Since 1972, Vermont Yankee (VY) has reliably produced one-third of the electricity used in the state of Vermont. Over the past 35 years, Vermont Yankee has prevented more than 55 million tons of carbon dioxide and other pollutants from being spewed into our air, and has saved Vermont residential and commercial customers hundreds of millions of dollars on our electric rates.

Vermont has always wanted to be known as an environmentally tough but fair place to do business, and Entergy was pleased to take on that challenge by purchasing Vermont Yankee in 2002.

The Dean Administration’s Department of Public Service took a tough approach with Entergy when the VY sale was being negotiated in 2002. The result was a negotiated Power Purchase Agreement between Entergy and Vermont’s two major utilities that will save an estimated $668 million in electricity costs from 2002-12. It was a product of tough but fair negotiations.

Photo: Courtesy VT Yankee.

In 2003, Vermont Yankee was entering the last decade of its 40-year operating license and, as expected, the plant’s book value—the basis for the existing property tax—was depreciating rapidly. The Vermont Tax Department asked Entergy to negotiate a new generation-based tax to replace the property tax, capture revenues from the proposed 20 percent power increase, and provide both parties with a transparent, fair and predictable tax schedule through 2012. Entergy agreed, and the new tax was approved by both houses of the legislature. Another tough but fair deal.

In 2005, the legislature overwhelmingly approved a Vermont Yankee fuel storage proposal and Entergy Vermont Yankee agreed to pay $2.5 million annually into the “Vermont Clean Energy Fund” promoting conservation and renewable energy. A negotiation with the Douglas Administration’s Department of Public Service on a 20 percent increase in the plant’s output bumped Entergy’s payments into the fund to $4.5 million a year, for a total of $28 million through 2012. Again, tough but fair.

This year, in the waning days of the legislature, Vermont’s statehouse leadership pushed through a last-minute, $25 million tax hike on Vermont Yankee, which was an instant 90 percent increase in the Vermont Yankee generation tax negotiated in 2005.

Legislative leaders will tell you the new tax is fair because it is the same rate they levied on wind generators—0.3 cents per kilowatt hour. What they don’t tell you is that wind power will be sold at regional market prices—about 7-8 cents per kWh. Under the 2002 contract, 80 percent of Vermont Yankee’s power is currently locked in at four cents per kWh. Forcing Vermont Yankee to pay the same 0.3 cent tax rate on electricity that is sold to Vermonters and others at about half the market price is hardly fair.

A wide array of state business leaders and organizations – including IBM, General Electric, Ethan Allen, the Vermont Business Roundtable, and the Vermont Chamber of Commerce – have pointed out that the Legislature’s proposal sends out two disturbing messages.

First, no matter how advantageous the deals are that the state has already negotiated with a company, there are those in Vermont government who will grab more if they can. The second is that the state legislature is willing to jeopardize the low-cost power that Vermonters now receive from Vermont Yankee.

Finally, the tax on Vermont Yankee is completely illogical to what its proponents claim it will help achieve—a reduction in carbon emissions which contribute to global warming. Vermont Yankee has displaced 55 million tons of carbon dioxide since it came online in 1972, and that’s 177,000 pounds for every man, woman and child living in Vermont—which has helped Vermont to become one of the lowest per capita carbon emitting states in the country.

Brian Cosgrove, a St. Johnsbury native and 1968 graduate of St. Michael’s College, is Manager of Government Affairs for Vermont Yankee.