Source: WCAX.com (January 26, 2011) IBM warns lawmakers about the loss of Vt. Yankee
Vermont is one of the lucky places where a mature nuclear power plant provides a significant portion of the electrical power. Unfortunately, Vermont leaders are acting a bit like a spoiled heir that has no idea how generous his ancestors have been in leaving behind valuable assets that make his life significantly more luxurious than it would be without that legacy. Those leaders have been working hard for several years to rid themselves of the “burden” of having to perform the occasional roof repairs and seasonal piping maintenance that I described in my post titled 40-year-old nuclear plants can produce electricity that is “too cheap to meter” – that capability angers the competition
On Wednesday, January 26, 2011, corporate leaders from IBM, the mature manufacturing company that is the largest single employer in the state of Vermont held a pointed discussion with state legislators and told them clearly that an increase in their power bill is unacceptable. The company currently pays $35 million per year for electricity and has calculated that their bill may increase by 25%. That is roughly $9 million more per year.
IBM is a well above average employer in terms of pay and benefits, so I would guess that their budgeters would use an average pay and benefits cost per employee of something close to $100,000 per year. If that is the case, the math is simple – an increase in the power bill could lead to a need to lay off 90 people if they have determined that costs have to remain the same.
As the leader points out, IBM competes in international markets where other participants have access to lower cost, often government subsidized power. Raising prices is simply not an option for a manufacturing company that competes in a global market.
I also want to clarify a statement made in the news story and in hundreds of other stories about Vermont Yankee. Ms. Davenport stated that “Vermont currently gets one third of its power from Vermont Yankee.” That is actually a bit of a simplification that can lead to confusion. Vermont actually gets all of its power from a complex machine called “the grid”. Vermont Yankee is one of the more important sources of electricity on that grid; it produces enough kilowatt hours to supply fully 85% of the kilowatt-hours that people and businesses inside the state borders consume each year.
Based on paper documents, it is possible to claim that VY only supplies 1/3 of the electric power in the state, but it is impossible to put manufacturer labels on kilowatt-hours. Once they are put onto the grid, they lose all identity. If the state of Vermont forces a cheap power source off of the grid, costs will increase for everyone else who buys power from that grid. If you live in Connecticut, New Hampshire, Massachusetts, or even Quebec, you have a legitimate interest in Vermont’s decision whether or not to keep operating a local asset.
Aside: I understand the importance of electrical power costs for competitive manufacturers from personal experience; I spent about 3 years as the General Manager of a small plastic injection molding company. We produced products like toys, boat parts and kitchen supplies in direct competition with Asian manufacturers. It was a tiny company so our power bill was not close to IBM’s, but it was equal to roughly 25% of our payroll cost. Any increase in electric power costs without an increase in production would have required a cut somewhere else. Our only choice would have been to reduce wages or reduce head count. End Aside.
Hat tip to Meredith Angwin for pointing to this important story. Meredith is the pronuclear activist who produces the exceptional Yes Vermont Yankee blog. Meredith recently founded the Ethan Allen Energy Education Project to help teach her neighbors about the important role that energy supplies play in modern society. That project deserves your support if you are looking for a way to contribute to improving the human condition.