The US Nuclear Regulatory Commission (NRC) on October 11 issued its consent to the transfer of the Vermont Yankee Nuclear Power Station (Vermont Yankee) from Entergy Corporation (Entergy) to NorthStar Group Services, Inc. (NorthStar). The transfer paves the way for the accelerated decommissioning of Vermont Yankee, which could be completed as early as 2026.
Just as importantly for the nuclear industry as a whole, the NRC’s consent to the proposed transfer signals for the first time its willingness to consent to a transfer of a nuclear power plant license where: (1) title to the spent fuel is transferred to the new owner; and (2) spent fuel management costs will be recovered in a future settlement of litigation with the US Department of Energy (DOE). These are new precedents that have significant implications for future transfers of shutdown plants.
First, under the terms of the proposed Vermont Yankee transfer, NorthStar will acquire the subsidiary of Entergy that currently owns Vermont Yankee. As the NRC explained, under the proposed transaction “NorthStar would own [Vermont Yankee] as well as its associated assets and real estate, including its nuclear decommissioning trust fund, title to spent nuclear fuel, and rights pursuant to the terms of its Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste with the Department of Energy.” (emphasis added). This is the first time NRC has approved the transfer of indefinite possession and title of spent fuel to contractor acquiring a plant for purposes of decommissioning. Prior transactions were structured to provide that title to spent fuel did not transfer and the future long-term possession would be returned.
Second, in reviewing the plan for funding spent fuel management. the NRC staff relied upon NorthStar’s asserted intention to obtain a future settlement with DOE following initial litigation with DOE to recover damages. The NRC staff has previously approved a plan based upon the licensee having a settlement in hand under which it was recovering its annual costs. However, the NRC staff has never before accepted the proposition that damages would be recovered in litigation or through the “prospect” of a settlement. NorthStar offered to post a performance bond in the amount of one year’s worth of costs, if it fails to obtain a settlement by 2023, and the NRC staff imposed a condition to require this.
Morgan Lewis will continue to follow these important developments for the process of decommissioning nuclear facilities.