accounting, aging nuclear, Arkansas, Arkansas Nuclear One, Big Easy, City that Care Forgot, Cooper Nuclear, cost of repairs for nuclear reactors, Cynergy, Entergy, Fitzpatrick Nuclear, geriatric nuclear, Grand Gulf Nuclear Reactor, Indian Point Nuclear, Japan, Kashiwazaki-Kariwa Nuclear, leaking pipes, leaks, Louisiana, maintenance, Massachusetts, Michigan, Mississippi, Nebraska, New Orleans, New York, nuclear accountants, nuclear energy, nuclear power, Nuclear Power Stations, nuclear seismic risk, Palisades Nuclear Reactor, PSI, repairs, River Bend Nuclear, Spinco, Upkeep, Vermont, Vermont Yankee Nuclear Plant, Waterford Nuclear, Wayne Leonard
Does it make anyone else nervous that New Orleans, a city best known for jazz, food, gambling, corruption, and mafia, is the corporate seat for Entergy, which owns numerous old nuclear reactors? Exelon, third largest owner of nuclear power stations in the world, is based in Chicago which is equally or perhaps more notorious for its history of mafia and corruption. Exelon’s nuclear “fleet” is also geriatric.
“The first published account of what would evolve into the Mafia in the United States came in the spring of 1869. The New Orleans Times reported that the city’s Second District had become overrun by ‘well-known and notorious Sicilian murderers, counterfeiters and burglars, who, in the last month, have formed a sort of general co-partnership or stock company for the plunder and disturbance of the city.” http://en.wikipedia.org/wiki/American_Mafia (Emphasis our own). It certainly sounds a lot like the nuclear industry.
If no one has been rude enough to bring this up, perhaps it’s because the current and former CEOs of Entergy are accountants trained in Indiana, far far away from the Big Easy. Both have roots in PSI Energy of Indiana and Cinergy of Ohio.
Being an accountant by trade, former CEO of Entergy, Wayne Leonard, appears to have hatched a scheme for milking old nuclear reactors for all they are worth and more. The current CEO, Leo Denault, was VP of Corporate Development. This was followed by an attempt to spin off liabilities into a new entity, first named Spin-co!
Arnie Gundersen of Fairewinds gave the low-down on this topic on November 2nd, 2014:
“I wanted to talk today about my experience on the Public Oversight Panel in Vermont where we evaluated Entergy in Vermont and how the similarities are just astounding with Entergy here in New York State. So I wanted to spend 10 minutes or so on that experience.
First of all, Entergy had a corporate strategy at the turn of the century to buy old nuclear plants. And they bought Vermont Yankee for less than $200 million. And a new plant of that size was probably something on the order of $10 billion. So it was an enormous discount. (9:27) And between 2002 when they bought the plant and 2007, they made a boatload of money. They got – the market was high, the economy was flying and there wasn’t a lot of fracked gas on the market to drive electric prices down. And they never reinvested that in the power plant. Their stock prices took off; their stockholders were very well compensated, and their executives were even more so, well-compensated. That turned, of course, with the market collapse and the economy collapse and the load collapse. And since then, most of Entergy’s fleet of plants – we call them merchant plants because they don’t sell directly – they’re not utilities any more – are either marginally making money, like perhaps Indian Point, or definitely losing money like Vermont Yankee and Fitzpatrick.
So the strategy that made Entergy successful at the beginning of the 20th Century is now dragging it down in the last five years. It is a very investor-focused organization. If you think you’re a stakeholder, you’re not. The only people they really care about are their investors. In 2008, they tried to spin off these merchant plants in a marketing faux pas that will go down in history. They called the spinoff SpinCo and thankfully, New York State and Vermont saw through it. It was woefully undercapitalized. It was 90 percent roughly debt. And they counted on all six plants operating all the time in order to pay the interest on the money. So their execs and their stockholders were going to make a boatload of money and then the SpinCo would have to survive on the fact that every one of these plants had to keep running. And if they broke, there wasn’t enough money to pay the debt. So to New York State’s credit and to Vermont’s credit, we dug in our heels and prevented SpinCo from moving forward, and eventually it became obvious to everybody else it was a bad idea. But the execs that came up with that brilliant idea are still there.
So the first point is that it’s a company designed to increase shareholder value and if they call you a stakeholder and they call their employees stakeholders, it’s just not true.
What I learned when I was on the panel was that they have a unique way of distributing funds for the six nuclear plants that are in their merchant fleet and the six are Indian Point, two here, Fitzpatrick, Palisades, Vermont Yankee and Pilgrim. What they do is the company decides how much money is available for maintenance. And it’s not like everybody puts in their request and they get what they ask for. The company decides what’s available. And then the executives from each of these plants go into a room and argue until they divide up the pie as equitably as they can given the pie is too small for their needs. We found this out when I was on the oversight panel at Vermont Yankee. In 2009, there were 5 of us: Peter Bradford, who is quoted here and a former NRC commissioner, but also in charge of the Public Service Commission here in New York State for years. So Peter and I, a former nuclear engineer for the state, a professor at Penn State and Dave Lochbaum (13:32) were on this panel and we looked into problems at Vermont Yankee. And one of the points that we highlighted was that they weren’t spending enough money on maintenance. And we put that in writing in 2009. In 2009, we had 80 problem areas at Vermont Yankee and we determined that if they nailed those 80 areas, they could run for another 20 years. So only an antinuclear – I’m the only antinuke I know who’s ever signed a report saying you can run for 20 more years. But so in 2009, we signed a report saying you can run for 20 more years, but oh, by the way, we think you’re not spending enough money on maintenance. And Entergy portrayed that as these granola crunchy Vermonters were saying that, but it wasn’t true.
Entergy commissioned another group of experts to look at Indian Point. (14:29) And these were 12 hand-picked people from Entergy. And they came to the same conclusion about Indian Point. They said you’re not spending enough money. And the physical condition of the plant has an adverse affect on morale. If you went into the plant – and I don’t know if anybody’s been there, but there’s a pipe that runs up the side of the containment that’s designed to release the radiation in the event of an accident. And Entergy never painted it. It was this rusty thing hanging down. And the panel said, as you drive in to work every day, you see that. And as a maintenance person, it’s going to affect your outlook at plant maintenance. So it wasn’t just us granola eating crunchies up in Vermont, but their own hand-picked experts that came to the same conclusion.
So then I was appointed, after the panel dissolved, I was appointed by the Senate, but the joint fiscal committee in Vermont asked me to stay on and see if they were making any progress about knocking out these 80 problem areas. And something didn’t smell right and I just knew that they weren’t telling us the truth about these underground pipes. And I testified at a Joint Fiscal Committee about the underground pipes and three months later, I said we were lying to the panel, didn’t tell you the truth because Entergy didn’t tell us the truth. And Peter Shumlin is now governor and he – nonetheless, he was still president of the senate and he put it on the agenda he wanted to talk about that in January. And before the agenda ever materialized, the plant developed this underground leak that suddenly elevated the issue to astronomical terms. So Shumlin and others brought us back and the panel looked at this thing again and we determined that the problem – the reason this pipe failed was that they were too cheap. So it was the oversight panel who in ’09 had the broad concern and then in 2010 we had a narrower concern that there is a real safety concern when you’re too cheap, and underground pipes can burst and this is a classic example.
We had essentially three reports: two from the oversight panel and one from Entergy’s own hand-picked panel that this was not the way you’d want to run a nuclear business. And what was Entergy’s response? They cut their staff by 10 percent. They cut their staff by 10 percent. So again, this is a stockholder-focused organization. Safety second, I think is their motto.
So moving on, it’s clear to me that Vermont Yankee they will say was shut down for economic reasons, but it was really the citizen involvement for a long, long time that led them to choose Vermont Yankee. It could have been Pilgrim, it could have been Fitzpatrick or Palisades, both of which are single-unit plants. But it was Vermont Yankee because citizen involvement pushed them to the point that they just wanted to make it go away. So I encourage you to stay at it, your involvement in day-to-day activities here, always looking over their shoulder is a big factor in any business decisions they’ll make.
You know, the town of Vernon is where Vermont Yankee is, and it was shocked when Vermont Yankee shut down. It was as if they went through a divorce. But they promised us 20 years and they only gave us one. And I had told the Senate the year before, this is not a 20-year marriage. To you, to the people who want that nuclear plant, they’ll believe it’s a 20-year marriage. But to Entergy it’s 20 years of one-night stands. Every day they make a decision, is there enough money to run another day. And when we looked at their – the resource allocation, it was can we keep the plant fixed enough to run another 18 months. And their horizon on making repairs was can we make it good enough to run for another 18 months. And 18 months is to the next refuel. There’s never any attempt to make it good enough to run for 60 years. The goal is can we put enough Band-Aids on to get this plant to run for another 18 months. And I found that appalling, but it is the way Entergy does business; not just with Vermont Yankee, but Pilgrim, Indian Point, Fitzpatrick.
So please know that the organization you are dealing with has that incredibly short-term focus when in fact nuclear safety requires a much longer event horizon. Entergy has problems, not just at Vermont Yankee pipe or here with the frequent shutdowns, fires and transformers and things like that, but Palisades is another one of their plants in Michigan with numerous problems. but the one I’ll tell you about: they have a tank that sits above the control room and it leaks. It’s a safety-related thing. It shouldn’t be leaking, period, but it’s above the control room. And it drips into the control room. And when [NRC] Chairman Jaczko (20:09) was there, they actually were collecting the drops in a bucket, and the NRC didn’t tell Chairman Jaczko about that, that the tank on the roof of the control room was leaking water into the control room. Fitzpatrick up in upstate New York is a single-unit plant and has a condenser that’s leaking like a sieve. And for years, they just kept putting another Band-aid, putting another Band-Aid on. And this year, they finally committed to replacing it with a new condenser, largely – not because they wanted to but because Dave Lochbaum at the Union of Concerned Scientists wrote a scathing letter to the NRC saying this plant is not safe and unless you replace that condenser you are basically creating a serious safety hazard. That’s what it takes to push them over. And Pilgrim has had a tritium leak for as long as I can remember and they never seem to be able to find it. One wonders if they really want to. So it is a systemic problem within the merchant fleet at Entergy.
So the last two things I’d like to mention before handing the mic over to Tim is that the problems here – in my opinion, the two big problems are not new. When I was a VP in the industry, I had a group of emergency planners. And this was 1982, 83, 84. And we knew then that the worst plant in the country was Indian Point. So for us to be suddenly stumbling on oh, the emergency planning at Indian Point is a problem – no, the industry has known for almost 30 years now that Indian Point is the worst plant in the country as far as evacuation plans. And the reasons are obvious. You have a river on one side and all the roads essentially go north/south. There’s nowhere to run to the east or to the west. And the roads that do go north/south are small, two-lane highways. So emergency planning has been known within the industry as the Achilles heel of Indian Point for 30 years. Don’t be surprised.
The other piece of that is the seismic issues. There’s something in the industry called CDF, which stands for core damage frequency. And Indian Point has had the highest core damage frequency of any power plant in the country due to seismic events. So forget the plants in California. The worst plant as far as the chance of a radioactive release in the event of a seismic event has always been since, again, the late 80’s, Indian Point. So experts within the NRC have always had it right at the top of the list and it really took Fukushima to push the NRC to cause something to begin to move on that. I suspect they’ll analyze the problem for 7 or 8 years and when they realize how bad the problem is, they’ll shut the plant down rather than making the appropriate fixes.
I just came off a study for Friends of the Earth and I looked at, in the last 10 years, there’s been 12 nuclear plants involved in earthquakes.
There were 7 at the Kashiwazaki-Kariwa, which is in Japan. It’s on the Sea of Japan side of Japan. And they had a really serious earthquake in 2007. And I was over there speaking in 2012, and one of their seismologists said to me, he said I told them in 2007 this would be our last warning and then we had Fukushima. But the Kashiwazaki-Kariwa earthquake was worse than the accident – worse than what the plant was designed for, and worse than they ever expected in 10,000 years, and yet it happened in 30 years. So there are seven plants, three of which never started back up again. Twenty-five hundred different items were damaged by the earthquake and the entire site was shut down for three years, and like I said, three of the plants were never started up. A couple started up a year later and a few just started up right before Fukushima Daiichi. So when you hear experts say that the worst that can happen at Indian Point is a .15 G ground acceleration earthquake, those are the same experts that say Kashiwazaki-Kariwa was well built, too. So the first earthquake involving seven nuclear plants was the one at Kashiwazaki-Kariwa. And every plant experienced ground acceleration that were worse than the worst that they thought would occur in 10,000 years; and of course, it happened in 30 years.
The next one is Fukushima, obviously, and the ground acceleration in the buildings at Fukushima was worse than they ever expected to occur in 10,000 years. And yet it happened in 30 years. And there is seismic damage at Fukushima. The releases weren’t due to the seismic damage, but there’s numerous items that were destroyed by the earthquake before the tsunami ever got there.
And the last earthquake is an east coast earthquake. It’s in North Anna, and that’s the one that caused the crack in the Washington monument. I’m sure you felt it here; we felt it in Vermont a couple of years ago. And that was a .12 earthquake. And it exceeded what the plant was designed for on a 10,000-year timeframe. So an earthquake that wasn’t supposed to happen in 10,000 years happened in 30 years there, too. So the experts that are telling you that Indian Point is well designed at .15 are the same ones that told you that North Anna can withstand – the worst that North Anna can expect is a .12.
The last piece I’d like to leave you with – North Anna is an old plant like Indian Point, similar design, not quite the same. But it was designed to a .12 based on the standards of the 60’s, when the plant was designed. That’s North Anna 1 and 2. North Anna 3 is a new plant that is proposed and before the earthquake at North Anna, the new seismic requirement for North Anna 3 was a .54 earthquake – four times higher than the old plant had originally been designed for. Yet the NRC didn’t go back and tell North Anna 1 and 2 that they should make the appropriate modifications since the earthquakes been a lot worse. So when you hear they’re going to reevaluate the earthquakes here at Indian Point, there’s not enough experts to do it quickly and we need time, that’s baloney. I had 70 structural engineers working for me when I was a senior VP. The people are out there. It’s just the industry doesn’t want the results to be known quickly, because it pays for them to limp along a couple more years and squeeze a couple more bucks out of this plant before they shut it down.
The last thing the panel concluded is that no plant has ever run 60 years. The oldest nuclear plant ever has run 47 years before it was shutdown. So if you have an expectancy that Indian Point is going to run 60 years based on licensing promises, the history of nuclear power is that no plant has ever made it beyond its 47th year before it shut down. Again, it’s not a 20-year marriage; it’s 20 years of one-night stands.
About Arnie Gundersen: “I was a senior VP in the nuclear industry until 1990 and became a nuclear whistleblower. We lost everything. We lost our house, bankruptcy, foreclosure, the whole bit. And the Nuclear Regulatory Commission never lifted a finger to help. And it was John Glenn, my boyhood hero as an astronaut who held congressional hearings where I was exonerated and it was kind of cool – I got to meet him, with deep appreciation. So meanwhile, we moved on; life goes on. And became a dorm parent in a boarding school for kids that had learning disabilities. So during that, we needed a house, we had no place to live. So we taught in the day and I expert witnessed at night. And gradually, Fairewinds developed.” Excerpted from “Carbon Free, Nuclear Free” by Arnie Gundersen-Fairewinds, November 2nd, 2014, Emphasis our own. See the rest of the text and the video at: http://www.fairewinds.org/carbon-free-nuclear-free. (CC BY-NC-SA 3.0)
“Entergy’s main operating segments consist of the U.S. utility segment and the non-utility nuclear segment. The U.S. utility segment provides retail electricity services to approximately 2.7 million customers in Arkansas, Louisiana, Mississippi, and Texas. The non-utility nuclear segment operates a total of ten nuclear power plants:
New York – Indian Point Energy Center and FitzPatrick
Massachusetts – Pilgrim
Vermont – Vermont Yankee
Michigan – Palisades Nuclear Station
Arkansas – Arkansas Nuclear One
Louisiana – River Bend and Waterford
Mississippi – Grand Gulf
Nebraska – support services for the Cooper Nuclear Station through 2014” http://en.wikipedia.org/wiki/Entergy