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 January 11, 2012
Distribution Companies Sue Vermont Yankee for Curtailed Power After Cooling Tower Collapse

 Two of Vermont's largest power distribution companies on Monday filed suit against Entergy Vermont Yankee, owner of the aging 620-MW Vermont Yankee Nuclear Plant in Vernon, Vt., alleging that Entergy's faulty maintenance of cooling towers at the plant in 2007 and 2008 had cost them $6.6 million in increased power costs and lost capacity payments.

Investor-owned companies Central Vermont Public Service (CVPS) and Green Mountain Power alleged in a lawsuit filed with the Vermont Superior Court in Windham County that Entergy curtailed power to 35% for 11 days after a cooling tower collapsed, starting on Aug. 27, 2007, and again beginning on July 11, 2008, for almost 12 days after a sagging pipe and leak were detected in another cooling tower.

"This case arises out of Entergy's breach of its contractual obligation to use 'Good Utility Practice' in its management and operation of the Vermont Yankee Nuclear Station," the companies said in a statement on Monday. "Entergy's failure to implement and exercise sound practices with respect to the maintenance, repair and improvements of the facility's cooling towers caused tower failures in August 2007 and July 2008. The failures resulted in significantly reduced power output, which in turn deprived us of power due to us and our customers at specified, below-market prices."

In an inspection report following the 2007 partial collapse of a cooling tower, the Nuclear Regulatory Commission (NRC) said that "Entergy had not recognized the importance of performing hands-on inspections of [cooling tower] structural members which were located in heavily loaded and normally inaccessible areas for detecting degraded conditions. As a result of not performing adequate inspections of 'B' and 'C' columns within the fill area, a partial collapse of non-safety [cooling tower] cell 2-4 occurred."

Green Mountain and CVPS alleged in their suit that the NRC had also found that the failure occurred as a result of "over-tightened bolts and salt and fungal degradation that went undetected by Entergy."

"In failing to carry out hands-on inspections, Entergy failed to take into account considerable and relevant industry operating experience that had previously identified the importance of that kind of direct examination," CVPS and GMP said. "That led directly to the first tower failure."

The second tower failure on July 11, 2008 was caused by "failed pipe supports" within the cooling tower, the companies said. In both cases, the CVPS and Green Mountain contend that Entergy's failure to use "Good Utility Practices" led directly to the failures.

"The failures and omissions of Entergy in managing and operating Vermont Yankee led directly to both tower failures," the companies said. "This was a clear breach of Entergy's obligations under its power purchase agreement with CVPS and GMP."

The companies, which have requested a trial by jury, said they are seeking compensation for damages of $6.6 million---a sum that is expected to cover increased power costs, lost capacity payments resulting from the tower failures, interest, and legal costs. They said they had approached Entergy to settle the claim, but "Due to the statute of limitations and Entergy's failure to accept responsibility for its failures and contract breaches, we reluctantly must take this action now."

Entergy's Vermont Yankee power plant is currently embroiled in another legal proceeding in which it is suing the state of Vermont, challenging its authority to shut down the plant when its state permit expires on March 21, 2012.

In 1972, Vermont Yankee began to operate after the Vermont Legislature voted to allow a nuclear plant to be built and operated under a 40-year license, until 2012. In 2006, the state's General Assembly passed a law that outlined the requirements for continued operation of a nuclear power plant in the state. In 2010, the state Senate voted 26-4 to block the plant from operating past March 2012, when the permit expires. The company in April 2011 asked the federal court to stop the state from closing the plant this year, after the NRC extended the plant's operating license by 20 years.

The plant's potential closure has industry stakeholders and public officials worrying about power pricing and future supply. Last week, the End User Alliance (EUA) asked regional grid operator ISO-New England to conduct a formal study on regional power pricing impact if Vermont Yankee and other nuclear plants are forced to close.

Nuclear power supplies 30% of New England's electricity. "The need for such a study has become more urgent since December 21, when the Environmental Protection Agency ordered certain U.S. power plants to make profound cuts in emissions over the next three years," the group said. "Fearful of vastly more expensive power costs to ratepayers that will reverberate throughout the region's economy just when there are signs of a recovery, the EUA stresses that nuclear has become one of the least expensive forms of electricity to generate."