• Failure to navigate: Entergy in Vermont
    March 21,2013
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    Today marks the one-year anniversary of the day Vermont’s troubled nuclear power plant’s license to operate expired. One year later, the plant is still splitting atoms, but for the first time in almost 40 years, Vermonters are not buying any. Conflict between the plant’s owner, Entergy, and state officials remains intense, in federal court and before state regulators.

    How did we get to this point? How did a plant that had been a core state asset — providing about one-third of the state’s electricity for 40 years — become a pariah?

    Based on interviews and company documents, it’s clear that Entergy alienated key allies such as the state’s electric utilities, business groups and prominent legislators. The professional nuclear plant operator — the second largest in the U.S. — was unable to navigate Vermont’s policy culture.

    It wasn’t always this way.

    When Entergy bought Vermont Yankee in 2002, Vermont utilities, state officials and policy leaders welcomed the sale. Entergy was seen as an experienced nuclear operator that could bring those skills to Vermont. Furthermore, Entergy and the Vermont utilities negotiated a deal so that for the next 10 years (2002-2012) Vermonters would pay less than they would have paid if the Vermont utilities had retained ownership.

    Feelings were so positive that Entergy made the highly unusual (unique to Vermont) commitment to seek state approval in addition to federal approval for the 20-year license extension. During hearings to win that state license, state officials estimated the next 20 years would provide a tremendous positive boon to the state — impacts estimated at between $1.5 billion and $5.1 billion.

    So what went wrong?

    A skilled and well-resourced opposition took advantage of company missteps to paint a picture of an aging nuclear plant mismanaged by an out-of-state company. That story was enhanced by Entergy’s inability to navigate Vermont, to participate in Vermont’s policy culture.

    Looking back after the Senate’s vote to reject the plant, then Entergy Vice President Curt Hebert listed the company’s missteps in a memo to his boss — a long list that included attempting to “spin off” VY into a highly leveraged and deeply in debt holding company; refusing to add money to the plant’s decommissioning fund; and a “failure of communication” around the existence of pipes beneath the surface of the plant — pipes that would later be found to be leaking a radioactive substance.

    Listed also in Hebert’s memo and illustrative of the company’s approach to Vermont was the inability to agree on a deal with Vermont’s two largest utilities (Green Mountain Power and Central Vermont Public Service) to sell electricity to Vermonters. To spotlight the company’s inability to navigate Vermont, I focus here on the lack of the power deal and how that added to Entergy’s problems in the state.

    The CEOs of both GMP and CVPS told me they tried to negotiate with Entergy for several years but could not come to an agreement. The issue became so important that the Department of Public Service — previously supportive of the plant — testified against the plant’s continued operation.

    At the same time, the lack of a power deal meant no allies. Vermont utilities, powerful forces in Vermont, sat on their hands. As things started to increasingly collapse for Entergy, the company had no one to stand with it in the Legislature or before business groups and policy leaders.

    Isolated, Entergy misplayed its hand, sending in Hebert, the vice president, to offer a last-minute cheap power deal on the day before the Senate’s vote — telling the skeptical reporters that the offer had nothing to do with the vote the next day.

    Context, place and people matter. Entergy, an experienced nuclear operator, was unable to navigate Vermont. Managing important state assets takes more than technical skill. It takes a willingness to listen carefully and participate in a state’s policy and social culture.

    Richard Watts is the author of “Public Meltdown: The Story of the Vermont Yankee Nuclear Power Plant,” published by the Center for Research on Vermont, and an assistant research professor in community development and applied economics at UVM.
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