, NEPEX dispatch prices. Fuel price escalations were based on the Departrtat filing in Vt. PSB Docket 5177. The Nepool WeighteC Average Fossil Fuel index was estimated based on Docket 5177 fuel escalation rates and NEPLAN projection of New England fossil generation.

B-2 -

4

. 1.4 Future Needs ,

The state's future electrical needs were projected as in the Department's conservation Case load forecast. l (See the Department's Twenty Year Elaetrie. Plan, Public l Review Draft, Sec. II.4) This forecast was augmented by i system power and all-requirements sales of CVPS and GMP  ;

to out-of-state utilities. The NEPOOL reserve requirement was modeled at 24% throughout the study. l

' 1.5 Replacement Power Options and Costs. l t

CANADIAN OPTIONS P Vermont's ownership shares of the NEPOOL Phase I t and II projects were assumed convertible to long term firm purchases from Hydro-Quebec. Capacity and energy l prices of long term firm power were modeled 44 above i

' Block 2 of Hydro-Quebec's February,1987, letter of i intent with Central Maine Power (HQ/t MP) . The L

{ contractual structure of long term pvrchases from

)

Hydro-Quebec were based on that agrsament, including constant nominal fixed charges based on the first year j of purchase. First year fixed contract costs were inflated by coal construction cost escalations projected i l in NEPLAN's 1986 Generation Task Force Assumptions ,

(GTF). Constraints on energy deliveries were modeled by  !

)

i a 15% forced outage rate.  ;

I i PV-20 l The PV-20 interconnection was modeled as available -

1 from 1993 forward to transmit long term firm purchases, with the maximum firm capacity of PV-20 modeled as 175 l j MW. HQ/ CMP agreement plus 4% was used as a proxy price  ;

l for imports from ontario, Quebec or New York, and v j transmission charges of $5/MWH ($1988) were apolied to l 1 the dispatch price of purchases over PV-20. L

< I MARKET GENERATION

! The cost of peaking capacity was ramped from the  !

1 current market price to the cost of newly constructed  ;

j gas turbines by 1993, which is similar to but revised  ;

j from Department assumptions in Vt. PSB Docket 5248. The l

market price thereafter reflects a combination of new

and mid-1990'k vintage units. Gas-fired combined cycle j

capacity was modeled available from 1992 forward, with  !

v coal-fired capacity available from 1998 forward. Prices  ;

of combined cycle and coal cap & city were modeled to i

' reflect the carrying cost of newly constructed units. -

l overnight construction cost estimates of all three plant types are based on the 1986 NEPLAN GTF and Electric l Power Research Institute's 1986 Technical Analysis Guide I B-3

,1

d .

j -

f r ,

(EPRI TAG). Real construction cost escalations were .

taken from HEPLAN GTF. AFUDC estimates were based on .

l the 1986 NEPIAN GTF capital expenditure schedules and f 4 Vermont utilities' average cost of capital from the i

Department filing in Vt. PSB Docket 5177. Annual  !

carrying charges were estimated using the 1986 EPRI TAG j approach and Vermont utility weighted cost of capital. i t

1.6 Generation Expansion Methodol,gy ,

I The development of the state's future power supply  ;

portfolio was simulated using the same method of a

l J economic decision making in each scenario. Baseload and  ;

intermediate capacity additions were optimised by adding l j 25 MW blocks of capacity to the mix, until carrying l

~

costs of the additions outweighed the own-load energy

], cost savings they provided. Only permanent baseload and 3 intermediate additions were modeled, based on their  ;

l future impact on revenue requirements. Short term sales f j - and purchases were not considered. Further annual

• l capability deficiencies were assumed to be met by i purchases of market turbine capacity.

1.7 Retail Rate Impacts. t I The replacement power analysis above yielded [

estimates of the increased revenue required to meet (

l statewide needs in each Vermont Yankee shutdown case. [

To estimate the impact on Vermont retail rates as a r whole, the revenue impacts of replacement power costs i j were then divided by statewide revenue requirements .

1 assuming continued Vermont Yankee operation. The latter I were projected based on the forecast of' Vermont retail )

rates in Nepool's April, 1987, Load Forecast. The '

i distribution of rate impacts among customer classes was a

not estimated.

2.0 Discussion of Analysis 2.1 Distribution of Costs.

J

The costs to Vermont utilities to replace Vermont i

! Yankee were estimated in aggregate, with total costs l j calculated and generation expansion decisions made on a i

statewide basis. In reality, those decisions would be  !

j made and costs incurred by individual utilities, i

Most Vermont customers are served by utilities that

'l are direct purchasers of Vermont Yankee power. The power supplies of those utilities would clearly be more directly affected by an early plant shutdown than those of non-purchasers. However, non-purchasers could be affected by changes in the price or availability of systen power from present Vermont Yankee purchasers, i

1 B-4 i ___ _ __ _ _ _ _ . , _ _ _ _ _ _ _ _ _ _ . . _ _ _ _

. particularly CVPS and GMP. Non-purchasing utilities .

with surpluses could also obtain some benefit from a shutdown if instate purchasers turn to other Vermont utilities to purchase replacement energy and capacity.

Given the uncertainties in the potential interactions between instate and regional utilities in the event of a Vermont Yankee shutdown, it would be difficult to quantify how much of Vermont's replacement power cost would be borne by the direct purchasers, or what benefits could be gained by non-purchasers. It is t clear that the ability, if any, of non-purchasing utilities' ratepayers to profit from Vermont's increased '

supply needs would come at the expense of other Vermont ratepayers.

2.2 Profits from Rosales This replacement power analysis was performed on an "own-load" basis, and was designed to estimate an optimized cost of serving Vermont's needs in each case.

The cost of an early shutdown of Vermont Yankee would also include the loss of present and potential profits from the sale of power in excess of those needs.

Vermont utilities presently sell a substantial amount of surplus energy, both from Vermont Yankee and other sources, to New England utilities. This analysis did not quantify the effective cost to Vermont of lost revenues from such sales in the event of a Vermont Yankee shutdown.

A similar and potentially greater cost of a shutdown could be decreased opportunities for Vermont to benefit from New England's need for economic baseload power. To the extent that power from Quebec or ontario would be used to replace Vermont Yankee in Vermont's power supply, the state would lose the potential to sell imports at a profit to other utilities. This also was not included, other than to reduce savings shares revenue from the existing Phase II contract.

2.3 Replacement options.

SKALL POWER The analysis in this preliminary report does not estimate the savings that could be achieved by the acquisition of small power at prices below competing supply options. These savings could be large in the case of an early Vermont Yankee shutdown. A recent solicitation for small power production in Maine was met with several hundred Megawatts of project proposals at prices below the utility's long term avoided cost.

B-5

DEMAND SIDE MANAGEMENT (DSM). ,

The estimate of replacement power costs in this study was based on the Department's conservation case forecast of Vermont's annual peak load and energy requirements. The forecast incorporates the effects of DSM measures that are both cost-effective and marketable, and is the Departasnt's attempt to quantify a conservative, achievable target for utility efforts to modify load growth in Vermont. An early shutdown of Vermont Yankee would certainly increase the capacity and energy needs of Vermont's utilities, and could raise the electric rates faced by their customers. These effects would increase the attractiveness of DSM measures to both utilities and consumers.

In addition, this analysis did not quantify how short and long term consumption would be affected by changes in electric rates. The steps taken by customers to reduce consumption in the face of higher rates could significantly reduce the need for new generation, even .

in the absence of formal DSM initiatives by utilities.

To obtain a better understanding of how Vermont Yankee power would be replaced, an improved understanding of the price response of electrical consumers'will be needed.

Q0EBEC If Vermont Yankee were closed early, the ability to obtain additional Hydro-Quebec power would become more valuable to Vermont. Late in the preparation of this study, a number of Vermont utilitien signed an agreement with Hydro-Quebec containing options to increase imports up to 500 MW of long term power. Because imports from Quebec are accessible and can be a direct source of replacement power and an option against which other potential sources will compete, the contract would be one of the more important factors in assessing Vermont's replacement options.

The proposed contract would be important to the state's degren of flexibility in replacing vermont Yankee. It would dictate the size and timing of long term Quebec imports available to Vermont. The total cost of power from the contract would directly influence both the cost of replacement power and Vermont's e.bility to profit from sales of Quebec power to out-of-state utilities. It will be necessary for power planners to carefully study the implications of the proposed contract regarding the availability and cost of power to replace Vermont Yankee in the event of an early shutdown.

B-6 i -__ _ _ _ _ _ _ _ _ _ _

1

! . PRICE OF IMPORTS OVER PV-20 Vermont presently benefits from the import of inexpansive firm power from ontario, over the PV-20 interconnection with New York. The value of this and the state's other interconnections would increase in the event of a Vermont Yankee shutdown. This report's analysis of replacement power costs modeled the availability of long term imports over PV-20 at a price l comparable to that of imports from Quebec, and did not l

quantify the potential benefits of less expensive imports from ontario or New York. While the actual amounts and prices of long term power that will be available from the west are uncertain, long term purchases over PV-20 at prices below those of competing options would help mitigate the cost of replacing ,

Vermont Yankee power.

SHORT TERM PURCHASES In the short term, the bulk of the impact from the loss of Vermont Yankee would be from higher energy costs rather than from the cost to replace capacity. While this analysis quantified only the contributions of long term replacement power sources, an important determinant of the short term cost of replacement power would be the ability of Vermont's utilities to purchase moderately priced energy from existing units in the region. Short term purchases are made routinely in the course of their normal business, but would be especially valuable in the event of a shutdown, enabling vermont to minimize its use of expensive energy from peaking units. Such moderately priced energy purchases may be associated with system power, unit entitlements, or other short term transactions. While New England's short term capacity reserves would be affected by a loss of Vermont Yankee, it is likely that Vermont would still be able to substantially reduce its energy costs during many hours of the year, through short tern purchases of energy or capacity.,

TRANSMISSION Neither this analysis nor that of Vermont Yankee's instate purchasers accounted for the potential costs of alterations to Vermont's transmissior, system that might be required to accommodate replacement power in the event of an early Vermont Yankee shutdown. VELCO has indicated that the necessary changes, if any, would depend strongly on the extent to which replacement power sources come from the north or west, and whether another generating facility is constructed at or near the present Vermont Yankee site.

B-7 l

Secondly, the potential costs and benefits of .

increasing Vermont's interconnection transmission capacity with other systems has not been analyzed. Each of these could be substantial and would require study in the event of an early shutdown.

2.4 Conclusion The extent to which economical DSM initiatives and small power production can be developed in Vermont could have a great effect on the cost to replace Vermont Yankee power in the event of an early shutdown. That cost will also depend strongly on the lo'ag term price of imported power available from Canada and New England.

The Department believes that this report's analysis is a reasonable preliminary estimate of the cost Vermont ,

utilities would face to replace vermont Yankee's power.

Further study of the supply and demand uncertainties outlined above will provide a better understanding of the sources Vermont would likely rely on to replace Vermont Yankee, and the steps that will be necessary to minimize the magnitude of Vermont's exposure to replacement costs.

B-8

Appendix c History of Nuclear Reactor Decomissionings A___ _. _ _ _ . _ _ _ _ . _ _ _ _ . _ _ _ _ _ _

O Information on Past Nuclear .

Reactor Decomissionings ie.,

Po.e i,,e of c=-ii'e "

P , m t, w .., te,s.u e no.<ter '>ee umI L note m'iilena e te n . i .. f.c i im ei ..e.o e. im or.it0,cla.e.

. . ,o.ee.t ee .ie neu,e.,i.

1.i.: i. e e.oe. neH,s ie n e i.. f.c i .i m ei eane. im c e, . u . eei eie ,i.

Aal ( Atttref t Seattee (spette fluid fwel 1 %t $ltadelled lill saet). Det liege, to 10 peut $46e44ood 1964 Pa.la (Pertelle mHlus Po.ee Ptra Plant). Greentene heaters predettlea Seettern, GrePatte

• CeltH141 left IMI*IIII

$lthlead bA steerttH, etter Storate (Leye

• SeelH eeep), 4 ltende D7 4.tettres IH4 I Citt (Carellat vtrglata lobe Ptollve e tote. Il m Pattive tafe 8ee n er), Parr. It heavy etter Storate toeled and (selheellet) asseratH helles hvtleet Power $rephite sneerge ll4 left {atented IIII FHility. Nellee 44 toe,testus 800104 45 m tatssted IHf Plews hotleer Deser Ortenic tooled fettllty. Pitse OM sad esseretH tot eith nucleet 64 lett (etenced III0

$0mW1 (Dellinp Ntleet Sweefteater Peser Ste* tweeMeellat tien, 01404 Pt IIII cetter hee 6 Reteerth Seettet. Si 14eeel %*S4 94 kWt $18edallet

' bethingles, DC ' hemogengest feel pettflaser, llees fellt, $4 000 with twtlear 190 lett Pettlee $4fe llII leperhee t tag Steroge (sett.

belb g) with llees P leal

, seeeerstea 4 lef t Perttilly llII led, Lyathew e g la Peel 9ttesagles tie le metal . Deutlened, llIl (Da.1 (tseerlmatal f ett esteatea.aeted, treeeer teatteel, teeled tea ,,eted fee 14elltellte. Il pwellt M tell Seiten kW41e+P laeotlegetal Ptit e $$ left Pett19e $4fe IIIl I H illts, lestem, P4 $tetete (esthhelled)

S(fee (lenthuell(6eefleont4% le$id teeled, $$ = Pellite lefe  !!II felt Salet teetteel, felt StPilllef. && S.ter490theelled)

(

Llt Gle*' heetter. Dd ellt fettil 64 Itts $t6asatted eith steen pleat 1974 (14 Ol'er 881 e 6eseceeettet teatertion C-1

e ne PeWe free of tese

_PetH ttr men) a w ( M etten Seattte frH 84 ttae Det aan t a t t ea t a s orteentisteage 45f t ( Aeroepece feit . It wt 01 asatled heettee), t.l. Ate Feete, 1934 hAU. f t. Weeth 18 6ft (Leowns fut heetter). . le mt et tasatlH 5.1. Ate forte. half, lift it. Worth, f3 R14 (toutteit, fell . t *t Ot6aestled 1974 noteelp). W.l. Ate feete, auf.ft. weth.18 *

• f( kl I. stenr.e (e. al ledive toeles. 100 Nt Pettive lefe telt it?l Steeste (moth.

bettHI esta stese plaat s ea.ees ten Pu la (Portatie most.e Posw Pvt 9 part et tesatlN 197)

Plaet). Antsetttaa u*t (neaters felt tenteel. Creeelte fece filenatlN 6971 tianlene, un asseretH Powee 14k (lae.steigt Seestae Peel l pt.t peettetty tg))

teneratoriet lac hiserth eitmentiw SeHter). Platestere. 8LJ 6t (ttle, ateneva Co.. (a See .ith antine 17sht testive lefe .

supeeHating St6eate (sethballH) tilt fl.more46. lowenti. CM Light water 100 twt inntee lefe .

Stees ee testn6s tlH Peu t bettes 1 Ces teelH. lit past p u tive Safe teet Co., n gesentte Stecap emeeestH (methulleg) 994 (tellMttet teillag BWI $4 Met festlee lefe .

bette teetteel. Stees ,e (sett.

Alesees to.. (A galles)etta Stese plaat ete.ectice telttatmet felt Auster, feat H eart Pullee Sete talte mills. #4 , Swey (methWilH) 54 llesl.a heellee Grapatte 30 part Pettive Sefe 1.eeri-at l . 616aentileg ameerstet. Stero p lasta. In progent teste notens. (A sedles belles . IMF) ei e. nq lieetes 19i6

(

ie aa i.y are si. to sa-=1 ,witi tein) w in.wiiitml.

y tomiiem..m isew m=,n u b o,nn tu w euen .enaie ery w nte=cmm.w neweiwe se m nwm

• is att enticate.

e eus in, leliem""a' sesT iuteeiww iin w ennatist= seetenn touse,ve.g.

unin ute.nwe, .ita e.uweiI=v uneiiw p oem espirient tw 1is .c,ene.=e

...wi.=e se e. iees., niin le (re ceuwse eas Pen

=ta.ei. a w *e,,c.ewi

= ==m nie=4 ru n u,. u own met now ennaie,, mac =, me=.ue iew m i.i,

. ewmt,.i i meweistian, umietw .its w Iule 54 CM Per% uhe (f)e.u uti enemis.l.e IM.N pe.elen Lne eglM.Wsw et 4 litantes my cased hit seeettieg ligente le 4 poebesti galy litease tefw ine si w vim .wi e=,=16 .m4. to us.ev, e .ini mws==.citei

,.wetia w w es, a en wewentw.e w r .i e.e ma.ao.. --

Reference:

Techeloitv. Safety and Costs of Demmdssicning a Reference Ibiling Water Reactore N1. REG /CR-0672, Main Reporte Chapter 4.

C-2

7

- Appendix D Low-Level Waste Disposal 1

l l

l l ,

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,r p State of Vermont  !

ebb ^; - ADVISORY COMMISSION ON LOW. LEVEL RADIO ACTIVE WASTE

. Cent *t Building i 103 South Mon Strut  ;

Waterbury, Vermont 05676 l l

i h N o vit a b o r 19H7  !

t MEMORANDUM TO: Rick Sharing Group

• FROM: Laurertco Becker. Special Assistant. Radioactive Waste Management. Vermont Agency of Environmental Conservation t RE: Low Level Radioactive Waste Shipped from Vermont 1979-1986 <

l Attached is information on generated waste shipped from Vermont l from 1979-1986. FigurW have been broken out for the two major

r generators (Vermont Yarkee and the University of Vermont) and a i

category of other generators. Volume, curies, cisasit'ications i J

j where known, and an entiente of the number of shipments care l shown.

The information has been derived from a number of sources 4 including: Telephone calls to Vermont Yankee and the University I

of Vermont; the Conference of Radiation Control Program  !

Directors. 1984 survey; E. O. and O's State by State survey; and l interviews with Ray McCandless. Director of Vermont's Occupational and Radiological Health Program. l An explanation for some of the figures is warranted. In 1983 and 1985 Vermont Yankee's curie content jumped because control rods l were shipped. The higher volume figures from Vermont Yankee in 1985 were due to pipe replacement activities (e 5700 ft' of the

{

total figure is dismantled pipe). In 1983 there was a significant volume shipped by the General Riectric Corporation.

That year General Electric ended their testing' program of uranium tipped anti-tank bullets and shipped the remainder.of their waste I I

from the test site.

i LB/1w . j

' I sA shipment can reprs ent a single package or as much as a '.'uck f load.

D-1 i

i i

LOW-LEVEL RADIOACTIVE WASTE SHIPPED FROM VERMONT 1986 ESTIMATED YEAR OENERATOR Ft* 1 OF_ TOTAL CURIES  % OF TOTAL CLA3S=Ft'/% TOTAL A,B & C SHIPMENTS ACC6 V'rmont e Yankee 11,475 94.19% 310. 99.71 % Class A=10,3'60 ft*/90.28% 73 Class B: 1,036 ft'/ 9.03%

Class C= 79 f t*- / .69%

Univ. of Vermont 675* 5.54% .700 .221% Class A = 8675 ft* 2

[ Middlebury College 15 .12% .0022 .001% Classk= 15 ft' 1 V.A. Hospital 15 .12% .011 .004% Class A = 15 ft* 1 Medical Center 3 .03% .200 .064% Clans A = 3 f t* 1 Hospital of VT 1986 Totals 12.183 100.00% 310.91 100.000% Class A=11,068 ft*/90.85% 28 Class B: 1,036 ft,'/ 8.50%

C1ssa C: 79 ft"/ .65%

183 cubic feet of this amount was stored for decay and shipped to a Weste incinerator in Florida 6 .

IDW-12VE1. RADT0 ACTIVE WASTE SMTPPED FVON VERM00fT 1982 - 1985 ESTIMATED l 3 3 SHIPHENTS t CBERA10E Ft 10F 1UfAl. C1 RIES I 0F 1UTAl. CllSS = Ft /I 1UTAl. A. 8 A C 99.521 "et Available for 1982 35 2 Vermeet Tomkee 15.925 95.591 209.400 3 4 Univ. of Vermont 675 4.051 700 .331 675 ft A= 60

" 3 3 Other Ce ciators 60 .361 .300 .15%

1 42

Totale 16,660 100.001 210.400 100.001 5%

Versomt Yankee 15.016 51.881 57.501.000 99.9940% Not AvailabL' for 1983 3 4 893 3.081 .700 .0010% A. 893 ft Univ. of Vermont " 83 Ceneral Electric 12.975 44.831 2.645 .0045% A - 12.975

" 5 60 .211 .300 .0005% A= 60 Other Ceneretors t.>

152 Tetelo 28,944 100.001 57.504.645 100.00001  ;

A = 11.2% f t /91.851; 8 - 310 f t /2.771: C = 662 ft /5.38% 36 Versomt Yankee 12.298 94.141 281.000 99.65%

" 4 5.401 .906 .32% A- 705 Univ. of Versomt 705 A= 60 " 3 3 Other Ceeersters 60 461 .07458 .031 43

~

Totale 13.063 100.001 281.98058 100.001 A - 12.061 ft /92.3X B - 340 ft /2.601: C - 662 ft /5.071 A = 17.753 ft /91.441; B-1.166 ft /6.011: C = 495 ft /2.551 45 Vermont Yankee 19.414  % .571 17.272.000 99.994%

" 4 630 3.131 .700 .004% A- 630 Dair. of Vermont 50

" 5 60 .301 .300 .0021 A-50ther Generatore A = 18.443 f t /91.741; B-1.lf6 f t /5.801: C - 495 ft /2.461 54 his 20.104 100.001 17.273.000 100.0001

LOW-LEVEL RADIOACTIVE WASTE SHIPPED FROM VERMONT *1979-1981 ESTIMATED YEAR GENERATOR Ft* 1 OF TOTAL CURIES  % OF TOTAL CLASS =Ft* /% TOTAL A,B at C SHIPMENTS 19'i9 Vermont Yankee 9,551 88.53% 999.

99.80% NA 25 ,

Univ. of Vermont 375 3.48% .700 .07% Class A = 375 f t" 4 Medical 15 .14% (1. -

Class A= 15 f t' NA

, Industrial 847 7.85% (1. -

Class A = 847 ft' NA 1979 Totals 10,788 100.00% e 1,001 1980 Vermont Yankee 17,072 94.94% 920. 99.78 % NA 50 Univ. of Vermont 788 4.39% .700 .08% Class A = 788 ft' 4 i?

d Medical 15 .08% (1. -

Class A = 15 ft' , NA Industrial _ 106 .59% (1. -

Class A = 106 ft' NA

, 1980 Totals 17,981 100.00% e 922 l

i 1931 Vermont Yankee 15.432

~

93.50% 1,103 99.82% NA 44 1

j Univ. of Vermont - 953 5.80% .700 .06% Class A = 953 ft' 4 Medical 15 .09% (1. -

Class A = 15 ft* NA l Industrial 35 .21% <1. -

Class A = 35 ft' NA 1 t

! 1931 Totals 16.435 100.00% el.111 i.

l

]

Appendix E .

Operating History l

I j

• . 1

• 1 1973

)

+-1972 0 Nl0 J FlWlAlM JlJlAlS O Nl0

'" II III III II l I III III I [*

4O II IIIiill I I"80 I

400 - -

p 350 - -

N300 - -

250 - - g 200 - -

_ _- *0 $ '

30 E 150 -

20 coo - -

to - - o O

0 172'T 23 5 6 8 911g\ 5-1:

SHUTDOWNS 73 7 : REPAIR LEAR IN STEAM 7314 : OfF GAS DETOM ATION 72-1: AEC OPERATOR LICENSE (WITNOUT LIGHTNMS) AND i

EXAMINATIONS TRAP ORAIN LINE 7/stre00).7/7(0400) Asc REACTOR OPERATOR j 12/i2(0300).12/14(Oe00) 73-e : REACTOR SCRAM (DUE TO /9( 0 -9/NI )

72 2 : LOSS OF STARTUP MSIV CLO5URE SHIN AL TRANSFORME R M OROUNDS 734S: IE.lN F 12/270000).1/10/73(0900) RgLTING

( CHANNEL FR09LEMS, AND 73-1 : FUEL RECONSTITUTION 1 7/9(1600).7/8(2200) TURBINE INSPECTION 1/17(1100).3/2(0500) 9/28(2400).ll/19(0500)  ;

73 9 : REPAIR LEAM IN 7 3-16 : HF TURBINE FL ANGE LEAK I A A 10. EClRC- FEED WA R LINE J N T8 C Tlt AND VALVE 7/31(0400).8/l(0700) l SQO). 9 0) f

( 3/24(0500).3/25(1900) 7310: Rg g TIVITY 7347 PEEDWATER TRANSDUCER m,,,y,gEJ,1,e gp y,g,Sio 3

gjTyrggn 4

,t /lt$ 0}

l700 1 02 , )

13 - 32 ) II*II AMINE R P RESULT

( ).4/27(1100) g'V. /22t2* 1 2kl000 /h1500 73*20 STA A SY E$

73 5: SAS A ON 73 12: F G AS DETON ION g 4/12(2400).4/14(0000) s/3th5N 9/lf0700) 73 4 : RCIC VALVES e6 & ett 7313: OPP GAS DETON ATION OUT OF COWWISSION (wlTH LIGHTNING)

S/26(t900).4/27(0400) $/3(0500).9/4t0600:

] INITI AL TE STING LOAD RESTRICTIONS: it orr. eAS LIMITATMNS III Fu tt. DENSIFIC AT!ON E-1

l -

la 7 I 19 7" M.A "

600 ,

550 00 E 500 -90 b 450 80 400 70 a m 330 60h0 3t 300 2

50 ,,,

15 y5 5 800 30!

ISO 20 100 10 0 78

=

12 g gigl2 14 15 16 1 23 45 6 9 5

x ,

ft A[7 1/s(oaoo).VS(1200)

Nt )

4/27t0000).4/2speool

76. l l NRC DIRECTro coat sPR AY

$8,$Pj,C$0["eN

'**E" McN).2/19tttoo)

74. t : stacTom senAu ron " *

• D OE !$4 d 000$. ( Ntisoo .Nm o4oo) 75 2 :

ggojNyC,to ruth

->7.m m - : e.Y e e* m a umuns

/s. : atPain Le Axsee aeeinc.

$7tEsoo)!t/se(isool N7"vite *uwt EIscE*$a 74 4 : atAc704 senas rnow I"$NolYs/sds5cW s/ MM AAN 2/z5(N/ ash) 74.H suvroowM SV WUt.717t2 W3 0 l*3/24(12ool

"-' ilsM"!?r#"ol @*8al,N,$o)7'*' *:$fgo["qr)

~

, f, g NNI.YiYoeob 8(0 I 7 74 18: t**st 74 7 : A to LEAu ,

iot m bAA s/s tosoo) . 3/is(14ool

[ANCggyA44 Nf7 7e.e:qsj p g fue d/SUloo).4/6(21oo) 76774/ A L WtAR 74.e : atciac. PuuP s Ptto 7(0'00 *8/2'I33001 NM"4gg/o) A 7s.e : etPA iMHsgt u ,oi .. rt,.. , ,,e A,

~7=== wi(irooi 4 2 */i(22h Actus N/9(230C4-II/lollioo)

LOAD RESTRICTIONS U A JISTR ATNE Llu ty .80 %. H14H dry g A g Z ADMINISTRATIVE LIMIT -80% -/UEL CHANNEL VlBRATION E-2

• e 1977 1974 J F 600 -

00 SSO -

90 S00 450 '-

400 to 350 N300 150 40g

' 200 30 E ISO 20 100 I

I i 2 34 5 6 j 9 4 2 J 4 S I

II*l 76 -1 : CONTROL ROD [ND SC DUL

) PATTERN CHANGE MAINTE N ANCE 1/16(2300)-l/18(1800) 1/8(0300) l/9(0900) 76-2 : TORUS INTEGRITY 77 2 : ROD PATTERN CHANGE,

.f/h 1 -2/15(0300) $hfgTA REPAlR E

LE Y L N 3/26(0200) 3/27(1600) 76-3: TE E 3/22(0400)-3/23(0600) 77 3 REFUELING OUTAGE III l 8/19(2400) 10/8(1800) 76-4 : RESIOUAL HEAT REMOVAL 16(04 1 4/ 8(0600)

~

hR UC Y REACTOR INSTRUMENTATION 10/9(1200)-10/9(2400) 76-5 : AUTO SCRAM FROM 88%

POWER INDUCED BY 77 5 ROD PATTERN CHANGE AND REACTOR COHTROL DRY WELL '

INSTRUMENTATION. 12/10(0100)12MAIN

/11(14 0T0 E

) N ANC E 6/l6(1400)-6/l7(1000) 76-6 : REF1JELING OUTAGE II 6/19(0200)-8/7(1900) 76-7 : TURBINE BEARING VlBR ATION 9/8(0500)-9/13(2000) l

\

76-8 : RELIEF VALVE SOLENOID >

POWER SUPPLY l OROUNDED -

9/140000)-9/15(0900) i 76-9 : STEAM LEAK LOAD RESTRICTIONS (SJAE ROOM)

ICV 23CIOO)-lCV2410700) f II FUEL COAST -OOWN t 76-10 : "B"CLE AN UP SYSTEM EII FUEL COAST DOWN FLOW SWITCH  !

MALFUNCTION 10/25(0400)-10/26(0500) f E-3  !

r

~ . . _ _ - - -_

t 1978- 1979 ,

J F M A M J J A Sl0lN O J F M A M J J A S O NlD 55U i i i 1 T, ico

) ,

500 -~

go 450 - ~~

80 400 ,

70 350 '-

gy g300 y' E 150 p E 200 -

h 150 - -

ioo - 20 So _

7 f 10 S

0 0

1 2 4 5 6 '. 8 9 I

'4 5 3

~

0 STURE SE AR ATOR I/6(1200) l/7(1300)

'I' ffl6(O - /3( '

R P '$ "

78 2: AUTO SCRAM INDUCED 79

• 2 kt (C A NTE A CE SP TION BULLETIN 8/10(l700)- 8/l4 (1003) p 2/3(1400)-2/4(0300) 79-3: AUTO SCRAM INDUCED BY EPR 78 -3 ; AUTO SCR AM INDUCED ' /k($803 f3 5(07b )

BY INSTRUMENT SURVEILL ANCE TEST 79-4 REFUELING OUTAGE I 3/21(10 00)-3/21(210 0) 9/2 2(0113) -11/3(214 3) 78 4 : RECtRC PUMP OIL 79-5: AUTO SCRAM INDUCED BY RA " "

3!03($00)-N26(1000) eRAION

, 78 5: TORUS SUPPORT MODIFICATION AND SURFACE CRACK REPAIRS 7/l(2300) 8/l4(0900) 78 6 : REFUELING OUTAGE IZ 9/16(0200)-10/13(1500)

Cl C PUMP VE ED wi8(OiOO)-lo/is(0300) 78 8 . TURBINE BE ARING OVERHE AT W@ MMRCWE 10/2 3(0f00) 11/l(1300) IIII FUEL COAST DOWN 78 9 : AUTO SCRAM INDUCED By II ADMINISTRATIVE LIMIT 90*/.-

h25( hI/26 l 20 I FUEL COAST DOWN E-4

e 1980 19 01 ,

J A S O N O F A O N D 600 - --

55. _- -

.g j

- - = -

500, -

3 90

" --=

450 80

--=

400l 350 l

--=

60 l l g .

• - E g$o g

- U g

200 i . m l '

150 ,

,~ 7-

! _ -- 20 goo SO yi jo 0 2'3 >0 2 3 5 6 7 'I 4

l l

80 - 1: RHR VALVE PACKING 81 1: 8 LOWN FUSE IN REACTOR MAINTENANCE PROTECTION SYSTEM (DRYWELL) 5/11(1002)-5/13(0335)

I/5(0 915)-l/6(12 21) j l

61 2 : AUTO SCRAM DUE TO MPR MALFUNCTION l 80-2: NRC NUREG. 10/16(1250)-IO/16(2400) l l 0578 MODIFlC ATIONS I/3I(1709)-2/4(2332) 81 3: REFUELING OUTAGE III 80-3: MAIN TUR8lNE STEAM SEAL 10/17(0001)-I2/4(1333) -

REGUL ATOR LE AK 81 4: RECIRC PUMP SE AL LE AK i-3/31(0126)- 4/2(12'42) l 12/5(0220) 12/7(lll4) l r

80-4: FEED WATER CHECK VALVE LE AK [

6/11(1710)- 6/l3(2043) si .5: AUTO SCRAM OUE TO i-MAIN TURBINE PRESSURE i 80 5: AUTO SCRAM CAUSED BY REGULATOR MALFUNCTION F 1

TURBINE TRIP OUE TO HIGH 12/26(1944)-12/27(2035)

E RA RA N TA K 6 /I T(1401) - 6 /l 7 ( 22 31) l

$k L LE A CONTROL ROD ORIVE SYSTEM TEST 7/12(1125)- 7/13(1736) 80-7 : REFUELING OUTAGE TI 9/26 ( 2334)-t2 /28 (1948:

LOAD RESTRICTIONS ,

II FUEL COAST DOWN {

i

(

E-5

I- '

l980 5981 JlJ A S O N O J _

0

, I I I 550 , 4 l i

.g 500 -

, 90 450 -

80 400 -

350 -

30 0 h 2 ~

1 150 y 100 h 150 20 l

100 l 50 [ 10 l 0

t 2 3 3 6 7 i 2 34 -70 4

l l

l l

80 -1: RHR VALVE PACKING 81 I: BLOW). FUSE IN REACTOR MAINTENANCE PROTECTION SYSTEM (ORYWELL) 5/110002)-5/13(0335) l/5(0 915)-l/6(1221) 81 2 : AUTO SCRAM DUE 80-2: NRC NUREG. TO MPR MALFUNCTION 0578 MODIFIC ATIONS ~

10/16(1250)-10/16(2400)

I/31(1709)-2/4(2332) 81 3: REFUELING OUTAGE ZI 80-3: MAIN TURetNE STE AM SE AL 10/17(00011-f 2 /4(1333) 31 26)- 4/2(f222) el .4 RECIRC PUMP SEAL LEAK 12/5(0220)-12/ 7(ill4) 80 4: FEED WATER CHECK VALVE LE AK 6/11(1710)- 6/13(2043) 91.$: AUTO SCRAM OUE TO MAIN TURBINE PRESSURE 80 5: AUTO SCR AM CAUSED BY REGut.ATOR MALFUNCTION R IN 01 TURE SE PAR A DRAIN TANK 6/l7(1401)- 6/17(2231)

~

Ak Lv LEkK CONTROL ROO ORIVE SYSTEM TEST 7/12(1125)- 7/13(1736) 80-7 : REFUELING OUTAGE E 9/26(23341-62/28(1948)

LOA D R E STRICTION S II FUEL COAST DOWN E-6

1982 4983 JlFlMlA M JlJlA SlolN O JlF M AlM J J A Slo NlDI 4 EM E EMEEE E M zggg um., *,o

{' ; p i

sx . m. .

7 ,'i l l r EE: : l l'

'" l' l -k  ; 3 E' U!-  %

m a. ' -

333 , wg w:

REEEE -a

==

ggg .

,g EME 20 E!EE

,o

. 2 3 56 7

i 8

EMB 2

~

3 I .

82 - 1: MotSTURE SEPARATOR 83 - 1: MANUAL SHUT 00WN TO REPAIR STEAM LE AK IN DRAIN LINE REPAIR MolSTURE SEPARATOR 1/26(0142) l/28(ll29) ORAIN LINE PIPING t/8(0413)-l/10(0901) 82 2: AUTO SCRAM OUE TO HIGH NEUTRON FLUX 83 2: REFULEING OUTAGE 3/30(2040)-3/31(2040) 3/5(0000)-6/19(0501)

~

v EL LEV 83 3: AUTO SCRAM FROM 93%

POWER HIGH VESSEL TO A FEED WATER CONTROL WATER LEVEL-OPERATOR SYSTEM MALFUNCTION ERROR WHEN GolNG FROM 4/24(0059)-4/24(2315) AUTO TO MANUAL FEE 0 WATER CONTROL 82 - 4: DRYWELL FAN REPAIR 8/2 T(0030)-8/28(1243) 6/8(1658)-6/11(0355) 82 5: AUTO SCRAM OUE TO MANUAL PRESSURE REGUL ATOR MALFUNCTCN 8/15(1030)-8/16(0843) 82 - 6; RECIRC PUMP SE AL REPLACEMENT 8/27(23371-9/l(0132) 82 7: MAIN TURBINE MotSTURE

. SERARATOR STEAM LEAK 10/i4(0 3:1) 10/16 (2 3 31)

E-7

. .. . ~. - _. ,. - , - _ _ _.- _ . _ _ . .. - _ _ .._ .- - -_.__- .-.___.-__-. --. -- .....

e 1985 1984 J FlM A M J J A S -

0lN O JlF MlAfMlJlJfAlSl0lN)D 550 1 I  !!IIil I I I

.,ioo l

500 --

,90 450 --

80 400 --

p ;

w 350 B M0

-e l @b g3 t 60 o 150 -

y too - E- 3 '#0$

,SO 1z hzE 30 E l 3, 20 '

loo

-f ,

50 -y 'O O 12 3 2 4 S6 7 8 1 j

1 1

84 1: AUTO SCRAM FROM 85 -1: AUTO SCRAM CAUSED BY FULL POWER-PRESSURE SPIKE TURBINE TRIP INITIATED ON TURBINE CONTROL SYS, BY FAULTY CORE SPRAY t/5(1252)-l/7(0514) TEST SWITCH 2/6(1104)-2/7(0731) l 84 - 2: MahDAL SHUTOOWN TO REPLACE EXPANSION 85 -2: REFUELING OUTAGE I i JOINT ON MAIN CONDENSER AND RECIRCULATION PIPE 1/10(1258)-l/24(0955) REPLACEMENT EFFORT 9/20(2144)- 7/ 5/ 4 84 - 3: AUTO SCRAM INADVERTENT MSIV CLOSURE .

4/l4(0742)-4/17(0102) j 84 4: REFUELING OUTAGE 6/15(214 9)- 8/9(0118) ,

84 5: WANUAL SHUT 00WN i INBOARD MSIV POSITION INDICATION PROBLEM 8/9(2216)-8/12(0554) ,

l 84 -6: MANUAL SHUTOOWN  !

MIGH CONDUCTIVITY  !

CONDENSER TUBE LEAK l 8/l4(l232) 8/15(1940) i 84 7: MANUAL SHUT 00WN TO INVESTIG ATE STE AM I

N ACTOR VESSE II:I FUEL COAST 00WN 9/18(0 5181- 9/2 9(0 9 21) L" FUEL COAST _00WN 84 -8: MANUAL SHUTDOWN TO INVESTIGATE MSiv I TIMING PROBLEMS 9/30(1500)-10/2(0921) l l

E-8 ,

l

. VERMONT YANKEE NUCLEAR POWER CORPORATION ,

l

• Average Cost of Pett Powr Generated Since date of Comercial Operation November 30, 1472 Mills per Cun. Mill s Period Net WH Co st Ne t W H per ht hR 1972 176,029,830 3,754,342 21.33 1973 1,814,375,000 48,077,127 26.50 Cum. , 1,990,404,830 51,831,469 26.04 1974 2,482,564,000 51,019,038 20.55 Cum. 4,472.968,830 102,850,507 22.99 1975 3,561,206,000 56,493,212 15.86 Cum. 8,034,174,830 159,343,719 19.83 1976 3,260,016,000 53,014,861 16.26 Cum. 11, 294,190,830 212,358,580 18.80 1977 3,537,675,000 61.111,795 17.27 Cum. 14,831,865,830 273,470,375 18,44 1978 3,240,697,000 61,637,509 19.02 Cum. 18.072,562,830 335,107,884 18.54 1979 3,448,842,000 65,981,810 19.13 Cum. 21,521,404.830 401.089,694 18. 64 1980 2,979,214,000 78,339,803 26.30 Cum. 24,500,618,830 479,429,497 10. 57 1981 3,568,707,000 88,170,620 24.71 Cum. 28,069,325.830 567,600,117 20.22 1982 4,174,255,000 106,256,013 25.46 Cum. 32.243,580,830 673,856,130 20.90 1983 2,874,475,000 113,069,705 39. 34 -

Cum 35,118,055,830 786,925,835 22.41 1984 3,335,832,000 117,008,959 35.08 Cum. 38,453,887,830 903,934,794 23.51 1985 2,999,402,000 118,867,577 39.63 Cum. 41,453,289,830 1,022,802,371 24. 67 1986 2,058,426,000 126,878,055 61.64 Cum. 43,511,715,830 1,149,680,426 26.42 Reconciliation of Generation reported by Treasury Department with Generation reported by Operating Department Cumulative through December 31, 1985 Generation reported by Operating Department (1) 43,758,676,000 KWH Generation reported by Treasury Department (2) 43.511.715,830 KWH 01ffarence 246,960,170 Reasons for Difference:

Generation prior to comercial operation date included in Operation Department total but not in Treasury Department Total 246,960,570 1972 generation rounded to nearest thousand by Operation Department but not by Treasury Department (4001 Total 246,960,170 (1) M.R.C. Monthly Statistical Report (2) See File Folder te. 73 M 2/3/87 - - - - - - - - - - - -

M ,  ;

I . .

Appendix F -

Vermont Yankee operating Expense Projections

(~ ., , '

SCENARIO: 1987 SHUTDOWN WITH CONDEMNATION PAYMENT FOR THE TAXING OF AN ASSET ASSUMPTIONS o Base 0 & M, Operating Projects, YNSD reduced to the following percentages of 1987 expenses adjusted for inflation.

Year Percent 1987 Expense 1988 755 1989 50%

.1990-2003- 25%

o Shutdown Expenses eliminated after 1987 o Spent Fuel is not shipped until 2003 o Variable and Fixed Expenses (except for Insurance and Decomissioning) eliminated o Insurance reduced to 25% of.1987 level adjusted for inflation, O after 2003 o Decomissioning - same as Base Case o Capital Expenditures taper off beginning in 1988 to the following levels adjusted for inflation Year Percent 1987 Expense 1988 75%

1989 50%

1990 355 1991 15%

1992-on 0%

Reference Infonnation and assugtions supplied to the Department by Willim J. Daley in letters dated Novmber 6,1987 and November 19, 1987.

F-1 l

1 . .

l l

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1 ,

Appendix G Plant Capacity Factors O

e 4

/

)

• l

.i e

' 1 APPENDIX G Vermont Yankee Nuclear Power Plant Plant Capacity Factor 1972 - 1986 Iggt Cmnacity Factor 1972 33.6 1973 40.3 1974 55.1 1975 79.1 1976 72.2 1977 76.6 l 72.0 1978 i 1979 76.6 1960 65.9 1981 79.2 1982 ,

94.4 1983 63.8

! 1964 73.9 i 1985 66.6 1966 45.7 a

l Plant Capacity Factor shows actual output by a generating station as a percentage of its full I Fotential.

1 l

l (dps .12/67.co) i G-1

i

? .

j I

! ANNUAL CAPACITY FACTORS Vermont Yankee Nuclear Power Corporation 5- 100 --

0 HDC (gross 535) 43 MDC (net 504)  :

l 0 80 DER (net 514) ........,-.......................

~

4 Thermal '

q. l

[

j h.  :

, 60- ---------------------- -- -- -- -- -- -- -- -- -- -- --------

l l

4)  :  :  :  :  : .

~a  : . .  :  :  :  : :_

p g 40- --------

p --

E -;  ;

j -- . -- -- .

]

g -

4  :  :

E s

i O_  :  : .

4 20- --------

O li i

! .  !  !  :  ! E E

i i "

i , i  ! .

i X 0

~ ~ - ' ' ' - ' -

i 1972 1974 1976 1978 1980 1982 1984 1986 l 1973 1975 1977 1979 1981 1983 1985 Years _

O  %

e *

[ .

o Appendix E '

vermont Yankee Ownership e

+ .

8

,= .

O APPENDIX H e

Vermont Yankee Nuclear Power Plant Plant Ownership s

4 Joint Owners ownership Green Mountain Power Corporation 17.88 Central Vermont Public 31.29 Service Corporation New England Power Con.pany 20.00 The Connecticut Light & Power Company 9.50 Public Service Company of New Hampshire 4.00 Central Maine Power Corapany 4.00 City of Burlington Electric Light Departnent 3.57 Western Massachusetts Electric Cen.pany 2.50 Canbridge Electric Light Company 2.50 Montaup Electric Company 2.50 Vermont Electric Cooperative, Inc. 1.05 Washington Electric Cooperative, Inc. 0.61 Village of Lyndonville, Vermont -

Electric Departt.ent 0.60 100.00 Non-Ownerg Village of Morrisville 0.28 Village of Morthfield 0.43 Village of Stowe 0.26 Village of Hardwick 0.11 Village of Orleano 0.24 Rochester Electric Co. 0.06 Allied Power Co. 0.16 l

owners of the Yankee plant receive dividends in an equal percentage of plant ownership. Their share of the plant's cost and output is limited to the. percentage of ownership. Non-owners are obligated to pay their share of costs and receive their percentage of output but do not receive dividends.

(dps.12/87.co)

H-1

A l

1 1

Appendix I community surrounding vernont Yankee 4

I I

l P

l L

W

j . >

@'Wa-N "'

y

'~{4%ffQ)3&MF9-%I((F Nr ,*-* -" '*" .WOODED HILL 3 *

'f' NO.3 MONITORINO A

~ D-T"[ y. 'd$';a.y.h.. ~

,'* f, '

FLAT FIELDS gy$TATION -

• PICNIC AREA CENTRAL -

-- -Q{.' - kQ~'['.'." _._;, . -.

~~

-- O p " ""* 7" , g,_, : "~

• VERMONT RR u rsa.

.. . m e-m- ,"...;p # *!

-.2N :- ~ b. ,f.

-- C# ' "- '-

..::::D_. :"'

. T.. VERNON TOWNSHIP POPULATION-1168 VEkNON

r5 _.

'. 5:NGLE CIRCUIT

-?d.#; 4 ~~ - CCMMUNITY HOUSES -.

h* RNON 345 kV TRANS LINE

,r*.  :-

h ST RTE 142 s TOWN Hall.

1. %Ih ++ [ #

W " e BRATTLEBORO 5 ml.

rVISITOR

• J,- -'N- VERNON ELEMENTARY

. ws fG #- . l CENTER Y VERB DAM

• PICNIC' NT,. ~.- , t-SCHOOL-163 STUDENTS \ g

~.-* . . , AND HYDRO . AREA f ~ ~,] a a m , - - ,,

e ~\ C C == .

a. ,

J = __ =

s -

, ,'D AM 15 EXCLUSION ,- 4. . __ _ EXCLUSION AREA , PROPERTY ' LINE XCLUSION AREA.

T. AREAEOUNDARY - J(j. . '-----/ 125 acres --$ BOUNDARY nj f T l VERMONT YANKEE PLANT l BOUNDARY

~g l D _m

'.5, y'T.,W,.

// n

'Q' \s

- .-- / SITE GR. -

,  % , -  ::. - p_

y* f -i 250 ft. -w 8 ,--

..__=._

---~ *~-

W ^e -

. ..spst .jQ 2DOUBLECIP.OUtTi e DISCHARGE i . < -;.T3 345kVTRANS LINE

*,i,'**"'g..,.-

y

?.I.4.-/

' '- . - ' gerpc, *'n MARSH VERI, ONT A.

I INTAKE "#;ff.W.-

I

.re ','i 'f , j

" - - j 'I .Y; N

\ ~

/

,') , I ___.e.:- N _... 22 cis MIN __g.g . , j \

\ - - = : r.- 840 cfs MAX e w-

..~.s. , g

~~

___a- -

/

NEW HAMPSHIRE SHORE / .

IS EXCLUSION AREA

\ VERNON POND / ___ W - \

BOUNDARY \ NORMAL POOL / d *

' \.

220 ft mst

.me

/ . 3 ==- -

... .x.> .

. / .-

., h "Nyg . CONNECTICUT RIVER T"~ /

32* F LOW-84* F ltIGII /

=' g7Y% N g NORM #1 FLOW FROM - M ~'m R - _. , , - -

• a- ~

600 '

400

~

k- . -

N ,,,,

M-

. 5000 c's TO 15.000 cfs MIN!M'/.'l FLOW 1200 cfs ,. '

.7,.,~'

~ " " - STD PROJ FLOOD-235 It mst 200

~~ -

.-= + " ^ + '

~~~ ' ' . -. '

NOMTH SCALI O TF ' ' ' - -

, .,,.~a IN FEET U. .  % mi rad.

--.g=3.

e- SX. ^ -

N.i HINSDALE,NJL BOSTON &

8OSTON &

MAINE RR TWP POPULATION-3276 pg MAINE RR

\

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