The Vermont Yankee nuclear power plant went off-line seven months ago, on December 29, 2014. The shutdown has had a massive negative economic effect on the region near the power plant. Could this have been predicted?
Well, yes. The economic consequences of closing Vermont Yankee not only could have been predicted, they were predicted. They were predicted early and often.
Local economy takes nine-figure hit
That’s correct—nine figures. The yearly hit to the local economy is measured in hundreds of millions of dollars.
In recent days, people have noticed this, and there have been several articles on the financial effects from closing down Vermont Yankee.
I’ll start with my own blog post at the Northwest Clean Energy blog: it has many references. Pain from Closing Vermont Yankee Lingers.
Vermont Watchdog has well-researched articles, which were later reprinted in several newspapers in Vermont:
- Economic fallout from closed Vermont Yankee plant to continue for years.
- Brattleboro housing market dives as Vermont Yankee exits region.
For the quick version, a local TV station has brief video clip: Vermont Yankee closure negatively impacting the local economy.
The UMass report comes true
Many articles referenced a report that appeared on Christmas Eve last year. Economic Impacts of Vermont Yankee Closure was ordered by a joint group of planning commissions in three states (Vermont, Massachusetts, and New Hampshire), and written by the University of Massachusetts–Dartmouth and the Donahue Institute. The report appeared a few days before the plant closed down.
The report predicted direct wage losses to the area at $100 million per year, and indirect losses (secondary jobs, economic activity) adding to a total of $480 million losses per year. Yep, that’s half a billion a year in losses to the local economy. I describe the report in this blog post. Now the predictions from within that report are coming to fruition, and frankly, the worst effects are yet to come.
Vermont Yankee still employs more than 300 people. Here’s the time line:
The plant staffing was at 550 people in December 2014, when it went offline forever. In January 2015, all the fuel in the reactor was transferred to the fuel pool for cooling. At the end of January 2015, 234 people were laid off.
That left 316 people employed at the plant. As of this writing, they are still there, and their presence mitigates the economic effects of the plant closing. However, another massive layoff is still ahead. At the end of April 2016, about 200 more people will be laid off, leaving a staff of 127 for monitoring and security.
Several years from now, in 2020, there will be a burst of activity, transferring fuel to dry casks. After that, the staffing will drop even further, and stay very low for years.
The pain was so predictable
Back in 2011, Vermont’s Governor Peter Shumlin was touting the idea that the decommissioning of Vermont Yankee would be a billion-dollar jobs bonus. However, decommissioning is not a jobs bonus. In 2011, I wrote posts to challenge that idea, for example Decommissioning: Facts Versus Fantasy. And remember, nuclear plants are often located in fairly rural areas. When they close, the area has a hard time making an economic recovery.
But it wasn’t just me predicting that the closing of Vermont Yankee would be terrible for the economics of its region. In 2010, there were two reports showing the same level of economic losses as shown in the recent UMass report. The first of the older reports was commissioned by the International Brotherhood of Electrical Workers (Vermont Yankee’s union) and is no longer on the web. The second report was commissioned by the Vermont legislature, and is still easily available. I describe the two reports in this post. Both of the older reports show the local loss of more than 1000 jobs, as well as severe loss of economic activity.
A major graphic of the legislative report is worth a little scrutiny. Employment Impacts Associated With Various Energy Policy Scenarios, found on page 9, describes expected job loss (or gain) from closing Vermont Yankee. Note that “keep Vermont Yankee operating” is shown as the baseline. This means that the jobs the plant contributes are sort of hidden in the graph. If the plant shuts down, there would be approximately 1000 jobs lost in the area (see red line below the baseline). It’s almost as if the baseline (plant keeps running) isn’t a line at all.
The timeline of the graph extends past 2032, when Vermont Yankee’s extended license from the U.S. Nuclear Regulatory Commission would have ended. At that point, the red job line surges upward to just below the baseline. The shutdown job loss number of 1000 is on the graph, but the number doesn’t exactly jump out at you.
So, if all these predictions were available in 2010, why is the current economic devastation such a big surprise to anyone?
Politics: Why the economic effects were a “surprise”
The economic losses due to Vermont Yankee shutdown were not a surprise. Perhaps Governor Shumlin and his closest supporters truly believed the “decommissioning is a jobs bonus” rhetoric, but I would say that few others believed it. However, Shumlin’s anti-nuclear stance and his “jobs-bonus” pronouncement were important to many people in his political base.
Governor Shumlin is well-known for his recent fierce and unrelenting opposition to the continued operation of Vermont Yankee. Back in 1998, Shumlin did support Vermont Yankee. At that that time, the plant was owned by Vermont utilities, not Entergy.
Did Shumlin change his opinions and begin to oppose Vermont Yankee because Entergy bought the plant—or because of Shumlin’s assessment of his own political situation? We will never know, but this blogger would guess it was the latter.
Entergy claims it closed the plant for economic reasons. Although true, some of Vermont Yankee’s economic problems were caused by the plant having to defend itself in court against state attempts to shut it down. Also, various new taxes were suddenly levied against the plant, all that directly affected profitability.
Most of my friends at Vermont Yankee would say that the plant closed because of politics, not economics. Entergy management would say it was closed due to economics, not politics. In any case, looking at the consequences of the shutdown, all the studies and reports predicted the negative results from Vermont Yankee closing. These reports were ignored.
In other words, the economic consequences of closing the plant were completely predictable. The economic analysis was done by several groups, at different times, and always with the same basic results. It seems to have been a fairly straightforward calculation.
In my opinion, the economic analysis of the consequences of closing Vermont Yankee was not rocket science. Understanding the politicalscience of why the state wanted the plant to close…now, that is more difficult.