Former PSC Chairman Robert Johnston
wouldn't, not when it comes to Entergy
promises about holding Arkansas harmless on future nuclear plant
construction. There's some history. Paul Barton writes from Washington today:
A Grand Gulf 3? Who’s going to pay?
By Paul Barton
WASHINGTON – As Arkansans continue to chafe under payments for the Grand Gulf nuclear plant, a company spokesman said Monday they will not be asked to share in the costs of two new nuclear plants, including a proposed Grand Gulf Unit 3, if Entergy Corp. moves forward with their construction.
But one veteran of the controversy over Grand Gulf Unit 1 - at Port Gibson, Miss. -said he would not trust the company to honor that pledge, even with the language incorporated in the license applications for the plants at the Nuclear Regulatory Commission in Rockville, Md.
“That’s meaningless,” Robert E. Johnston, former chairman of the Arkansas Public Service Commission, said in a telephone interview.
Johnston was chairman of the PSC during the 1980s when the state tried in vain to escape costs for Grand Gulf, also known as Grand Gulf Unit 1. The Reagan-era Federal Energy Regulatory Commission and the federal courts refused to let Arkansas out of the charges for Unit 1, even though the state didn’t need power from it. Arkansas ratepayers have contributed $4.5 billion toward the cost of the Grand Gulf over nearly 25 years.
A Grand Gulf Unit 2 was also supposed to have come online in the 1980s but the company stopped construction.
“The contracts can be rewritten by the FERC,” Johnston added.
Federal regulators ruled in 1985 that all of subsidies of Entergy, then known as Middle South Utilities, had to contribute to the plant’s costs through a “system operating agreement,” and Entergy Arkansas, then known as Arkansas Power & Light Co., had to pay 36 percent, the largest share assigned to any of the company’s branches.
The FERC ruling, upheld by federal judges, was largely the result of agitation by the Louisiana Public Service Commission, which didn’t want to see Arkansas ratepayers escape Grand Gulf costs. Louisiana is served by Entergy Louisiana, another Energy subsidiary.
Mike Bowling, a spokesman in Mississippi for Entergy’s nuclear operations, said that even if the company decides to build a Grand Gulf Unit 3 and a new Riverbend nuclear unit at St. Francisville, La., it doesn’t plan to assign costs to Entergy Arkansas.
Licensing and construction applications for both are on hold at the NRC while Entergy seeks a new company to make the reactors. Entergy had planned to use GE Hitachi, but those negotiations fell through, Bowling said. The company has already completed initial environmental and other assessments.
Language that exempts Arkansas, Bowling said, is specifically written into the two applications.
A separate statement issued by Bowling said :
“The ultimate decision to build a new nuclear plant is very dynamic and based upon a number of factors. Similarly, if a decision is made to build the plant, participation in the plant will be based on a number of factors, including an assessment of the customers’ need for additional capacity and the estimated costs of electricity from new nuclear as compared to other alternatives. To position ourselves for making those ownership decisions in the future, the COL [combined operating and construction license] applications Entergy submitted for River Bend and Grand Gulf list several Entergy operating companies as potential owners.”
And then it added: “Neither EAI (Entergy Arkansas) nor ENOI (Entergy New Orleans) are envisioned to be owners of a potential unit at Grand Gulf or River Bend; thus neither are listed as potentials owners in either COL application. Likewise, ETI (Entergy Texas) is not listed as a potential owner, although all are described as part of the Entergy system in the application.”
And even if a new vendor is found for the reactors and the licenses are approved, Bowling again stressed that doesn’t guarantee construction. “It only give authority from federal regulators to do so,” he said.
The earliest that either would come on line would be after 2020, he added.
Bowling, referring to current Grand Gulf controversies, asked in response to questions: “Are you afraid that Arkansas is going to get roped into another system operating agreement?”
Johnston said Monday that Entergy can’t be trusted. There were agreements in the late 1970s that were supposed to protect Arkansas from Grand Gulf Unit 1, he said, and those were ripped up after struggles started between the state and Louisiana.
“A contract can be changed. That contract can be changed by the FERC,” he said. “This is potentially a big deal.”
While Entergy insists Arkansas isn’t being targeted – and it concedes the state has no need for additional power currently – language referring to the system operating agreement that controls Unit 1 is in its applications at the NRC.
Further, on its website, the company points to Department of Energy projections showing demand for electricity increasing 50 percent over the next 20 years and it touts a new generation of nuclear plants as one of the safest, most environmentally friendly means of meeting that need.
The company’s new nuclear plant applications, first filed in 2008 but little publicized in Arkansas, are coming at a time when the Obama administration has already approved $8 billion in federal loan guarantees for the construction of new nuclear plants. Projects have already been announced in Georgia by the Southern Company, and Obama is seeking an addition $48 billion in loan guarantees in his 2011 budget.