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H.545

Introduced by Committee on Natural Resources and Energy

Date:

Subject:  Conservation; spent nuclear fuel on-site storage charge

Statement of purpose:  This bill proposes to establish a charge on the privilege to store spent nuclear fuel on site at the state’s nuclear power station, with proceeds to be allocated primarily for renewable energy projects, and certain combined heat and power projects. 

AN ACT AUTHORIZING VERMONT YANKEE TO GO BEFORE THE PUBLIC SERVICE BOARD TO SEEK PERMISSION FOR DRY CASK STORAGE

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  10 V.S.A. chapter 157, subchapter 2 is redesignated to read:

Subchapter 2.  Advisory Commission on Low-Level Radioactive Waste

Dry Cask Storage Authorization of 2005

Sec. 2.  10 V.S.A. §§ 6521 - 6526 are added to read:

§ 6521.  LEGISLATIVE FINDINGS

(a)  Federal role.  The general assembly finds:

(1)  The federal government, through the Department of Energy (DOE), has a legal obligation to take title to and provide for the disposal of spent nuclear fuel, but has not yet done so, and is in breach of contract for its failure to do so.

(2)  A parent corporation of Entergy Nuclear Vermont Yankee, LLC (“Entergy Nuclear VY”), the current owner of the Vermont Yankee nuclear power station (Vermont Yankee), is a lead plaintiff in an ongoing lawsuit against the Department of Energy for damages associated with the department’s failure to take delivery of spent nuclear fuel from its nuclear plants, including Vermont Yankee.

(3)  Were it not for the federal government’s failure to perform its contractual obligations to begin removing spent fuel from Vermont Yankee in 1999, Entergy Nuclear VY would not require dry cask storage at Vermont Yankee for an unknown and indefinite period of time.

(4)  Payments made by Entergy Nuclear VY for the privilege of storing spent nuclear fuel in Vermont are incurred because of the failure of the DOE to accept title and delivery of the spent fuel as required by law, and should be subject to review and recovery in a court of law for damages for breach of contract.

(b)  Intergenerational equity.  The general assembly finds and determines:

(1)  When Vermont Yankee was first proposed, Vermonters were led to have positive expectations with respect to:  low density storage of spent nuclear fuel rods; timely shipping of spent nuclear fuel to a federal facility outside the state; a limited period of time during which the state would be the host of spent nuclear fuel; and timely conversion of the plant site to a greenfield.  These expectations have not been fulfilled.

(2)  Given the uncertainties incumbent in determining when the federal government will be able to perform its waste management responsibilities, it appears that succeeding generations of Vermonters risk being faced with an electricity-related burden, in the form of stored high level nuclear waste, that may be unfairly disproportionate to the benefits they are likely to receive from stored, high level nuclear waste considered on its own.

(3)  It is necessary in the interests of intergenerational equity to help balance the burdens and benefits of nuclear power among succeeding generations of Vermont electricity consumers.

(4)  In that pursuit, the entity profiting from the continued operation of Vermont Yankee is required by this subchapter to provide a specified degree of offsetting benefit to Vermont’s future electricity consumers.

(5)  To make this equitable reallocation, this subchapter redirects a small part of the revenue stream generated near the end of the nuclear system operating life in order to provide succeeding generations of Vermonters with an offsetting benefit in the form of assistance for varied, reliable, economic, and sustainable sources of electricity for the future.

(c)  Power uprate.  The general assembly finds and determines the  following:

(1)  Entergy Nuclear VY is a limited liability corporation that, as an “exempt wholesale generator,” is operated as a for-profit private enterprise and not on a cost-of‑service or rate-regulated utility basis.

(2)  After purchasing Vermont Yankee, Entergy Nuclear VY applied for and received conditional permission from the Vermont public service board for a power uprate at the facility that would increase its output by 20 percent over its remaining life.  If the uprate is implemented, Entergy Nuclear VY will be able to sell approximately 850,000 additional MWH per year into regional power markets at competitive market prices, with additional revenues estimated at more than $35 million per year.  These additional power sales are not subject to rate regulation by the public service board nor are they committed primarily to the benefit of Vermont utilities or ratepayers. 

(3)  As a result of the uprate, Entergy Nuclear VY will be creating additional spent fuel and will run out of storage in the spent fuel pool and require on-site dry cask storage earlier than previously anticipated.

(4)  Because the federal government has not yet provided a permanent solution for long-term spent fuel storage, spent fuel might be stored in Vermont for many decades or perhaps much longer. 

(5)  As a condition of granting the privilege to an independent power producer to store additional spent fuel assemblies and dry casks in Vermont, it is appropriate to impose a spent fuel storage charge for so long as spent nuclear fuel is stored in the state.

(d)  Diversity and clean energy development fund.  The general assembly further finds:

(1)  Vermont Yankee in Vernon provides a very large fraction of the state’s power supply and is by far the largest power plant operating in the state.

(2)  Although nuclear power plants often operate at high levels of availability, they are, to a greater degree than other large generating stations, subject to operational and regulatory conditions that can take them off line and make them unavailable to provide power that is expected by the purchasing utilities and customers.

(3)  Whether the plant runs to the end of its current license, is relicensed by the federal government, or is required to shut down on short notice, that large fraction of the state’s supply will need to be replaced.

(4)  Vermont utilities and state power planners have stated that sound principles of portfolio management favor the state as a whole undergoing a substantial reduction in the proportion of energy attributable to any single source, including Vermont Yankee.

(5)  The state’s future power supply should be diverse, reliable, economically sound, and environmentally sustainable.

(6)  In order to make a smooth transition to the future, the state needs to accelerate Vermont’s investment in electricity resources that are economically and environmentally sound and that can be acquired in modest increments.

(7)  In making this transition, there is great value in investing in renewable energy sources, in efficient, combined heat and power facilities, and in energy efficiency.

(8)  To facilitate the wise and timely allocation of funds for these purposes, there is a need for a clean energy development fund that would be used to provide the resources needed to support investment in those advanced resources in time to permit adequate power supply diversity by 2012.  The general assembly intends and expects that the public service board, public service department, and the state’s power and efficiency utilities will actively implement the authority granted in this title to acquire all reasonably available, cost-effective, energy efficiency resources for the benefit of Vermont ratepayers and the power system.  If this is done, additional financial resources should be targeted primarily at renewable energy and combined heat and power projects.

(9)  The Vermont Yankee site has substantial potential value in Vermont’s future energy supply mix, both because of its geographic location and its location on the regional transmission grid.  Upon the closure of Vermont Yankee, the future use of the existing site and its substantial  transmission assets for a generation facility using other fuels could be restricted if spent nuclear fuel is stored on site for a long period of time.  

§ 6522.  PUBLIC SERVICE BOARD REVIEW OF PROPOSALS FOR NEW

              STORAGE FACILITIES FOR SPENT NUCLEAR FUEL

(a)  Neither the owners of Vermont Yankee nor their successors and assigns shall commence construction or establishment of any new or altered storage facility for spent nuclear fuel before receiving a certificate of public good from the public service board pursuant to 30 V.S.A. § 248.

(b)  In addition to all other applicable criteria of 30 V.S.A. § 248, before granting a certificate of public good for a new or altered spent nuclear fuel facility, the public service board shall find that:

(1)  Adequate financial assurance exists for the management of spent fuel at Vermont Yankee for a time period reasonably expected to be necessary, including through decommissioning, and for as long as it is located in the state.  Since the existing decommissioning fund was developed with the expectation that it no longer would be necessary as of 2032, a finding that adequate financial assurance exists shall include adequate financial provision for the eventuality that the site is not a greenfield and the radioactive materials are not entirely removed by the end of that year.

(2)  The applicant has made commitments to remove all spent fuel from the state to a federally certified long-term storage facility in a timely manner, consistent with applicable federal standards.

(3)  The applicant has developed and will implement a spent fuel management plan that will facilitate the eventual removal of those wastes in an efficient manner. 

(c)  In addition, the following limiting conditions shall apply:

(1)  Any certificate of public good issued by the board shall permit storage only of spent fuel that is derived from the operation of Vermont Yankee, and not from any other source.

(2)  Any certificate of public good issued by the board shall limit the total amount of spent fuel stored at Vermont Yankee to the number of fuel assemblies necessary to operate the facility up to, but not beyond, March 21, 2012, the end of the current operating license.

(3)  The requirement to obtain a certificate of public good from the board for this purpose applies to Vermont Yankee, regardless of who owns the facility, and the conditions of the certificate of public good and the requirements of this subchapter will apply to any future owner.

(4)  Compliance with the provisions of this subchapter shall constitute compliance with the provisions of this chapter that require that approval be obtained from the general assembly before construction or establishment of a facility for the deposit or storage of spent nuclear fuel, but only to the extent specified in this subchapter or authorized under this subchapter.

(5)  Compliance with the provisions of this subchapter shall not confer any expectation or entitlement to continued operation of Vermont Yankee following the expiration of its current operating license on March 21, 2012.  If the owners of the facility wish to extend the operation of the generation facility beyond that date or to extend or expand the operation of the spent fuel storage or deposit facility beyond the capacity authorized in this subchapter, they must first obtain the approval of the general assembly, and then obtain a certificate of public good from the public service board under Title 30.

§ 6523.  SPENT NUCLEAR FUEL STORAGE CHARGE

(a)  Effective January 1, 2006, there is assessed a charge on the privilege to store spent nuclear fuel at Vermont Yankee, or in the vicinity of the station, regardless of the technology employed in that storage.  The charge shall be calculated at the rate of one mill per kilowatt hour generated at Vermont Yankee, with a minimum annual charge of $4,000,000.00 per year.  The charge shall be adjusted annually to reflect changes in the consumer price index.  The charge shall be paid by the owner of Vermont Yankee, whether or not Vermont Yankee is generating, out of service, or decommissioned, so long as spent nuclear fuel from the plant is stored within the state of Vermont.  The charge shall be calculated and paid quarterly into the clean energy development fund established by this subchapter.

(b)  The department of public service may develop a system that would give Entergy Nuclear VY a financial credit to offset any portion of the charge that would be due under this section, based upon the company’s investment during the calendar year in new renewable energy sources, as defined under 30 V.S.A. § 8002, or qualifying combined heat and power projects, that are located within the state.  The offset shall be based on the amount of capacity and energy that the department projects will be delivered to Vermont’s electric system by those investments, when compared to the energy and capacity otherwise expected to be delivered by the clean energy development fund.  Credits shall be earned at the rate of one offset unit for each two units of capacity or energy reasonably projected to be delivered.

§ 6524.  GENERATION FACILITY CHARGE

Effective January 1, 2006, there is created a generation facility charge on all electric generation facilities in the state with a nameplate generation capacity in excess of 400 MW.  The charge shall be $25.00 per year for each kW of installed capacity at a facility in excess of 510 MW.  This charge shall be calculated and paid quarterly into the clean energy development fund created under section 6526 of this title.  Receipts from this charge shall be used to accelerate the development of, investment in, and effective deployment of  clean energy resources to meet the future electric resource needs of the state.

§ 6525.  FINANCIAL REVIEW OF EFFECTS OF STORAGE AUTHORITY

              AND OF CHARGES

(a)  Review of financial effects of storage and spent fuel storage charge.  As an element in the certificate of public good review set out in this subchapter, the public service board, if petitioned by the operator of Vermont Yankee, shall examine the financial feasibility and consequences of the spent fuel storage charge established in this subchapter.

(1)  After considering and balancing the cost, revenue, energy diversity goals, and other factors set out in subsection (b) of this section, the board shall issue findings, based upon substantial evidence presented in hearings, with respect to at least two issues:

(A)  whether the payment of the spent fuel storage charge would create a significant and unreasonable financial hardship for the owner of the site;

(B)  whether the authority issued under this subchapter leads to a significant and excessive financial benefit for the owner of the site, in comparison to the benefit flowing to the state in general.

(2)  The petitioner shall bear the burden of proof in this proceeding, and may be required to submit in evidence the cost and revenue information necessary to substantiate its claim.

(3)  The board shall present to the committees on natural resources and energy, the house committees on ways and means and on commerce, and the senate committee on finance its findings together with its recommendations with respect to increasing or decreasing the charge established under this subchapter, or leaving the charge without amendment.

(b)  Factors to be considered.  In conducting any evaluation under this section, the board shall consider:  the degree to which costs incurred by the owner of Vermont Yankee and the spent fuel facility may be recovered through other sources, including power sales in competitive power markets; any value added by the creation of air pollution and greenhouse gas regulations; any value added by increased power output and lower operating costs at Vermont Yankee; any tax incentives and recoveries under state and federal tax laws; any cost-sharing from sources outside Vermont, including any damage recoveries or settlements as a result of the failure of the federal government to perform its contractual obligations under the Nuclear Waste Policy Act; the costs of operating the facility; the economic value of the privilege to store spent nuclear fuel at the site; the level of funding needed to support adequately an effective clean energy development fund; and such other factors as the board finds relevant to the petition.

(c)  Review of generation facility charge.  Upon petition, or on its own motion, the public service board may review the financial impact and appropriate level of the generation facility charge.  Upon a finding that the financial impact of the charge unreasonably exceeds the additional revenues received by the facility due to its expanded capacity and as a result of the implementation of installed capacity, locational installed capacity, or other capacity benefits received in regional power markets, the board may reduce the level of the charge.

§ 6526.  VERMONT CLEAN ENERGY DEVELOPMENT FUND

(a)  Creation of fund.

(1)  There is established the Vermont clean energy development fund to consist of:

(A)  the proceeds from the spent nuclear fuel charge assessed under this subchapter;

(B)  any revenues received under the generation facility charge assessed under this subchapter;

(C)  the proceeds due the state under the terms of the memorandum of understanding between the department of public service and Entergy Nuclear VY and Entergy Nuclear Operations, Inc. that was entered under docket 6812; together with the proceeds due the state under the terms of any subsequent memoranda of understanding entered before July 1, 2005 between the department of public service and Entergy Nuclear VY; and

(D)  any other monies that may be appropriated to or deposited into the fund.

(2)  Interest earned on the fund shall be deposited into the fund.  Balances in the fund shall not be funds of the state, shall not be available to meet the general obligations of the government, and shall not be included in the financial reports of the state.

(3)  By January 15 of each year, commencing in 2007, the department of public service shall provide to the house and senate committees on natural resources and energy, the senate committee on finance, and the house committee on commerce a report detailing the revenues collected and the expenditures made under this subchapter, together with principles to be followed in the allocation of funds and a five‑year plan for future expenditures from the fund.

(b)  Definitions.  For purposes of this section, the following definitions shall apply:

(1)  “Clean energy resources” means electric power supply and demand‑side resources that are either “combined heat and power facilities,” “cost‑effective energy efficiency” resources, or “renewable energy” resources.

(2)  “Combined heat and power (CHP) facility” means a generator that sequentially produces both electric power and thermal energy from a single source or fuel.  In order for a fossil fuel-based CHP system to participate in the clean energy program set out in this section, at least 20 percent of its fuel’s total recovered energy must be thermal and at least 13 percent must be electric, the design system efficiency (the sum of full load design thermal output and electric output divided by the heat input) must be at least 65 percent, and it must meet air quality standards established by the agency of natural resources.

(3)  “Cost‑effective energy efficiency” means those energy efficiency and conservation measures that would qualify as part of a utility’s least‑cost integrated plan under 30 V.S.A. § 218c or that would be an eligible expenditure under 30 V.S.A. § 209(d).

(4)  “Renewable energy” has the meaning established under 30 V.S.A. § 8002(2), and shall include the following:  solar photovoltaic and solar thermal energy; wind energy; geothermal heat pumps; farm, landfill, and sewer methane recovery; low emission, advanced biomass, and combined heat and power technologies using biomass fuels such as wood, agricultural or food wastes, energy crops, and organic refuse-derived waste, but not municipal solid waste; advanced biomass heating technologies and technologies using biomass-derived fluid fuels such as biodiesel, bio-oil, and bio-gas.

(c)  Purposes of fund.  The purposes of the fund shall be to promote the development and deployment of cost-effective and environmentally sustainable electric power resources for the long-term benefit of Vermont electric customers, primarily with respect to renewable energy resources, and the use of combined heat and power technologies.  The fund shall be managed, primarily, to promote:

(1)  the increased use of renewably produced electrical and thermal energy and combined heat and power technologies in the state;

(2)  the growth of the renewable energy and the combined heat and power industries in the state;

(3)  the creation of additional employment opportunities and other economic development benefits in the state through the increased use of renewable energy and combined heat and power technologies; and

(4)  the stimulation of increased public and private sector investment in renewable energy and combined heat and power and related enterprises, institutions, and projects in the state.

(d)  Expenditures authorized.

(1)  This fund shall be administered by the department of public service to facilitate the development and implementation of clean energy resources.

(2)  The department, through the appointment of a fiscal agent or acting on its own behalf, shall assure accounting for all charges and any other revenues to be deposited in the clean energy development fund, and shall assure an open public process in the administration of the fund for the purposes established in this subchapter.

(3)  If during a particular year, there is a lack of credible applications to the department for funding for renewable energy or combined heat and power technologies, as identified in the five‑year plan, or as otherwise identified, the department may consult with the board and shall consider transferring funds to the energy efficiency fund established under the provisions of subsection 209(d) of this title.  Such a transfer may take place only in response to an opportunity for a particularly cost‑effective investment in energy efficiency, and only as a temporary supplement to funds collected under that subsection, not as replacement funding.

Sec. 3.  OTHER MATTERS TO BE CONSIDERED BY THE BOARD

To the extent that to do so is consistent with federal law, the public service board will require the use of best practices for the environmental management of high level nuclear waste.  This shall include appropriate use of berms; minimizing line-of-sight visual impacts of the facility; the location of the storage facility, including the appropriate distance from the river; spacing of casks; use of real-time temperature and radiation monitoring equipment; and restrictions on the use of corrosive or flammable materials on or near the storage facility.

Sec. 4.  REPORT ON LOSSES AND GAINS OF INSTALLED CAPACITY

The public service board and the public service department shall report to the Committees on Natural Resources and Energy, the House Committees on Commerce and on Ways and Means, and the Senate Committee on Finance by no later than January 15, 2006 and again by no later than January 15, 2007 with respect to the net revenue loss and the net revenue gain to Vermont ratepayers, utilities, and Vermont-based generators as a result of any tariff relating to locational generation capacity; and the options available to mitigate the cost impacts of any such tariff.

 Sec. 5.  IMPLEMENTATION

This act shall not prohibit the owners of the Vermont Yankee nuclear power station from applying for, nor the public service board from granting, a certificate of public good for on-site storage of spent nuclear fuel as necessary in order to accommodate the decommissioning of the facility.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us