Entergy Purchases Vermont Yankee Nuclear Plant for $180 Million, Memorandum of Understanding Creates Decade of Regulatory Conflict

On July 31, 2002, Entergy Nuclear Vermont Yankee LLC—a subsidiary of Entergy Corporation of New Orleans—completes its $180 million purchase of the Vermont Yankee nuclear power plant from Vermont Yankee Nuclear Power Corporation, a consortium of eight New England utilities that originally owned the facility. The acquisition includes the reactor complex, nuclear fuel, inventories, related real estate, decommissioning trust funds of approximately $310 million, and a critical 10-year power purchase agreement under which three former owners commit to buy electricity at approximately 4.5 cents per kilowatt-hour. On June 13, 2002, the Vermont Public Service Board approved the sale and issued a new Certificate of Public Good (CPG), but only after Entergy entered into a controversial Memorandum of Understanding with the Vermont Department of Public Service that will generate a decade of regulatory conflict and litigation.

The 2002 Memorandum of Understanding contains a provision that becomes the source of bitter dispute: Entergy agrees to “waive any claim… that federal law preempts the jurisdiction of the Board” and acknowledges “the express and irrevocable agreement that the Board has authority to grant or deny approval of operation beyond March 2012”—when Vermont Yankee’s original 40-year operating license expires. This provision represents Entergy’s contractual agreement to seek Vermont state approval for continued operation even if the federal Nuclear Regulatory Commission grants a license extension. For Vermont, the MOU appears to preserve state authority over a nuclear facility that generates 71.8% of all electricity produced within Vermont (35% of total consumption) despite federal preemption doctrines that typically place nuclear regulation under exclusive NRC jurisdiction. For Entergy, the agreement seems acceptable given the 10-year timeframe before the issue becomes relevant and the expectation that routine license extensions will be approved.

The arrangement unravels starting in 2006 when the Vermont General Assembly passes legislation that effectively invalidates the MOU’s key provision by requiring legislative approval—not just Public Service Board certification—for operation beyond March 2012. A cooling tower collapse in 2007, radioactive tritium leaks, misstatements in testimony by plant officials, and other operational problems fuel public opposition. In February 2010, the Vermont Senate votes 26-4 against allowing the Public Service Board to even consider recertifying Vermont Yankee after 2012. Despite this state opposition, the NRC grants Entergy a 20-year license extension in March 2011, authorizing operation through March 2032. Entergy sues Vermont in federal court, arguing federal preemption and claiming “this is not what we signed up for in 2002.” In January 2012, a federal district court rules in Entergy’s favor, holding that federal law preempts Vermont’s attempt to block continued operation on safety or radiological grounds.

The Vermont Yankee controversy illustrates how corporate acquisition of utility infrastructure creates regulatory capture and accountability gaps. Entergy, a Louisiana-based corporation with no historic ties to Vermont, purchases a facility that provides over one-third of the state’s electricity specifically to profit from deregulated energy markets and license extension. The company enters contractual agreements with Vermont regulators that appear to preserve state oversight, then litigates to invalidate those same agreements when state opposition emerges. The legal battle demonstrates federal preemption’s power to override state preferences regarding facilities with massive local impact, effectively preventing democratic accountability. On August 27, 2013, Entergy announces it will close Vermont Yankee by end of 2014 citing “ongoing low energy prices resulting from increased shale gas production and the high operating costs of the plant”—economic factors, not regulatory defeat. The plant officially shuts down December 29, 2014, leaving 58 casks of spent nuclear fuel on-site with no federal repository to accept the waste, creating a permanent toxic legacy for Vermont communities while Entergy’s corporate ownership enables the company to walk away from long-term responsibility.