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Lessons for Diablo Canyon: Vermont region adjusts to life without its nuclear plant

Editor’s note: Diablo Canyon nuclear power plant’s closure in 2025 means an annual economic loss of about $1 billion locally. This is the first of a four-part series on how other communities dealt with the financial consequences when their nuclear power plants closed.

When residents of Vernon, Vermont, lost their biggest taxpayer — the 620-megawatt Vermont Yankee nuclear power plant — nearly two years ago, they reacted quickly and pragmatically. Among other cost-cutting measures, they eliminated the entire Police Department and turned to the sheriff to enforce the law in the town of 2,100 residents.

The pain isn’t over yet. In Vernon — where everyone gets to vote on budget and policy issues at town meetings — there will almost certainly be more economizing in the future.

“It’s going to be a process over the next five years to cut back even more,” said newly hired town administrator and former Vermont Yankee employee Michelle Pong.

The Vermont Yankee nuclear power station, which shut down Dec. 29, 2014, paid roughly $1.1 million in annual property taxes to Vernon, nearly half the town’s tax revenue. Losing the plant means the town will have to learn to get by on less — much less.

Checkered operating history

Vermont Yankee, one of the oldest reactors in the nation, had been a fixture in the town of Vernon for more than 40 years. The beginning of the end came in 2013, when the plant’s owner, Louisiana-based Entergy Corp., announced it would close the plant in 2014. Cheap natural gas had pushed the wholesale price of electricity so low that it was no longer financially viable to operate Vermont Yankee, Entergy officials said.

The news was welcome in some quarters. Many environmentalists in New England had been calling for the plant’s closure for years. The opposition only grew louder following the partial collapse of a cooling tower in 2007 and the discovery of radioactive tritium leaks in 2010. The state of Vermont tried to shut down the plant but was overruled in court.

In the town of Vernon, though, the plant was a respected neighbor, so much so that if another energy plant were to come to town, “people would welcome it with open arms,” Pong said.

Tax income from the plant provided residents of Vernon with services — such as its own Police Department — that were out of reach to other Windham County communities.

While those days are over, the Entergy income stream hasn’t been shut off completely. The company will continue to make tax stability payments to the town over the next five years, though payments will gradually decline from $750,000 this year to $400,000 in 2022. The payments will stop after that, though the town’s grateful for the five-year leeway.

“That was pretty much out of the goodness of their heart,” Pong said of the tax stability payments.

Entergy also is paying school taxes to the state to help compensate for loss of education revenue, but those, too, are temporary.

Tri-state region affected

Vernon isn’t the only community — nor the only state — to suffer economic reversals on account of the shutdown. Vernon is close to Massachusetts and New Hampshire, and Vermont Yankee workers made their homes in a tri-county area that overlaps state lines.

A study by the University of Massachusetts found Vermont Yankee boosted the region’s economy by $500 million per year and, between the plant’s workforce and spin-off jobs in the community, provided 1,220 jobs.

Yet even when the plant was open, the region struggled with challenges that confront many communities: an aging population; deteriorating infrastructure; lack of affordable housing; and low household incomes. (According to a 2009 United Way study, the median household income in Windham County was more than $5,000 lower than the statewide median.)

Some communities had already been working on economic revitalization plans when Vermont Yankee’s shutdown was announced. That news served as an even greater catalyst for economic planning, and it brought leaders from three areas — Cheshire County, New Hampshire; Windham County, Vermont; and Franklin County, Massachusetts — together to brainstorm and explore collaborating on projects.

The region’s efforts to replace Vermont Yankee jobs have been aided by millions of dollars in financial assistance:

▪  In a memorandum of understanding with the state of Vermont, Entergy agreed to provide $10 million — $2 million per year for five years — for economic development efforts aimed at increasing employment in Windham County.

▪  Entergy also gave $350,000 to New Hampshire’s Monadnock Region to help its economic recovery efforts.

▪  The federal Economic Development Administration (EDA) provided $335,650 in grants to foster the green/sustainable building industry in southeastern Vermont.

Such financial benefits for economic recovery aren’t the norm for communities that lose a nuclear power plant, but could offer lessons for San Luis Obispo County stakeholders as they plan for a future without Diablo Canyon.

In the Vermont Yankee case, negotiations and lobbying by advocacy groups and public officials — including the governor and Vermont Sen. Patrick Leahy — played a big role. It helped, too, that data about Vermont Yankee’s role in the regional economy had already been gathered.

“It was a good fortune the region had done its own research several years before,” said Jennifer Stromsten, a co-founder of the Institute of Nuclear Host Communities.

Drop in housing prices

Yet the economic recovery funds can’t compare to what Vermont Yankee used to contribute on a regular basis. Loss of Vermont Yankee dollars is being felt in ways large and small, especially in Windham County.

When the plant closed and a first wave of workers left, the number of houses on the market increased and housing prices dropped. While there are fewer houses on the market this year, the median sales price for single-family homes selling the first seven months of this year — $175,000 — was still below the state median of $210,000.

The plant’s closure also hurt nonprofit groups. Entergy used to contribute between $300,000 and $400,000 per year to 100 different organizations. That’s gone.

Entergy’s role in civic life has faded as well. For example, the company used to sponsor a Fourth of July fireworks show. Its employees coached youth sports teams, served on the volunteer fire department and took part in town government.

Entergy still has a presence in town, though it’s greatly reduced. The company is in the process of transferring spent fuel into dry casks, and it has 50 employees plus contractors on the site to get that job done. The transfer is scheduled to be completed by 2020. At that point, the plant will be mothballed for decades — a process known as SAFSTOR — until it’s eventually dismantled.

Delaying demolition of the plant serves a dual purpose: It allows radioactivity to decay while the company’s decommissioning trust fund grows. That’s necessary in this case since Entergy has only about half of the $1.2 billion it needs for decommissioning.

SAFSTOR is not such good news for the region, since it means the Vermont Yankee property will be off-limits to other uses for a half-century or more (federal rules give nuclear plant owners up to 60 years to complete decommissioning). It also denies Vernon and surrounding communities the near-term economic benefit that comes with immediate decommissioning, which requires a large workforce generally made up of both company employees and contractors.

In spite of the economic hardships that accompanied the closure of Vermont Yankee, Pong says the community of Vernon is moving on.

“They’re tough New England stock here,” she said. “It wasn’t the most ideal situation, but it’s not going to drag us down for eternity.”

Stephanie Finucane: 805-781-7933, @SLOTribOpEd

A snapshot of Windham County, Vermont

2015 population estimate: 43,386

Median household income: $50,526

Individuals below poverty level: 12.2%

Percent without health insurance: 6.8%

Median housing value: $210,700

Total housing units: 29,806

Number of companies: 7,029

SOURCE: U.S. Census Bureau

The 4-day series at

a glance

Day 1: In Vermont, financial aid includes $10 million for economic development

Day 2: Citrus County, Florida, looks to tourism and tax increases to get back on economic track

Day 3: Carlton, Wisconsin, is sued after assessing shuttered power plant $457 million

Day 4: Should communities get federal financial incentives when nuclear plants close?

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